Finotec Disclaimer and Risk Warning
This warning supplements and does not replace the standard Risk Warning on our site (link to regular warning).
Spread Betting is a high risk financial product. You MUST read the information set out below and ensure that you are fully satisfied as to the risks.
This notice cannot and does not disclose or explain all of the risks and other significant aspects involved in spread betting. You should not engage in spread betting unless you understand the nature of the transaction you are entering into and the extent of your exposure to the risk of loss. The amount that you may win or lose will vary according to the extent of the fluctuations in the price of the underlying markets on which the bet is based.
These transactions are not suitable for many clients. Therefore, you should consider carefully whether they are suitable for you in the light of your circumstances and financial resources and investment objectives.
In considering whether to engage in this form of betting, you should be aware of the following:
- The high degree of "leverage" is a particular feature of spread betting. This means that spread betting allows you to buy or sell a financial product with substantially less money than the actual market value of that financial product. So leverage is the correlation between potential profit or loss against initial deposit. A highly leveraged bet involves substantial risk to your money.
You need to be aware that a relatively small movement in the underlying market can have a disproportionately dramatic effect on your bet. If the underlying market movement is in your favor, you may achieve a good profit, but an equally small adverse market movement can not only quickly result in the loss of your entire deposit, but may also expose you to a large additional loss over and above your initial deposit. Remember that spread betting is a leveraged product and can result in losses that greatly exceed your initial deposit. Spread betting may not be suitable for everyone, so please ensure that you fully understand the risks involved. - You may be called upon to deposit substantial additional margin, at short notice, to maintain your bet. If you do not provide such additional funds within the time required, your bet may be closed at a loss and you will be liable for all resulting deficit.
- Bets are not transacted on a recognized or designated investment exchange and, accordingly, they may expose you to greater risks than exchange transactions. The betting structure and betting rules will be established solely by Finotec in accordance with applicable regulations. For example, if you wish to close the bet earlier than the time at which it would otherwise automatically expire, you will have to close it at Finotec's quotation which may reflect a premium or discount to the underlying market. When the underlying market is closed, Finotec's quotation can be influenced by the weight of other clients' buying or selling.
As a result of the Financial Services Act 2000, the bets in this case are enforceable and Finotec may be sued by you (if you win) and may sue you (if you lose). - Tax treatment of spread betting may vary considerably if you pay tax in a jurisdiction other than the UK.