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Disclosure Statement

 

 

Futures Disclosure

 

The risk of loss in trading commodity futures contracts can be substantial. You should therefore, carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should be aware of the following points:

 

  1. You may sustain a total loss of the funds that you deposit with your broker to establish or maintain a position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice, in order to maintain your position. If you do not provide the required funds within the time required by your broker, your position may be liquidated at a loss, and you will be liable for any resulting deficit in your account.
  2. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market reaches a daily price fluctuation limit (“limit move”).
  3. Placing contingent orders, such as a “stop- loss” or “stop-limit” orders, will not necessarily limit your losses to the intended amounts, since market conditions on the exchange where the order is placed may make it impossible to execute such orders.
  4. All futures positions involve risk, and a “spread” position may not be less risky than an outright “long” or “short” position.
  5. The high degree of leverage (gearing) that is often obtainable in futures trading because of the small margin requirements can work against you as well as for you. Leverage (gearing) can lead to large losses as well as gains.
  6. You should consult your broker concerning the nature of the protections available to safeguard funds or property deposited for your account.

 

 

Options Disclosure

 

Because of the volatile nature of the commodities markets, the purchase and granting of commodity options involves a high degree of risk. Commodity option transactions are not suitable for many members of the public. Such transactions should be entered into only by persons who have read and understood the nature and extent of their rights and obligations and of the risks involved in the options transactions covered by this disclosure statement. Both the purchaser and the grantor should know whether the particular option in which, if exercised, results in the establishment of a futures contract (An “option on a futures contract”) or results in the making or taking of delivery of the actual commodity underlying the option the option ( An “option on a physical commodity”). Both the purchaser and the grantor of an option on a physical commodity should be aware that, in certain cases, the delivery of the actual commodity underlying the option may not be required and that, if the option is exercised, the obligations of the purchaser and grantor will be settled in cash. A person should not purchase any commodity option unless he is able to sustain a total loss of the premium and transaction costs of purchasing that option. A person should not grant any commodity option unless he is able to meet additional calls for margin when the market moves against his position and, in such circumstances, to sustain a very large financial loss. A person who purchases an option should be aware that in order to realize any value from the option, it will be necessary either to offset the option position or to exercise the option. If an option purchaser does not understand how to offset or exercise an option, the purchaser should request an explanation from the futures commission merchant or the introducing broker. Customers should be aware that in a number of circumstances, it may be difficult or impossible to offset an existing option position on an exchange. The grantor of an option should be aware that, in most cases, a commodity option may be exercised at any time from the time it is granted until it expires. The purchaser of an option should be aware that some option contracts may provide only a limited period of time for exercise of the option.

 

The purchaser of a put or a call is subject to the risk of losing the entire purchase price of the option- that is the premium paid for the option plus all transaction costs.

 

 

For further disclosure, please review all necessary documents within the Account Forms

 

 

 

 

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