General notes to Investors:
Risk is one of the major factors that should carefully consider before investment. Investor must aware that there is nothing risk-free in the investment world. Before engage in securities, futures or bonds investment, you should prepare yourself by acquiring more information such as, knowledge of securities markets, derivatives markets, securities firm's business practices, including the operation of the firm's order execution systems and procedures. If you are a prudent investor, you should properly allocate on your funds in your portfolio, avoid heavily engage in high-risk investment. In particular, you should not fund high-risk trading activities with retirement savings, student loans, education funds, mortgages, emergency funds or funds required to meet your living expenses.
Risk of Investing in Securities:
All investments, including securities/Futures, carries certain risks. Neither SSL, its information providers nor its licensors shall be responsible for any investment incurred in reliance on information provided on this website. Advice from your own financial advisor is strongly recommended. You should note that market conditions including volatility and/or high volume may delay system access and trade execution. The prices of securities fluctuate, sometimes dramatically. The price of a security may move up or down, and may become valueless. It is as likely that losses will be incurred rather than profit made as a result of buying and selling securities/Futures. Past performance should not be taken as an indication of future performance. Depending on the trading environment, below some of the risks that investor might encountered penses.
Risk of Dealing in Warrants:
The risks attached to warrants are different from and can be much greater than those attached to securities such as shares, debentures, loan stocks and bonds. It is possible to lose the entire paid value of warrants if the market moves against you. Unless you fully understand the risks associated therewith (including the nature of the investment, the transaction you are entering into and the true extent of your exposure), you should not deal in warrants. Warrants often involve a high degree of gearing, so that a relatively small movement in the price of the underlying securities may result in a disproportionately large movement in the price of the warrant. The prices of warrants can therefore be volatile.
Risk of Trading Growth Enterprise Market Stocks:
Growth Enterprise Market (GEM) stocks involve a high investment risk. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. GEM stocks may be very volatile and illiquid. You should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Current information on GEM stocks may only be found on the internet website operated by The Stock Exchange of Hong Kong Limited. GEM Companies are usually not required to issue paid announcements in gazetted newspapers. You should seek independent professional advice if you are uncertain of or have not understood any aspect of this risk disclosure statement or the nature and risks involved in trading of GEM stocks.
Risk of trading Nasdaq-Amex securities at The Stock Exchange of Hong Kong Limited:
The securities under the Nasdaq-Amex Pilot Program (PP) are aimed at sophisticated investors. You should consult Sanfull and become familiarised with the PP before trading in the PP securities. You should be aware that the PP securities are not regulated as a primary or secondary listing on the Main Board or the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited.
Risk of subscribing and trading Newly Issued Securities:
Subscribing Newly Issued Securities does not mean that you have a good title for all your subscription volume. The newly listed company and its sponsor will determine the allocation method on this new subscription share. Therefore, it is possible that subscribers may not be alloted with any shares at all depending on the allocation method applied. In such case, subscribers may lose interests and other related charges on the subscription application. Therefore, you must ensure the correctness of the final allocation volume before you place your sell order. In case your sell order exceeds your actual share holdings, you may be prosecuted on short selling by the relevant authority.
Risk of Lower Liquidity:
Liquidity refers to the ability of market participants to buy and sell securities. Liquidity is important because with greater liquidity, it is easier for investors to buy or sell securities, and as a result, investors are more likely to pay or receive a competitive price for securities purchased or sold. Generally, the more orders that are available in a market, the greater the liquidity. If you trade in stocks with low liquidity, there is a high probability that your order may only be partially executed, or not at all.
Risk of Higher Volatility:
Volatility refers to the changes in price that securities undergo when trading. Generally, the higher the volatility of a security, the greater its price swings. Trading in stocks with high volatility requires investors to take a very close monitor on your investment, as it involves a very high degree of risk that may cause you to loss a very substantial part of your fund within a very short period of time.
Risk of News Announcements:
Normally, listed companies make news announcements that may affect the price of their securities after regular market hours. Similarly, important financial information is frequently announced outside of regular market hours. In some occasions, rumors or actual announcements may occur during normal or extended trading hours, and if combined with lower liquidity and higher volatility, may cause an exaggerated and unsustainable effect on the price of a security.
Risk of Wider Spreads:
The spread refers to the difference in price between what you can buy a security for and what you can sell it for. Generally, securities with low liquidity and/or high volatility usually results in a wider spread, especially during a quiet market or extended trading sections.
Risk of Electronic Trading Services:
The access, communication and conducting transactions over the internet or other electronic means or facilities does not involves face to face contact and may be open to abuse by intruders. While various steps and procedures (For Example: login password, encryption, F2A and firewalls) has been taken and/or implemented by Sanfull to protect unauthorized access to your account, there can be no assurance that such steps and procedures are effective to prevent all forms of abuses including the unauthorized use of your account by intruders.
Risk of System Delay or Outage:
The trading system currently used by SEHK is OTP-C, in which brokers can process its clients' order without geographic constrains. Aside from that, Sanfull Securities also have its own in-house trading system to better manage the order execution flow and provide better protection to our clients' interests. Both the OTP-C and Sanfull Securities's in-house trading system are highly automated and rely on computer technology. However, there are many possible causes (such as system hardware, software, communication line failure or system upgrades) that may affect the order processing speed in the event of a system delay or outage. Under any such situation, your order is either not executed according to your instructions or is not executed at all.
Risk of Chat Room Services:
There are many chat rooms/bulletin boards available on the market, and in particular, they are easily accessed on the internet. When using chat rooms and message board forums concerning investments, you should be wary and cautious of any information you find. The people who make such information available may not be who they claim to be or may not be affiliated with whom they claim to be. The information they make available may be incorrect, either because of mistakes or, unfortunately, because of intentional deceit. Information obtained through these sources cannot be a substitute for independent research into particular companies, industries and investments. You are warned not to rely on such materials in making investment decisions.
Additional Risk of Data Accuracy available on the Sanfull-Net:
Information and data available on the Sanfull-Net are obtained from the securities exchanges and/or sources that believed to be reliable. Owing to market volatility, delay in data transmission or other reasons, information and data available on Sanfull-Net may not be accurate, complete, timely and in correct sequence. Thus any reliance on such information and data may lead to incorrect investment decisions and/or other actions. You are warned not to rely solely on such materials in making investment decisions.
Risk of Short Selling:
Short sell refers to a sale of securities that you do not own, and make profit by recover purchasing the share as the price goes down after the sale transaction. If, however, the share price go up, you may suffer substantial loss from the recover purchase. In Hong Kong, investor must make prior arrangement, and notify the brokerage house before engaging in short selling activities. Otherwise, the investor will be in breach of the Securities Ordinance section 80(1), in which the maximum penalty is HK$10,000 and six months imprisonment. However, selling shares that you have on hand is not considered as short-sell.
Risk of Extended Trading Section:
The SEHK may extend its trading hours to provide retail customers with greater opportunities to trade securities and manage their portfolios. This provides access to markets that were previously limited to institutional investors or professional traders. Participation in extended trading sections may offer certain benefits to retail customers, but entails several material risks. Some of the risks include but not limited to Lower Liquidity, Higher Volatility and Wider Spreads.
Risk of Day Trading:
"Day-trading" means an overall trading strategy characterized by the regular transmission by investor of intra-day orders to effect both purchase and sale transactions in the same security or securities. Upon prior arrangement with SSL, you only need to settle for the price difference from those day trade orders. Client may apply the arbitration theory, and amplify his/her investment amount with limited amount. However, this will make share investment become highly speculative. Day trading can be extremely risky and generally is not appropriate for someone of limited resources, limited investment or trading experience and low risk tolerance. Under certain market conditions, for example, when there is a system delay or outage, the price of a stock suddenly drops, or if trading is halted due to sensitive news events or unusual trading activity. These market conditions may make it impossible to execute contingent orders, such as "stop-loss" or "stop-limit" orders. In consequence, you may sustain losses in excess of your initial investment.
Risk of Market Order:
In a fast moving market, when many investors want to trade at the same time and prices are volatile, delays can develop across the board due to order imbalances, system queues and backlogs. When you place a market order, you cannot control the price at which your order will be filled. You may buy or sell a stock at a price higher or lower than you want in the market.
Risk of Transactions in other jurisdictions:
Transactions on markets in other jurisdictions, including markets formally linked to a domestic market, may expose you to additional risk. Such markets may be subject to regulation which may offer different or diminished investor protection. Before you trade you should acquire knowledge on rules relevant to your particular transactions. Regulatory authority in HKSAR will be unable to compel the enforcement of the rules of regulatory authorities or markets in other jurisdictions where your transactions have been effected.
Risk of Off-exchange transactions:
Upon your request, Sanfull may be able to arrange off-exchange transaction for you. For such transactions, the firm with which you deal may be acting as your counterparty to the transaction. It may be difficult or impossible to liquidate an existing position, to assess the value, to determine a fair price or to assess the exposure to risk. For these reasons, these transactions may involve increased risks. Off-exchange transactions may be less regulated or subject to a separate regulatory regime. Before you undertake such transactions, you should familiarize yourself with applicable rules and attendant risks. You are also remind that Sanfull is acting on your behalf for such off-exchange transaction, and you are liable for all the loss and possible causes or claims arise from it.
Risk of Margin Trading:
Margin account is a type of loan account. Upon approved by Sanfull Securities, you may buy shares within a preset credit limit in your margin account. Loan ratio as provided by Sanfull Securities varies on different securities, and Sanfull Securities have the sole discretion to change the loan ratio at any time. The securities purchased are Sanfull Securities's collateral for the loan to you. If the value of securities in your account decline, so does the value of the collateral supporting your loan. As a result, SSL can take action, such as issue a margin call and/or sell any securities in your account, in order to maintain the healthiness of your account. It is important that you fully understand the risks involved in trading securities on margin and carefully consider whether such a financing arrangement is suitable in light of your own financial position and investment objectives. These risks include the following:
- You may sustain losses in excess of your cash and any other assets deposited as collateral with Sanfull Securities;
- Sanfull Securities can increase its "house" maintenance requirements at any time without any advance written notice;
- You are not entitled to an extension of time on a margin call;
- If the required margin deposits or interest payments are not made within the prescribed time, Sanfull Securities can force sale any securities in your account without your consent and/or without contacting you. Moreover, you are liable for any resulting deficit in your account and interest charged on your account;
- You have no right to choose which security in your margin account has to be liquidated or sold to meet a margin call.
Risk of providing an authority to lend or deposit your securities with third parties:
There is risk if you provide Sanfull Securities, your securities margin financier, with an authority that allows us to lend your securities to or deposit them with certain third parties under section 81, 81A or 121AB of the Securities Ordinance (Cap. 333) and related Rules. This is allowed only if you consent in writing. The consent must specify the period for which it is current, which cannot exceed 12 months. Sanfull Securities require all margin account clients to sign these authorities, so as to facilitate margin lending to you or to allow your securities to be loaned to or deposited as collateral with third parties. If you sign one of these authorities and your securities are lent to or deposited with third parties, those third parties will have a lien or charge on your securities. Although Sanfull Securities is responsible to you for your securities lent or deposited under the authority, a default by it could result in the loss of your securities. Cash account not involving securities borrowing and lending is available from Sanfull Securities. If you do not require any margin facilities, you should open a cash account and do not need to sign the above authorities.
The profit or loss in transactions in foreign currency-denominated contracts (whether they are traded in your own or another jurisdiction) will be affected by fluctuations in currency rates where there is a need to convert from the currency denomination of the transaction to another currency.
Risk of instructing Sanfull to hold mail or to direct mail to third parties:
If you instruct Sanfull to hold mail or to direct mail to third parties, it is important for you to promptly collect in person all contract notes and statements of your account and review them in detail to ensure that any anomalies or mistakes can be detected in a timely fashion.
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