| RISK WARNING |
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For the purpose of Spread Betting, E*TRADE Securities Limited will introduce you to London Capital Group Ltd (LCG or E*TRADE Spread Betting), authorised and regulated by The Financial Services Authority (FSA). For the purposes of Spread Betting, the contract is between you and LCG and all dealing, administration and settlement is carried out by them, and E*TRADE Securities Limited is not responsible for any of the functions of LCG. This notice is provided to you in compliance with FSA requirements because you are proposing to undertake dealings in financial instruments in the form of spread bets with a firm which is carrying on investment business as a financial bookmaker. This notice cannot and does not disclose or explain all of the risks and other significant aspects involved in dealing in such spread betting products. Engaging in Spread Betting carries a high risk to your capital. As these transactions differ markedly from the more common form of fixed odds betting, where your potential losses are pre-determined in advance, you should not engage in this form of betting unless you understand the nature of the transaction you are entering into and the true 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. For many members of the public, these transactions may not be suitable; you should, therefore, 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: 1. The high degree of "gearing" or "leverage" is a particular feature of this type of transaction. This stems from the initial financial requirements applicable to such bets which generally involves a comparatively modest deposit or margin in terms of the overall market value of the bet involved, so 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 favour, 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. 2. 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 any resulting deficit. 3. Bets with E*TRADE Spread Betting are not transacted on a recognised 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 E*TRADE Spread Betting pursuant with FSA Conduct of Business rules. 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 E*TRADE Spread Betting quotation which may reflect a premium or discount to the underlying market. When the underlying market is closed, E*TRADE Spread Betting’s quotation can be influenced by the weight of other Client's buying or selling with E*TRADE Spread Betting. You will have to close any bet with the same bookmaker with whom it was originally entered into. 4. Where entering into such transactions, E*TRADE Spread Betting must do so under a two-way customer agreement (i.e., E*TRADE Spread Betting Terms and Conditions and documents incorporated by reference therein) pursuant to the FSA Conduct of Business rules unless exempted from doing so. You should satisfy yourself that dealing is conducted throughout in strict conformity with that customer agreement and report to the FSA if you have reason to believe it is not. 5. Prior to placing bets, you should receive from E*TRADE Spread Betting written confirmation of all transactions or other charges for which you will be liable. As a result of the Financial Services Act 2000, the bets in this case are enforceable and E*TRADE Spread Betting may be sued by you (if you win) and may sue you (if you lose). 6. E*TRADE Spread Betting is prohibited under FSA requirements from providing you with investment advice relating to investments or possible transactions in investments or from making investment recommendations of any kind. This prohibition is subject to an exception where advice given amounts to the giving of factual market information or information, in relation to a transaction about which you have enquired, as to transaction procedures, potential risks involved and how those risks may be minimised. 9. E*TRADE Spread Betting is required to hold your money in segregated trust accounts in accordance with the regulations of FSA, but this may not afford complete protection. 10. If you deposit collateral as security with E*TRADE Spread Betting, you should ascertain from E*TRADE Spread Betting how your collateral will be dealt with. 11. If you have reason to believe that E*TRADE Spread Betting is not acting in accordance with representations that it has made to you, the terms of your customer agreement or the rules of the FSA, you should report it to the Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London E14 9SR telephone number 020 7964 1482. We maintain our financial stability by hedging against large bets. In the unlikely event that E*TRADE Spread Betting were to face liquidation, private customers are covered by the FSA Compensation Scheme to a ceiling of £48,000 (claimants would receive the first £30,000 in full and 90% of the balance - a total of £48,000). E*TRADE Spread Betting E*TRADE Securities Limited is authorised and regulated by the Financial Services Authority (FSA). Applications for spread betting are introduce to London Capital Group, which is authorised and regulated by the Financial Services Authority. Registered address: 4th Floor 12 Appold Street, London EC2A 2AW . Registered No : 3218125. Glossary: Gearing (or Leverage): This term refers to the fact that spread betting allows the client to buy (or sell) a financial product with substantially less money than the actual full market value of that financial product. So gearing is the correlation between potential profit or loss against initial deposit. A highly geared or leveraged bet involves substantial risk to your money (but also gives the possibility of high returns) At E*TRADE Spread Betting the initial deposit is normally at least the IMR. Underlying Markets: our quote is always based upon the prices received from the various financial exchanges around the world these prices are the 'underlying markets'. |