Risk Acknowledgement and Disclosure

1. Scope of the Notice.

This Risk Acknowledgement and Disclosure document is provided by Falcon Brokers Ltd (hereinafter referred to as the “Company”) to prospective clients in accordance with the requirements of the Markets in Financial Instruments Regulations (MiFID) and the Investment Services and Activities and Regulated Markets Law (144 (I) 2007) – Cyprus.

This document provides a general description of the nature and risks involved in trading in financial instruments. It is not meant to disclose and explain all risks associated with dealing in financial instruments.

Clients should refrain from engaging in any investment in financial instruments if they do not know and understand the risk involved therewith.

Prior to applying for a trading account with the Company, clients should assess carefully the suitability of investing in specific financial instruments taking into consideration their knowledge of the field, their financial resources and their understanding (or lack thereof) of the following risks:

1.Technical Risk.

The client who trades on an electronic trading system is exposed to the risks associated with the system, including,

2.Communication Risk

3.Effect of “Leverage” or “Gearing”

Transactions in foreign exchange and derivatives entail a high degree of risk. Contracts for Differences (CFDs) allow client to carry out transactions by paying only a small fraction of the total value of the underlying asset. In such leverage or gearing condition, as is often referred to, a relatively small market movement will have a disproportionately larger impact on the funds deposited in the margin account. If the market moves against client’s positions and/ or margin requirements, he/ she may be called upon to deposit additional funds on very short notice, the failure of which may result in closing the positions leading to a loss or deficit in client’s account.

4.Abnormal Market Conditions

CFDs and related markets can be highly volatile. The underlying assets may change rapidly and over wide price ranges owing to markets events like implementation of new trade programs and policies, national and international socioeconomic and political events. As a result, the placing of certain orders which are intended to limit losses or take profits at declared prices may not be effected and consequently the client may be exposed to larger additional losses.

5.Margin Requirements

The client is responsible to keep sufficient margin in his/ her trading account at all times in order to avoid their closure due to unavailability of funds. Noting that the Company is under no obligation to notify clients of the need to increase the margins but will have the discretion to begin closing client’s positions starting with the most unprofitable one.

6.Trading Platform Conditions

Trading on an electronic trading system is vulnerable to temporary disruption or failure. The result of any system failure may be that the client’s order is not executed according to his/ her instructions and the Company is in no position to keep him/ her informed continuously about the open positions and fulfillment of the margin requirements.

7.Trading Suspension or Restriction

Under certain market conditions like times of rapid price movement where prices fall or rise in one trading session to such an extent that under rules of relevant Exchange trading is suspended or restricted. This will result in making it impossible to execute a client’s order at a stipulated price and realized losses can be larger than expected. Normal pricing relationships between the underlying asset and a derivative do not always exist. The absence of an underlying reference price may make it difficult to judge “fair” value.

8.Force Majeure event

The Company shall have no liability for any loss or damage the client may sustain as a result of total or partial failure, delay or non-execution of orders caused by acts of God, fire, war, political upheaval, labor dispute, strike, civil commission, government action, discontinuance or suspension of the operations of the stock exchange market, failure to communicate with market makers, non-operation of computer system and any other reasons beyond the control of the Company.

9.Liquidity Risk

The liquidity risk arises in circumstances where a person interested in selling a given asset is unable to do so because no one on the market is willing to trade with this asset.

10.Credit Risk

The credit risk arises when the contracting party may not fulfill willingly or may not be able to fulfill the obligations as agreed upon in the contract. Investors should assess the credit worthiness of the issuers of the financial instruments, as well as their ability to repay their obligations. Over-the-Counter transactions (where an open position cannot be closed with any other entity) may involve higher risk in comparison to trading on a regulated market (central counter party).

11.Currency Risk

Transactions in foreign currency denominated instruments (other than client’s account currency) will be affected by the fluctuations in the currency and the client may be unfavorably affected by the lowering of the exchange rate of the foreign currency (against the currency of the account) when the instrument is sold.

12.Transactions in Other Jurisdictions

Transactions done on markets in other jurisdictions affect the value of the investments, like the imposition of new withholding tax or increase actual taxes or levies on foreign investment or actions taken by the government to restrict asset repatriation.