Risk Disclosure Statement
Internet Related Risk
Internet is inherently inadequate in terms of reliability and security. Trading of securities or the conduct of securities transactions or communication via Internet is exposed to a certain degree of risk. In particular, your connection with this website (the “Site”) of Excellent Success Investments Limited (“ESIL” or the “Company”) access to the services the Company provides via the Internet may be restricted or delayed at any time or from time to time when the network utilization rate reaching its peak, market fluctuation, system breakdown ( including failure of software and hardware ), network system upgrade or maintenance ( including upgrade or maintenance of software and hardware ) or any other reasons such that the Company is unable to provide or bound to terminate temporarily our service to you. Apart from the above,
(1) Securities transactions conducted via the Internet may be interrupted, experience termination or delay in data transmission due to the volume of data communicated on the Internet or, may result in data transmission errors as a result of the public nature of the Internet;
(2) Trading instructions may fail to be executed or experience delay in execution resulting in disparity between the execution price and the market price when trade instructions are given;
(3) Unauthorized third parties may have access to your contact and personal details;
(4) Your instructions may be executed without being reviewed; and
(5) Information published on the Site may not be updated immediately and may not be able to reflect the securities transactions carried out on websites other than the Company’s.
The Company shall not be liable to you or any other persons for any loss or expenses incurred due to communication delay, breakdown, inaccuracy or lack of secrecy which are beyond the reasonable control of the Company.
Risk of Securities Transactions
Price of securities may be highly volatile. In addition, securities price would goes up or down, or even become worthless. You should pay attention to the fact that trading of securities may not generate profits and on the contrary, may incur losses.
Risk Associated with Stock Trading on GEM
Trading of securities on the Growth Enterprise Market (“GEM”) of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) involves tremendous investment risks. In particular, these companies can be listed on GEM without providing track records on profits and future profit forecast. In addition, GEM shares may be highly volatile and their liquidity may be very low. In light of the level of risk associated with stock trading on GEM, GEM market is more suitable for professional investors and investors who are well versed in investment techniques. You are advised to consider prudently before making relevant investment decisions.
At present, information relating to GEM shares is available only on the websites operated by the Stock Exchange. In general, GEM listed companies are not required to publish paid announcements on those newspapers designated on the Gazette. In case you are in doubt as to the contents of this Risk Disclosure Statement, the nature of the GEM market or the risk associated with stock trading on GEM, you are advised to seek for professional advice.
Risk Associated with Giving Written Authorization for Lending to or Depositing Securities with Third Parties
When you authorize the Company to lend your securities to or deposit them to a third party according to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “Ordinance”) and the relevant rules and regulations, a certain degree of risk does exist. The authorization will only become effective under the circumstance that written consent has been given by you in respect thereof. In addition, the above written consent shall specify the effective date and the relevant effective period shall last for no more than 12 months. While the current legislation does not require you to sign the said written authorization, you should note that this type of written authorization may be required in certain circumstances. These circumstances include the provision of margin borrowings to you, authorizing the lending of your securities to third parties or depositing these securities with third parties as collateral, etc.
Prior to signing the written authorization, you may make enquiries with the Company to ascertain the purpose for which the authorization is needed. In case you sign on the written authorization and, your securities have already been lent to or deposited with a third party, such third party shall have lien or charge over your securities. Although your dealers or securities margin financiers shall be liable to you in regard to the lending or depositing of your securities according to the written authorization, the defaults of the above dealers or securities margin financiers may result in the loss of your securities. In view of this, the Company provides cash accounts that do not involve any securities lending activities. If you have no need of margin borrowings or do not wish your securities to be lent or charged, you should not sign on the above written authorization and alternatively, request for the opening of “cash account” with the Company.
ESIL is a market participant of the Stock Exchange. In case the Company fails to fulfill its obligations to you, you are entitled to make claim under the Compensation Fund established by the Stock Exchange subject to the relevant terms and conditions applicable to the Compensation Fund.
Margin Trading Risk
Using the deposit of collateral to acquire financing for the purpose of securities trading can involve tremendous risk. As such, the loss you incur may exceed the value of cash and any other assets you have deposited as collateral with the Company. Please also note that market situation may render the execution of standing trading instructions, for instance, “stop-loss” or “limit price” orders, impossible. You may therefore be requested to deposit additional margin monies or pay interests within a short period of time. In case you fail to deposit the required margin monies or pay interests at the time specified, the collateral you have deposited may be disposed of without your prior consent. In addition, you shall also be liable for any shortfall of monies or interests payable arising therefrom in respect of your account. Therefore, you should consider carefully whether this kind of financing arrangement is suitable for you with reference to your financial status and investment objectives.
Risk Associated with Receiving or Holding Clients’ Assets Outside Hong Kong
The receipt or holding of your assets by the Company or its agent elsewhere outside Hong Kong is subject to the regulation of the applicable laws and regulations of the relevant overseas jurisdiction. These laws and regulations may differ from the Ordinance and the provisions made according thereto. In this case, your assets may not enjoy the same protection as assets being received or held in Hong Kong.
Risk Arising from Transactions Conducted in Other Jurisdictions
Additional risks may arise from transactions conducted in markets of other jurisdictions (including those markets which have established formal connection with the local market). Subject to the regulations of these markets, the coverage extended to investors in different jurisdictions may vary, or even be reduced. Prior to conducting any transaction, you should examine all regulations relevant to the transaction to be conducted in such jurisdictions. You should consult independent professional advice. The regulatory institution of the place where you are situated shall not force the regulatory institution or market under the jurisdiction of which its stock exchange has executed the said transaction to implement the relevant regulations. As such, prior to conducting any transaction, you have to make enquiries with the relevant firms to confirm the availability of remedy measures at the jurisdiction where you are situated and other jurisdictions together with the relevant details.
Trading Instructions or Investment Strategies for Reducing Risk
Even though you place certain trading instructions (for instance, “stop-loss” or “stop loss limit” orders) which are intended to pre-set the limits of loss, the effectiveness of them may not be as desirable as expected since market situation may render the execution of such trading instructions impossible. In regard to the strategies of using various portfolios of positions, for instance, the portfolio of “spread” or “straddle” etc., the level of risk may not be lower than the holding of basic “long” or “short” position.
Risk Relevant to Cash and Property Deposited
Where you deposit money or other property for the purposes of conducting transactions locally or in overseas countries, you should clarify the protection concerning the said money or property, in particular, at a time when the relevant firms are being wind up or become insolvent. The amount of money or property ultimately recovered will be subject to the specific legislation or local regulations. You should note that in certain jurisdiction, in the case where there is shortfall of monies or property being recovered, the property which should have belonged to you shall be distributed to you as cash on a pro-rata basis.
The profits or loss arising from trading of securities denominated in foreign currencies (whether the transactions are conducted in the jurisdiction where you are situated or in other regions) will be subject to the movement of foreign currency exchange rates when converting the denomination currency of the said securities into another currency.
Commissions and Other Fees
Prior to conducting any transaction, you have to ascertain all commissions, fees and other charges which are payable by you. These fees will have a direct impact on the net profits (if any) you gain or the loss you incur.
Risk Arising from Trading Facilities
Electronic trading facilities carry out order transmission, execution, matching, registration and clearing by means of computing system. However, it should be noted that all of these facilities and systems are susceptible to temporary connection, disruption or break down and the compensation you will acquire in respect of this will be subject to the restriction imposed by the liability of the system providers, markets, clearing companies and / or participant firms. Since the said liability-related restrictions vary, you should make enquiries with the relevant participants through whom your transactions have been conducted.
Electronic Trading Risk
Securities trading transacted through different electronic trading systems may by no means be the same. Where you conduct trading via a particular electronic trading system, you shall be subject to the risk associated with that particular system, inter alia, the relevant hardware or software of the systems may fail at any time. You should also note that system breakdown may result in the failure of executing your securities trading orders according to your instructions or those securities trading orders may become entirely non-executable.
In certain jurisdiction or under certain specific circumstances, the Company may be permitted to carry out over-the-counter trading and, the Company may be the only counterparty of the securities trading you engaged in. Under such circumstances, it may be difficult or impossible for you to close the open position, carry out evaluation, determine a fair price or assess the relevant risk. The said trading, therefore, may involve higher degree of risk. In addition, the regulation of over-the-counter trading may be relatively relaxed, or the securities trading may be subject to different regulatory system. In light of this, prior to conducting the said over-the-counter trading, you should understand applicable regulations and the relevant risk.