Risk Disclosure

Risk Disclosure Document (Capital Market & Derivatives)

This document contains important information on trading in Equities/Derivatives Segments of the stock exchanges. All prospective constituents should read this document before trading in Equities/Derivatives Segments of the Exchanges. Stock exchanges/SEBI do not, singly or jointly, expressly or impliedly, guarantee nor make any representation concerning the completeness, adequacy or accuracy of this disclosure document, nor have they endorsed or passed any merits of participating in the trading segments. This brief statement does not disclose all the risks and other significant aspects of trading.

In light of the risks involved, you should undertake transactions only if you understand the nature of the relationship into which you are entering and the extent of your exposure to risk.

Trading in equity shares, derivatives contracts or other instruments traded on the Stock Exchange, which have a varying element of risk, is generally not appropriate for someone of limited resources, limited investment and/or trading experience and low risk tolerance. You should carefully consider whether such trading is suitable for you in light of your financial condition.

1. Risk of Higher Volatility

Volatility refers to the dynamic changes in price that a security/derivatives contract undergoes when trading activity continues on the Stock Exchanges. Generally, the higher the volatility, the greater the price swings. As a result of volatility, your order may only be partially executed, not executed at all, or executed at a price substantially different from the last traded price — resulting in notional or real losses.

2. Risk of Lower Liquidity

Liquidity refers to the ability of market participants to buy and/or sell securities/derivatives contracts expeditiously at a competitive price and with minimal price difference. There may be a risk of lower liquidity in some securities/derivatives contracts. As a result, your order may only be partially executed, executed with a greater price difference, or not executed at all.

3. Risk of Wider Spreads

Spread refers to the difference between the best buy price and the best sell price. Lower liquidity and higher volatility may result in wider-than-normal spreads for less liquid or illiquid securities/derivatives contracts, which in turn hampers better price formation.

4. Risk-Reducing Orders

Orders intended to limit losses (e.g. “stop loss” or “limit” orders) may not be effective many times because rapid movement in market conditions may make it impossible to execute such orders. A “market” order is executed without regard to price; a “limit” order is executed only at the limit price or better but may not be executed at all; a “stop loss” order converts to a market/limit order when the stop price is reached, with no assurance of execution.

5. Risk of News Announcements

News announcements that may impact the price of a stock/derivatives contract may occur during trading and, when combined with lower liquidity and higher volatility, may cause sudden, unexpected movements in price.

6. Risk of System / Network Congestion & Failures

Trading on exchanges is in electronic mode. There exists a possibility of communication failure or system problems, slow or delayed response, trading halts, or other glitches that may result in delays in processing or non-processing of buy or sell orders, either in part or in full.

7. Derivatives-Specific Risks

In the derivatives market, the margin is small relative to the value of the contract, so transactions are “leveraged”. This provides the possibility of great profit or loss in comparison with the margin amount. Transactions in derivatives carry a high degree of risk. If prices move against you, you may lose a part of or the whole margin amount in a relatively short time; the loss may exceed the original margin amount. Futures positions are marked to market daily and you may be required to deposit additional margin within a stipulated time.

Do's and Don'ts

• Deal only with and through SEBI-registered intermediaries; verify their SEBI registration number.
• Fill the KYC form completely and strike off blank fields.
• Read all mandatory documents — Rights & Obligations, Risk Disclosure, and the Policy & Procedure document.
• Get a clear idea of all brokerage, commissions, fees and other charges before trading.
• Do not share your internet trading password with anyone; do not make cash payments to the broker.
• Register your mobile number and email ID to receive trade confirmations and alerts.
• Do not fall prey to fraudsters promising assured/huge returns.

Contact

Please read the Risk Disclosure Document as prescribed by SEBI before trading or investing. For any queries regarding risk disclosure or account-related risks, contact us at [email protected].