Risk Disclosure

Admiral Markets Cyprus Ltd is incorporated (Certificate of Incorporation No. HE 310328) in the Republic of Cyprus through the Department of Registrar of Companies and Official Receiver (http://www.mcit.gov.cy). Admiral Markets Cyprus Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission (http://www.cysec.gov.cy) (License No. 201/13) and operates under the Markets in Financial Instruments Directive (EU Directive 2004/39/EC).

This disclosure statement discusses the characteristics and risks of contracts for differences (CFDs) on securities, indices, and futures traded in foreign markets, hereinafter referred to as underlying assets. The glossary of terms appears at the end of the document.

1. Risks of CFDs

1.1. Risks of Transactions in CFDs

1.1.1. Trading CFDs may not be suitable for all investors. The Client may lose a substantial amount of money in a very short period of time. The amount client may lose is potentially unlimited and can exceed the amount he originally deposited. This is because most of CFDs are highly leveraged, with a relatively small amount of money used to establish a position in assets having a much greater value. If the client is uncomfortable with this level of risk, he should not trade CFDs.

1.1.2. The client should be aware that the regulatory protections applicable to his account are not intended to insure him against losses he may incur as a result of a decline or increase in the price of a CFD. As with all financial products, the client is solely responsible for any market losses on his account.

1.2. General Risks

1.2.1. As with any high risk financial product, the client should not risk any funds that he cannot afford to lose, such as his retirement savings, medical and other emergency funds, funds set aside for purposes such as education or home ownership, proceeds from student loans or mortgages, or funds required to meet its living expenses.

1.2.2. Be cautious of claims that you can make large profits from trading CFDs. Although the high degree of leverage in CFDs can result in large and immediate gains, it can also result in large and immediate losses. As with any financial product, there is no such thing as a “sure winner.”

1.2.3. Because of the leverage involved and the nature of CFD transactions, the client may feel the effects of his losses immediately. Gains and losses in CFDs are credited or debited to client account’s equity in real-time mode. If movements in the markets of the underlying asset decrease the value of client’s positions in CFDs, he may be required to submit additional funds to Admiral Markets Cyprus Ltd as margin. If his account is under the minimum margin requirements set by Admiral Markets Cyprus Ltd, his position may be liquidated at a loss, and he will be liable for the deficit, if any, in his account. 1.2.4. Under certain market conditions, it may be difficult or impossible to liquidate a position. If the client cannot liquidate his position in a CFD, he may not be able to realize a gain in the value of his position or prevent losses from mounting. This inability to liquidate could occur, for example, if trading is halted due to unusual trading activity in either the CFD or the underlying asset; if trading is halted due to recent news events involving the issuer of the underlying asset; if systems failures occur on an exchange or at Admiral Markets Cyprus Ltd carrying your position; or if the position is on an illiquid market. Even if client can liquidate his position, he may be forced to do so at a price that involves a large loss.

1.2.5. Under certain market conditions, it may also be difficult or impossible to manage your risk from open CFD positions by entering into an equivalent but opposite position in another contract month, on another market, or in the underlying asset. This inability to take positions to limit your risk could occur, for example, if trading is halted across markets due to unusual trading activity in the CFD or the underlying asset or due to recent news events involving the issuer of the underlying asset.

1.2.6. Under certain market conditions, the prices of CFDs may not maintain their customary or anticipated relationships to the prices of the underlying asset. These pricing disparities could occur, for example, when the market for the particular CFD is illiquid, when the primary market for the underlying asset is closed, or when the reporting of transactions in the underlying asset has been delayed. For index products, it could also occur when trading is delayed or halted in some or all of the securities that make up the index.

1.2.7. Client may experience losses due to systems failures. As with any financial transaction, client may experience losses if his orders for CFDs cannot be executed normally due to systems failures on a regulated exchange or at Admiral Markets Cyprus Ltd carrying his position.

1.2.8. All CFDs involve risk, and there is no trading strategy that can eliminate it. Strategies using combinations of positions, such as spreads, may be as risky as outright long or short positions. Trading in CFDs requires knowledge of all relevant markets.

1.2.9. Day trading strategies involving CFDs and other products pose special risks. As with any financial product, persons who seek to purchase and sell the CFD in the course of a day to profit from intra-day price movements (“day traders”) face a number of special risks, including substantial commissions, exposure to leverage, and competition with professional traders. Client should thoroughly understand these risks and have appropriate experience before engaging in day trading.

1.2.10. Placing contingent orders such as “stop-loss” orders, will not necessarily limit client’s losses to the intended amount. Admiral Markets Cyprus Ltd may permit you to enter into stop-loss orders for CFDs, which are intended to limit client’s exposure to losses due to market fluctuations. However, market conditions may make it impossible to execute the order or to get the stop price.

1.2.11. Client should thoroughly read and understand Admiral Markets Cyprus Ltd Customer Agreement before entering into any transactions in CFDs.

1.2.12. Some CFDs may be marked-to-market at daily basis, usually after the close of trading, as specified in Admiral Markets Cyprus Ltd’s contract details. At that time, the account of each buyer and seller reflects the amount of any gain or loss on the CFD based on the contract price established at the end of the day for settlement purposes (the “daily settlement price”).

2. Description of a CFD

2.1. What is a CFD?

2.1.1. A CFD is a legally binding agreement between two parties to purchase or sell, and subsequently sell or purchase a contract, priced on the basis of a certain underlying asset and valued as a specific quantity of the underlying asset. A person who buys a CFD is said to be “long” the contract. A person who sells a CFD is said to be “short” the contract. The price at which the contract trades (the“contract price”) is determined by relative buying and selling interest on a regulated exchange, or, if the underlying asset is an offexchange derivative, is determined by AM’s business counterparties.

2.1.2. In order to enter into a CFD transaction, client must deposit funds with Admiral Markets Cyprus Ltd equal to Admiral Markets Cyprus Ltd margin requirements specified for a particular CFD as a margin collateral.

2.1.3. An open position, either a long or short position, is closed by entering into an offsetting transaction (i.e., an equal and opposite transaction to the one that opened the position), which is, in terms of the Admiral Markets Cyprus Ltd MetaTrader System, said to be a ‘Close’ transaction. With regards to CFDs on futures, such offsetting transaction must be made prior to expiration of the underlying asset.

Examples:

Investor A is long one September ABC Corp. futures CFD. To liquidate the long position in the September ABC Corp. futures CFD, Investor A would sell identical September ABC Corp. futures CFD by using the ‘Close’ option in the Admiral Markets Cyprus Ltd MetaTrader System. Investor B is short one XZY Corp. stock CFD. To liquidate the short position in the XYZ Corp. stock CFD, Investor B would buy an identical XYZ Corp. stock CFD by using the ‘Close’ option in the Admiral Markets Cyprus Ltd MetaTrader System.

2.1.4. Futures CFDs traded with Admiral Markets Cyprus Ltd are settled through cash settlement. In this case, the underlying security is not delivered. Instead, any positions in such futures CFDs that are open at the end of the last trading day are settled through a final cash payment based on a final settlement price determined by the exchange or clearing organization, or at the last dealing price provided by Admiral Markets Cyprus Ltd’s business counterparties. Once this payment is made, neither party has any further obligations on the contract.

2.2. Purposes of CFDs

2.2.1. CFDs can be used for speculation, hedging, and risk management. CFDs do not provide capital growth or income.

2.3. Speculation

2.3.1. Speculators are individuals or firms who seek to profit from anticipated increases or decreases in prices. A speculator who expects the price of the underlying instrument to increase will buy the respective CFD. A speculator who expects the price of the underlying instrument to decrease will sell the respective CFD.

2.3.2. Speculation involves substantial risk and can lead to large losses as well as profits. The most common trading strategies involving CFDs are buying with the hope of profiting from an anticipated price increase and selling with the hope of profiting from an anticipated price decrease. For example, a person who expects the price of XYZ stock to increase by March can buy a March XYZ futures CFD, and a person who expects the price of XYZ stock to decrease by March can sell a March XYZ futures CFD.

2.3.3. Speculators may also enter into spreads with the hope of profiting from an expected change in price relationships. Spreaders may purchase a contract expiring in one contract month and sell another contract on the same underlying asset expiring in a different month (e.g., buy June and sell September XYZ single stock futures CFD). This is commonly referred to as a “calendar spread.” Spreaders may also purchase and sell the same contract month in two different but economically correlated CFDs. For example, if ABC and XYZ are both pharmaceutical companies and an individual believes that ABC will have stronger growth than XYZ between now and June, he could buy June ABC futures CFD and sell June XYZ futures CFD.

2.3.4. Speculators can also engage in arbitrage, which is similar to a spread except that the long and short positions occur on two different markets. An arbitrage position can be established by taking an economically opposite position in the underlying asset, in the same underlying asset in another exchange, in a similar CFD with another brokerage firm, or in an options contract.

2.4. Hedging

2.4.1. Generally speaking, hedging typically involves the purchase or sale of a CFD to reduce or offset the risk of a position in the underlying asset or group of assets (or a close economic equivalent). A hedger gives up the potential to profit from a favorable price change in the position being hedged in order to minimize the risk of loss from an adverse price change.

2.4.2. An investor who wants to lock in a price now for an anticipated sale of the underlying asset at a later date can do so by hedging with futures CFD. For example, assume an investor owns 1,000 shares of ABC that have appreciated since he bought them. The investor would like to sell them at the current price of $50 per share, but there are tax or other reasons for holding them could sell ten 100-share ABC futures CFDs and then buy back those CFDs in September when he sells the stock. Assuming the stock price and the underlying futures price change by the same amount, the gain or loss in the stock will be offset by the loss or gain in the futures contracts.

2.4.3. Hedging can also be used to lock in a price now for an anticipated purchase of the stock at a later date. For example, assume that in May a mutual fund expects to buy stocks in a particular industry with the proceeds of bonds that will mature in August. The mutual fund can hedge its risk that the stocks will increase in value between May and August by purchasing futures CFDs on a narrow-based index of stocks from that industry. When the mutual fund buys the stocks in August, it also will liquidate the futures CFD position in the index.

2.4.4. Although hedging mitigates risk, it does not eliminate all risk. For example, the relationship between the price of the CFD and the price of the underlying asset traditionally tends to remain constant over time, but it can and does vary somewhat.

2.4.5. Furthermore, the expiration or liquidation of the futures CFD may not coincide with the exact time the hedger buys or sells the underlying asset. Therefore, hedging may not be a perfect protection against price risk.

2.5. Risk Management

2.5.1. Some institutions also use CFDs to manage portfolio risks without necessarily intending to change the composition of their portfolio by buying or selling the underlying securities. The institution does so by taking a CFD that is opposite to some or all of its position in the underlying securities. This strategy involves more risk than a traditional hedge because it is not meant to be a substitute for an anticipated purchase or sale.

2.6. Where CFDs Trade

2.6.1. Admiral Markets Cyprus Ltd provides its customers with CFD trading as principal, therefore a person holding a position in a CFD who seeks to close the position must do so with Admiral Markets Cyprus Ltd. This can be also done on with another brokerage firm or exchange, if any, where a fungible CFD trades. However, in such case the position held with Admiral Markets Cyprus Ltd will remain open. A person may also seek to manage the risk in that position by taking an opposite position in a comparable contract traded on another exchange or brokerage firm.

2.6.2. CFDs traded with Admiral Markets Cyprus Ltd might not be fungible with contracts traded on any exchange or with any brokerage firm for a variety of reasons. CFDs traded on different exchanges or with different brokerage firms may be non-fungible because they have different contract terms (e.g., size, settlement method), or because they are cleared through different clearing organizations.

2.6.3. Client should consult with Admiral Markets Cyprus Ltd about the fungibility of the contract he is considering to purchase or sell, including which exchange(s), if any, on which it may be offset.

2.6.4. Regulated exchanges are required by law to establish certain listing standards. Changes in the underlying asset may, in some cases, cause a certain CFD to be no longer available for trading with Admiral Markets Cyprus Ltd. Each regulated exchange will have rules governing the continued trading of assets that no longer meet the exchange’s listing standards. These rules may, for example, permit only liquidating trades in assets that no longer satisfy the listing standards, which may force Admiral Markets Cyprus Ltd to apply similar permissions to the respective CFDs.

2.7. How CFDs Differ from Underlying Securities

2.7.1. Shares of common stock represent a fractional ownership interest in the issuer of that security. Ownership of securities confers various rights that are not present with positions in CFDs. For example, persons owning a share of common stock may be entitled to vote in matters affecting corporate governance. They also may be entitled to receive dividends and corporate disclosure, such as annual and quarterly reports.

2.7.2. The purchaser of a CFD, by contrast, has only a contract for future settlement with Admiral Markets Cyprus Ltd. The purchaser of the CFD is not entitled to exercise any voting rights over the underlying security and is not entitled to any dividends that may be paid by the issuer (however, Admiral Markets Cyprus Ltd has discretion to apply dividend adjustments to account of the holder of a stock CFD position or index CFD position).

2.7.3. Moreover, the purchaser of a CFD does not receive the corporate disclosures that are received by shareholders of the underlying security, and may not be informed about various corporate actions such as split, reverse split, merger and other events which may affect the performance of the underlying asset and the respective CFD.

2.7.4. Naturally, as with any financial product, the value of the CFD and of the underlying asset may fluctuate. However, owning the underlying security does not require an investor to meet any margin requirements. By contrast, a person who is long a CFD may be required to deposit additional funds into his or her account as the price of the CFD decreases. Similarly, a person who is short a CFD may be required to deposit additional funds into his or her account as the price of CFD increases.

2.7.5. With regards to security futures CFDs, a significant difference is that security futures contracts CFDs expire on a specific date. Unlike an owner of the underlying security, a person cannot hold a long position in a security futures CFD for an extended period of time in the hope that the price will go up. If you do not liquidate your security futures CFD, you will be required to settle the contract when it expires through cash settlement. Upon expiration, an individual will no longer have an economic interest in the securities underlying the security futures CFD.

2.8. Components of Index CFDs, Security CFDs and Security Future CFDs

2.8.1. Each regulated exchange can choose the terms of the index and security futures contracts it lists, and those terms may differ from exchange to exchange or contract to contract. You should ask Admiral Markets Cyprus Ltd for a copy of the contract specifications before trading a particular contract.

2.8.2. Each security futures contract has a set size, which may be reflected in specifications of CFDs available for trading with Admiralex Ld. The size of a security futures contract is determined by the regulated exchange on which the contract trades. For example, a security futures contract for a single stock may be based on 100 shares of that stock. If prices are reported per share, the value of the contract would be the price times 100. For security indices, the value of the contract is the price of the component securities times the multiplier set by the exchange as part of the contract terms.

2.8.3. Security futures CFDs and index futures CFDs expire at set times determined by the listing exchange. For example, a particular contract may expire on a particular day, e.g., the third Friday of the expiration month. Up until expiration, you may liquidate an open position by offsetting your contract with a fungible opposite contract that expires in the same month. If you do not liquidate an open position before it expires, you will be required to settle the contract in cash after expiration.

2.8.4. Although securities, security futures contracts or an index may be listed and traded on a regulated exchange, the contract specifications of the respective CFD traded with Admiral Markets Cyprus Ltd may not be the same.

2.8.5. Prices of CFDs are usually quoted the same way prices are quoted in the underlying instrument. For example, a contract for an individual security would be quoted in dollars and cents per share. Contracts for indices would be quoted by an index number, usually stated to two decimal places.

2.8.6. Each futures and index CFD has a minimum price fluctuation (called a tick), which may differ from product to product or exchange to exchange, where the underlying asset trades. For example, if a particular contract has a tick size of 1., you can buy the contract at $23.21 or $23.22 but not at $23.215.

2.9. Trading Halts

2.9.1. The value of your positions in CFDs could be affected if trading is halted in underlying asset. In certain circumstances, regulated exchanges are required by law to halt trading in some markets. For example, trading on a particular security futures contract must be halted if trading is halted on the listed market for the underlying security as a result of pending news, regulatory concerns, or market volatility. Similarly, trading of a security index futures contract may be halted under such circumstances if trading is halted on securities accounting for a specific percentage of the market capitalization of the index.

2.9.2. Regulated exchanges are required to halt trading in all security futures contracts for a specified period of time when the benchmark index (such as DJIA or DAX30) experiences one-day declines for a certain percentage of its value.

2.9.3. Regulated exchanges may also have discretion under their rules to halt trading in other exchange determines that the halt would be advisable in maintaining a fair and orderly market.

2.9.4. A trading halt by a regulated exchange trading the underlying asset could prevent you from opening or liquidating a CFD position with Admiral Markets Cyprus Ltd in a timely manner.

3. Margin

3.1. General Notes:

3.1.1. When Admiral Markets Cyprus Ltd lends a customer part of the funds needed to purchase or sell a CFD, the term “margin” refers to the amount of funds customer is required to have in his or her account in order to be able to enter into a CFD transaction. Admiral Markets Cyprus Ltd requires margin to be on deposit in the account before Admiral Markets Cyprus Ltd will accept an order on any CFD.

3.1.2. Because the margin deposit required to open a CFD position is a fraction of the nominal value of the underlying assets being purchased or sold, CFDs are said to be highly leveraged. The smaller the margin requirement in relation to the value of the underlying asset, the greater the leverage. Leverage allows exposure to a given quantity of an underlying asset for a fraction of the investment needed to purchase that quantity outright. In sum, buying (or selling) a CFD provides the same dollar and cents profit and loss outcomes as owning (or shorting) the underlying asset. However, as a percentage of the margin deposit, the potential immediate exposure to profit or loss is much higher with a CFD than with the underlying asset.

3.1.3. It is important to understand that Adiralex Ltd can, and in many cases do, require margin that is higher or lower than the exchange requirements for the underlying asset of a particular CFD.

3.2. Risk of margin trading:

3.2.1. Client has to understand that trading on margin involves a high degree of risk and may result in a loss of funds greater than the amount you have deposited in your account.

3.3. Requirement to maintain sufficient margin:

Your margin transactions are subject to the initial margin and maintenance margin requirements (the “Margin Requirements”) established by Admiral Markets Cyprus Ltd. Admiral Markets Cyprus Ltd’s Margin Requirements are posted on the Admiral Markets Cyprus Ltd website. The general formulas for calculating Margin Requirements provided on the Admiral Markets Cyprus Ltd website are only indicative and may not accurately reflect the actual Margin Requirements in effect at a particular time for your portfolio. The margin required by Admiral Markets Cyprus Ltd may exceed the margin required by any exchange or clearing house. Admiral Markets Cyprus Ltd may modify such Margin Requirements for any of your open and new positions, at any time, in Admiral Markets Cyprus Ltd’s sole discretion. Admiral Markets Cyprus Ltd may reject any of client’s orders if he does not have a sufficient account balance to meet Margin Requirements and may delay the processing of any order while determining the correct margin status of client’s account. Client has to maintain, without notice or demand from Admiral Markets Cyprus Ltd, a sufficient account balance at all times so as to continuously meet the Margin Requirements. As set forth herein, client has submit all payments to satisfy Margin Requirements directly to Admiral Markets Cyprus Ltd in accordance with the instructions then set forth on the Admiral Markets Cyprus Ltd website and then in effect. Client must at all times satisfy whatever margin requirement is calculated by Admiral Markets Cyprus Ltd.

3.4. Admiral Markets Cyprus Ltd will not issue margin calls: Admiral Markets Cyprus Ltd has no obligation to notify client of any failure to meet Margin Requirements in his account prior to Admiral Markets Cyprus Ltd exercising its rights and remedies under Admiral Markets Cyprus Ltd Customer Agreement. Client has to understand that Admiral Markets Cyprus Ltd generally will not issue margin calls, that Admiral Markets Cyprus Ltd generally will not credit his account to meet intraday margin deficiencies, and that Admiral Markets Cyprus Ltd is authorized to liquidate positions in client’s account in order to satisfy Margin Requirements without prior notice to the client.

3.5. Liquidation of positions (Stop Out):

3.5.1. In the event that client’s account balance has zero equity or is in deficit at any time, or the account does not have a sufficient account balance to meet the Margin Requirements, or Customer Agreement between you and Admiral Markets Cyprus Ltd has been terminated, Admiral Markets Cyprus Ltd shall have the right, in its sole discretion, but not the obligation, to liquidate all or any part of client’s positions in any of his Admiral Markets Cyprus Ltd accounts, whether carried individually or jointly with others at any time and in such manner and in any market as Admiral Markets Cyprus Ltd deems necessary, without prior notice or margin call to the client. Client has to agree to be responsible for, and promptly pay to Admiral Markets Cyprus Ltd, any deficiencies in his account that arise from such liquidation or remain after such liquidation. Admiral Markets Cyprus Ltd will not have any liability to the client in connection with such liquidations (or if the Admiral Markets Cyprus Ltd MetaTrader System experiences a delay in effecting, or does not effect, such liquidations) even if the client subsequently re-establish his position at a less favorable price.

3.5.2. Client has to waive expressly any rights to receive prior notice or demand from Admiral Markets Cyprus Ltd and agree that any prior demand, notice, announcement or advertisement shall not be deemed a waiver of Admiral Markets Cyprus Ltd’s right to liquidate any of client’s positions. Client has to understand that, in the event positions are liquidated by Admiral Markets Cyprus Ltd, he will have no right or opportunity to determine the order or manner of liquidation. Admiral Markets Cyprus Ltd may, in its sole discretion, effect a liquidation on any exchange or market. In the event that Admiral Markets Cyprus Ltd liquidates any or all positions in client’s account, such liquidation shall establish the amount of his gain or loss and indebtedness to Admiral Markets Cyprus Ltd, if any. Client will have to reimburse and hold Admiral Markets Cyprus Ltd harmless for all omissions, expenses, fees, penalties, losses and liabilities associated with any such transaction undertaken by Admiral Markets Cyprus Ltd. Client will be responsible for all resulting losses on your positions, notwithstanding Admiral Markets Cyprus Ltd’s delay in or failure to liquidate any such positions. If Admiral Markets Cyprus Ltd transmits for execution an order for which client did not have sufficient funds, Admiral Markets Cyprus Ltd has the right, without notice to the client, to liquidate the trade and the client will be responsible for any loss as a result of such liquidation, including any costs, and will not be entitled to any profit that results from such liquidation.

3.5.3. Client has to acknowledge and agree that Admiral Markets Cyprus Ltd deducts overnight adjustments, commissions and various other fees from his accounts and that such deductions may affect the amount of equity in client’s account to be applied against the Margin Requirements. Client’s positions are subject to liquidation as described herein if deduction of commissions, fees or other charges causes client’s account to have an insufficient balance to satisfy the Margin Requirements.

3.5.4. If the Admiral Markets Cyprus Ltd MetaTrader System does not, for any reason, effect a liquidation, and Admiral Markets Cyprus Ltd issues a margin call to the client by e-mail or any other method, client must satisfy such margin call immediately. Client has to monitor e-mail messages and satisfy any margin call issued by Admiral Markets Cyprus Ltd by immediately depositing funds into his account to pay, in full, the under-margined position. Notwithstanding such margin call, client has to acknowledge that Admiral Markets Cyprus Ltd, in its sole discretion, may liquidate client’s positions at any time:

(i) if any dispute arises concerning any of client’s trades,

(ii) upon client’s failure to timely discharge his obligations to Admiral Markets Cyprus Ltd,

(iii) upon client’s insolvency or filing of a petition in bankruptcy or for protection from creditors, (iv) upon the appointment of a receiver, or

(iv) whenever Admiral Markets Cyprus Ltd deems liquidation necessary or advisable for Admiral Markets Cyprus Ltd’s protection or to prevent what Admiral Markets Cyprus Ltd, in its discretion, considers to be a violation of any applicable regulations or good standards of market practice.

3.6. Account deficits:

3.6.1. For any deficit in any of client’s accounts that remains unpaid, client has to agree to pay and to be liable for the reasonable costs and expenses of collection of the debit balance, including, but not limited to, attorneys’ fees and/or collection agent fees.

4. Futures Settlement

4.1. On the expiration date, the underlying futures contract cease to exist. The expiration of any futures contracts is established by the exchange on which the contract is listed, however the exact expiration time for a particular CFD may be established by Admiral Markets Cyprus Ltd independently from the expiration time of the underlying asset.

4.2. If client does not liquidate his position prior to the expiration of the CFD, client is obligated to make or accept a cash settlement, which commonly means the liquidation of the expired CFD at the last dealing price quoted by Admiral Markets Cyprus Ltd.

5. Special Risks for Day Traders

5.1. Certain traders who pursue a day trading strategy may seek to use CFDs as part of their trading activity. Whether day trading in CFDs or other financial products, investors engaging in a day trading strategy face a number of risks.

5.2. Client should consider the following points before engaging in a day-trading strategy. For purposes of this notice, a “day-trading strategy” means an overall trading strategy characterized by the regular transmission by a customer of intra-day orders to effect both purchase and sale transactions in the same CFD.

5.3. Day trading can be extremely risky. Day trading generally is not appropriate for someone of limited resources and limited investment or trading experience and low risk tolerance. Client should be prepared to lose all of the funds that he uses for day trading. In particular, client should not fund day-trading activities with retirement savings, student loans, second mortgages, emergency funds, funds set aside for purposes such as education or home ownership, or funds required to meet his living expenses.

5.4. Further, certain evidence indicates that an investment of less than $50,000 will significantly impair the ability of a day trader to make a profit. Of course, an investment of $50,000 or more will in no way guarantee success.

5.5. Be cautious of claims of large profits from day trading. Client should be wary of advertisements or other statements that emphasize the potential for large profits in day trading. Day trading can also lead to large and immediate financial losses.

5.6. Day trading requires in-depth knowledge of the traded markets and trading techniques and strategies. In attempting to profit through day trading, client must compete with professional, licensed traders employed by securities firms. Client should have appropriate experience before engaging in day trading.

5.7. Day trading requires knowledge of Admiral Markets Cyprus Ltd’s operations. Client should be familiar with Admiral Markets Cyprus Ltd’s business practices, including the operation of the firm’s order reception and transmission for execution systems and procedures. Under certain market conditions, client may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market suddenly drops, or if trading is halted due to recent news events or unusual trading activity. The more volatile a market is, the greater the likelihood that problems may be encountered in executing a transaction. In addition to normal market risks, you may experience losses due to systems failures.

5.8. Day trading will generate substantial commissions, even if the per trade cost is low. Day trading involves aggressive trading, and generally client will pay commission on each trade on certain markets, as specified by Admiral Markets Cyprus Ltd. The total daily commissions that client pays on his trades will add to his losses or significantly reduce his earnings. For instance, assuming that a trade costs $16 and an average of 29 transactions are conducted per day, an investor would need to generate an annual profit of $111,360 just to cover commission expenses.

5.9. Day trading on margin or short selling may result in losses beyond client’s initial investment. When client day trades with funds borrowed from a firm or someone else, he can lose more than the funds he originally placed at risk. A decline in the value of the contracts that are purchased may require client to provide additional funds to Admiral Markets Cyprus Ltd to avoid the forced sale of those contracts in his account. In application to such markets as security CFDs, short selling as part of day-trading strategy also may lead to extraordinary losses, because client may have to purchase a

CFD at a very high price in order to cover a short position.

6. Other

6.1. Corporate Events

6.1.1. As noted in Section 2.7, the purchaser of a CFD does not receive the corporate disclosures that are received by shareholders of the underlying security. Treatment of dividends and other corporate events affecting the underlying security may not be reflected in the CFD depending on Admiral Markets Cyprus Ltd’s rules and policies.

6.1.2. Consequently, individuals should consider how dividends and other developments affecting CFDs in which they transact will be handled by the relevant exchange. The specific adjustments to the terms of an underlying asset are governed by the rules of the applicable exchange. Below is a discussion of some of the more common types of adjustments that you may need to consider.

6.2. Splits, Special Dividends, Mergers and Acquisitions

6.2.1. Corporate issuers occasionally announce stock splits. As a result of these splits, owners of the issuer’s common stock may own more shares of the stock, or fewer shares in the case of a reverse stock split. The treatment of stock splits for persons owning a CFD may vary according to the terms of CFD trading with AM.

6.2.2. Corporate issuers also occasionally issue special dividends. A special dividend is an announced cash dividend payment outside the normal and customary practice of a corporation. The terms of a CFD may be adjusted for special dividends in Admiral Markets Cyprus Ltd’s sole discretion.

6.2.3. With regards to security futures or indices, there may be no adjustments for ordinary dividends as they are recognized as a normal and customary practice of an issuer and are already accounted for in the pricing of security futures and indices.

6.2.4. Corporate issuers occasionally may be involved in mergers and acquisitions. Such events may cause the underlying security of CFD to change over the contract duration. The terms of CFDs may also be adjusted to reflect other corporate events affecting the underlying assets.

6.3. Tax Consequences

Because of the importance of tax considerations to transactions in CFDs, readers should consult their tax advisors as to the tax consequences of these transactions.

7. Glossary of Terms

This glossary is intended to assist customers in understanding specialized terms used in the financial industries. It is not inclusive and is not intended to state or suggest the legal significance or meaning of any word or term.

Arbitrage - taking an economically opposite position in a contract on another exchange or brokerage firm, in an options contract, or in the underlying security.

Cash settlement - a method of settling certain futures contracts by having the buyer (or long) pay the seller (or short) the cash value of the contract.

Contract - 1) the unit of trading for a particular contract (e.g., one contract may be 100 shares of the underlying security, 1000 barrels of crude oil, etc), 2) the type of contract being traded (e.g., futures on natural gas).

Contract month - the last month in which delivery is made against the futures contract or the contract is cash-settled. Sometimes referred to as the delivery month.

Day trading strategy - an overall trading strategy characterized by the regular transmission by a customer of intra-day orders to effect both purchase and sale transactions in the same contract.

Futures contract - a futures contract is (1) an agreement to purchase or sell a commodity for delivery in the future; (2) at a price determined at initiation of the contract (3) that obligates each party to the contract to fulfill it at the specified price; (4) that is used to assume or shift risk; and (5) that may be satisfied by delivery or offset.

Hedging - the purchase or sale of a CFD to reduce or offset the risk of a position in the underlying asset or group of assets (or a close economic equivalent).

Illiquid market - a market (or contract) with few buyers and/or sellers. Illiquid markets have little trading activity and those trades that do occur may be done at large price increments.

Liquidation - entering into an offsetting transaction. Selling a CFD that was previously bought liquidates a position in exactly the same way that selling 100 shares of a particular stock liquidates an earlier purchase of the same stock.

Liquid market - a market (or contract) with numerous buyers and sellers trading at small price increments.

Long - 1) the buying side of an open contact, 2) a person who has bought contracts that are still open.

Margin - the amount of money that must be deposited by both buyers and sellers to ensure performance of the person's obligations under a traded contract.

Mark-to-market - to debit or credit accounts daily to reflect that day's profits and losses.

O_setting - liquidating open positions by either selling fungible contracts in the same contract month as an open long position or buying fungible contracts in the same contract month as an open short position.

Position - a person's net long or short open contracts.

Regulated exchange - a registered national securities exchange, a registered derivatives transaction execution facility, or an alternative trading system registered as a broker or dealer.

Security futures CFD - a legally binding agreement between two parties to purchase or sell in the future a CFD on specific quantify of shares of a security (such as common stock, an exchange-traded fund, or ADR).

Settlement price - 1) the daily price that the clearing organization or AM uses to mark open positions to market for determining profit and loss and margin calls, 2) the price at which open cash settlement contracts are settled on the last trading day.

Short - 1) the selling side of an open contract, 2) a person who has sold contracts that are still open.

Speculating - buying and selling contracts with the hope of profiting from anticipated price movements.

Spread - 1) holding a long position in one futures CFD and a short position in a related futures CFD or contract month in order to profit from an anticipated change in the price relationship between the two, 2) the price difference between two contracts or contract months.

Stop loss order - an order that becomes a market

order when the market trades at a specified price. The order will be filled at whatever price the market is trading at. Also called a stop order.

Tick - the smallest price change allowed in a particular contract.

Trader - a professional speculator who trades for his or her own account.

Underlying asset - the instrument on which the CFD is based. This instrument can be any of financial instruments available in various markets, including, but not limited to, common stock, ETF, ADR, GDR, commodity futures, security futures, index futures, security index and currency pair.

Volume - the number of contracts bought or sold during a specified period of time.