Diversify your portfolio with the world's major currencies
Foreign Currency Opportunities
If your Equinox Securities, Inc. Investment Professional recommends adding foreign currencies to your portfolio, then the EverBank® WorldCurrency family of deposit products could be the solution. Not only do these products allow you to earn interest rates from around the world, but they also deliver an opportunity to benefit financially if the foreign currency gains against the U.S. dollar. Conversely, if the foreign currency you choose declines, you may incur a loss of principal.

FOREIGN CURRENCY & OFF-EXCHANGE OPTIONS RISK DISCLOSURE STATEMENT

WorldCurrency Family of Currency Deposit Products:

FOREIGN CURRENCY & OFF-EXCHANGE OPTIONS RISK DISCLOSURE STATEMENT

This statement does not disclose all of the risks and other significant aspects of trading in foreign currency contracts and off-exchange options.  In light of the risks, you should undertake such transactions only if you understand the nature of the contracts (and contractual relationships) into which you are entering and the extent of your exposure to risk.  Trading in foreign currency contracts and off-exchange options is not suitable for many members of the public. You should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances.

FOREIGN CURRENCY CONTRACTS

EFFECT OF ‘LEVERAGE’ OR ‘GEARING’ Transactions in foreign currency contracts carry a high degree of risk.  The amount of initial margin is small relative to the value of the foreign currency contract so that transactions are ‘leveraged’ or ‘geared’.  A relatively small market movement will have proportionately larger impact on the funds you have deposited or will have to deposit: this may work against you as well as for you. You may sustain a total loss of initial margin funds and any additional funds deposited with the firm to maintain your position.  If the market moves against your position or margin levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your position.  If you fail to comply with a request for additional funds within the time prescribed, your position may be liquidated at a loss and you will be liable for any resulting deficit.

RISK-REDUCING ORDERS OR STRATEGIES The placing of certain orders (e.g., ‘stop-loss’ orders or ‘stop-limit’ orders) which are intended to limit losses to certain amounts may not be effective because market conditions may make it impossible to execute such orders. Strategies using combinations of positions, such as ‘spread’ and ‘straddle’ positions may be as risky as taking simple ‘long’ or ‘short’ positions.

OFF-EXCHANGE OPTIONS

VARIABLE DEGREE OF RISK Transactions in options carry a high degree of risk. Purchasers and sellers of options should familiarize themselves with the type of off-exchange option (i.e. put or call) which they contemplate trading and the associated risks.  You should calculate the extent to which the value of the options must increase for your position to become profitable, taking into account the premium and all transaction costs.

The purchaser of options may offset or exercise the options or allow the options to expire.  The exercise of an option results in either a cash settlement or in the purchaser acquiring or delivering the underlying interest.  If the option is on a foreign currency, the purchaser will acquire a foreign currency position with associated liabilities for margin (see section on foreign currency contracts above).  If the purchased options expire worthless, you will suffer a total loss of your investment which will consist of the off-exchange option premium plus transaction costs.  If you are contemplating purchasing deep-out-of-the-money options, you should be aware that the chance of such options becoming profitable ordinarily is remote.

Selling (‘writing’ or ‘granting’) an option generally entails considerably greater risk than purchasing options. Although the premium received by the seller is fixed, the seller may sustain a loss well in excess of that amount.  The seller will be liable for additional margin to maintain the position if the market moves unfavorably.  The seller will also be exposed to the risk of the purchaser exercising the option and the seller will be obligated to either settle the option in cash or to acquire or deliver the underlying interest.  If the option is on a foreign currency contract, the seller will acquire a position in a foreign currency contract with associated liabilities for margin (see the section on foreign currency contracts above).  If the option is ‘covered’ by the seller holding a corresponding position in the underlying interest or a foreign currency contract or another option, the risk may be reduced.  If the option is not covered, the risk of loss can be unlimited.

ADDITIONAL RISKS COMMON TO FOREIGN CURRENCY CONTRACTS AND OFF-EXCHANGE OPTIONS

TERMS AND CONDITIONS OF CONTRACTS You should ask the firm with which you deal about the terms and conditions of the specific foreign currency contracts or off-exchange options which you are trading and associated obligations (e.g. the circumstances under which you may become obligated to make or take delivery of the underlying interest of a foreign currency contract and, in respect of off-exchange options, expiration dates and restrictions on the time for exercise).

SUSPENSION OR RESTRICTION OF TRADING AND PRICING RELATIONSHIPS Market conditions (e.g. illiquidity) and/or the operation of the rules of certain markets (e.g. the suspension of trading in any foreign currency contract because of price limits or ‘circuit breakers’) may increase the risk of loss by making it difficult or impossible to effect transactions or liquidate/ offset positions. If you have sold options, this may increase the risk of loss.

Further, normal pricing relationships between the underlying interest and the foreign currency contract, and the underlying interest and the option may not exist.  This can occur when, for example, the foreign currency contract underlying the option is subject to price limits while the option is not.  The absence of an underlying reference price may make it difficult to judge ‘fair’ value.

DEPOSITED CASH AND PROPERTY You should familiarize yourself with the protections accorded money or other property you deposit for domestic and foreign transactions, particularly in the event of a firm insolvency or bankruptcy.  The extent to which you may recover your money or property may be governed by specific legislation or local rules.  In some jurisdictions, property which had been specifically identifiable as your own will be pro-rated in the same manner as cash for purposes of distribution in the event of a shortfall.

COMMISSION AND OTHER CHARGES Before you begin to trade, you should obtain a clear explanation of all commission, fees and other charges for which you will be liable.  These charges will affect your net profit (if any) or increase your loss.

TRANSACTIONS IN OTHER JURISDICTIONS Transactions on markets in other than your home may expose you to additional risk. Such markets may be subject to regulation which may offer different or diminished investor protection.  Before you trade you should inquire about any rules relevant to your particular transactions.  Your local regulatory authority will be unable to compel the enforcement of the rules of regulatory authorities or markets in other jurisdictions where your transactions have been effected.  You should ask the firm with which you deal for details about the types of redress available in both your home jurisdiction and other relevant jurisdictions before you start to trade.

CURRENCY RISKS The profit or loss in transactions in foreign currency-denominated contracts (whether they are traded in your own or another jurisdiction) will be affected by fluctuations in currency rates where there is a need to convert from the currency denomination of the contract to another currency.

TRADING FACILITIES Electronic trading facilities are supported by computer-based component systems for the order-routing, execution, matching, and registration of trades.  As with all facilities and systems, they are vulnerable to temporary disruption or failure.  Your ability to recover certain losses may be subject to limits on liability imposed by the system provider and/or the dealer. Such limits may vary: you should ask the firm with which you deal for details in this respect.

ELECTRONIC TRADING Trading on an electronic trading system may differ not only from trading in an open-outcry market but also from trading on other electronic trading systems.  If you undertake transactions on an electronic trading system, you will be exposed to risks associated with the system including the failure of hardware and software.  The result of any system failure may be that your order is either not executed according to your instructions or is not executed at all. GFT’s electronic trading platform requires Client’s Internet connection to have significant bandwidth to take full advantage of charting features.  Clients with insufficient bandwidth may experience delays as a result of having too many charts open at the same time.

OFF-EXCHANGE TRANSACTIONS In some jurisdictions, and only then in restricted circumstances, firms are permitted to effect off-exchange transactions.  The firm with which you deal will be acting as your counterparty to the transaction.  It may be difficult or impossible to liquidate an existing position, to assess the value, to determine a fair price or to assess the exposure to risk.  For these reasons, these transactions may involve increased risks.  Off-exchange transactions may be less regulated or subject to a separate regulatory regime.  Before you undertake such transactions, you should familiarize yourself with applicable rules and attendant risks.

LESSER PROTECTION IN BANKRUPTCY The transactions you are entering into with GFT are not traded on an exchange.  Therefore, under the U.S. Bankruptcy Code, your funds may not receive the same protections as funds used to margin or guarantee exchange-traded futures and options contracts, which receive a priority in bankruptcy.  Since that same priority has not been given to funds used for off-exchange forex trading, if GFT becomes insolvent and you have a claim for amounts deposited or profits earned on transactions with GFT, your claim may not receive a priority.  Without a priority, you are a general creditor and your claim will be paid, along with the claims of other general creditors, from any monies still available after priority claims are paid.  Even customer funds that GFT keeps separate from its own operating funds may not be safe from the claims of other general and priority creditors.

I'm interested in opening a WorldCurrency deposit product, what's my next step?

• Contact your Equinox Securities, Inc. Investment Professional to discuss which of these WorldCurrency deposit products could complement your overall financial goals.
• Or, contact our home office directly and we will put you in touch with one of our highly experienced investment professionals who will be happy to discuss the advantages and risks associated with this type of investment and whether this type of investment is the right choice for you. Contact us today, so that we can help you achieve your financial and investment goals.  (760) 868-5859
  
  

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