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General risk disclosure requirements

Securities and Futures (Licensing and Conduct of Business) Regulations

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—(1) Subject to paragraph (3), a holder of a capital markets services licence to deal in specified capital markets products must not open a trading account for a customer for the purpose of entering into transactions of sale and purchase of any specified capital markets products unless the holder —(a)furnishes the customer with a written risk disclosure document prepared by the holder that discloses the material risks of the specified capital markets products; and(b)receives from the customer an acknowledgment signed and dated by the customer that he has received and understood the nature and contents of the risk disclosure document provided.(2) Subject to paragraph (3), the holder must not enter any transaction of sale or purchase of any specified capital markets products unless —(a)the holder has informed the customer whether the holder is acting in that transaction as a principal or an agent;(b)the holder —(i)has informed the customer that the holder intends to act as a principal in all transactions of sale or purchase of specified capital markets products with the customer; and(ii)is acting in that transaction as a principal; or(c)the holder —(i)has informed the customer that the holder intends to act in as an agent for all transactions of sale or purchase of specified capital markets products with the customer; and(ii)is acting in that transaction as an agent.(3) Paragraphs (1) and (2) do not apply to the holder in respect of a customer who is —(a)an accredited investor;(b)an expert investor;(c)an institutional investor; or(d)a related corporation of the holder.(4) In this regulation, “specified capital markets products” means capital markets products other than futures contracts, spot foreign exchange contracts for the purposes of leveraged foreign exchange trading and FX OTC derivatives contracts.

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