Risk Warning
It is Central Markets policy that all clients should be provided with the following risk warning notice relating to CFDs.
You should not deal in CFDs or spreadbetting unless you understand their nature and the extent of your exposure to risk. You should also be satisfied that the product is suitable for you in light of your circumstances and financial position. Although CFDs and can be utilised for the management of investment risk, it may not be suitable for some investors. In deciding whether to trade in CFDs, you should be aware of the following points.
CFDs can only be settled in cash. Investing in a CFD carries the same risks as investing in a future or an option or other derivative product. Transactions in CFDs may also have a contingent liability and you should be aware of the implications of this as set out below.
Contingent liability investment transactions, which are margined, require you to make a series of payments against the purchase price, instead of paying the whole purchase price immediately.
If you trade in contracts for differences, you may sustain a total loss of the
margin you deposit with your firm to establish or maintain a position. If the
market moves against you, you may be called upon to pay substantial additional
margin at short notice to maintain the position. If you fail to do so within
the time required, your position may be liquidated at a loss and you will be
responsible for the resulting deficit.
Even if a transaction is not margined, it may still carry an obligation to make
further payments in certain circumstances over and above any amount paid when
you entered the contract.
Before you begin to trade, you should obtain details of all commissions and other charges for which you will be liable. If any charges are not expressed in money terms (but, for example, as a percentage of contract value), you should obtain a clear and written explanation, including appropriate examples, to establish what such charges are likely to mean in specific money terms. In the case of futures, when commission is charged as a percentage, it will normally be as a percentage of the total contract value, and not simply as a percentage of your initial payment.
