Risk Disclosure

Dear Client:

The petrochemical spot trade and petrochemical electronic spot trade on Guandong Petrochemical Exchange Center’s（hereinafter GPEC or Guandong）platform carry both potential reward and risk， it requires higher level of risk tolerance, understanding for investment risk, abilities to manage risk and investment experience for the investors. A client signing the Trade Agreement represents he or she fully acknowledges and understands the risk of trading petrochemicals on Guandong platform, and agree to comply with all the related trade rules, operations rules and regulations which are established, amended and published from time to time (hereinafter rules and regulations ).      

The purpose of this risk disclosure (hereinafter the disclosure) is to reveal the risk of petrochemicals trading business to the client, for client to assess and determine his risk tolerance as reference only. The disclosure reveals various risks in trading petrochemicals, which however do not include all the risk of petrochemicals trading business. A client should read the disclosure carefully and ensure he or she has fully understand the natures, rules and risk of petrochemicals trading business before signing the Trade Agreement and conducting a trade, given the existing risk of petrochemicals trading business. A client should determine whether to engage in the petrochemicals trading business based on his own consideration such as investment experience, investment objective, financial condition and risk tolerance.      

Please contact Guandong or related members if there is incomprehension. By signing the Trade Agreement, a client is deemed to fully agree and accept all the contents in the disclosure.    

I．Warning

 (a) Trading in petrochemicals trading business is highly speculative and risky, which is inappropriate for funds from pensions, debts (such as loans from financial financing institution or private loans )  to invest into the petrochemicals trading business.

A natural person who is under 18 or above 60 years old is not permitted to engage in the petrochemicals trading business. The fund invested in the petrochemicals trading business is recommended to account for less than 50 percent of his household disposal assets.

 (b)  Petrochemicals trading business is only appropriate for the client who meets all the following conditions:

1、Any natural person having a complete civil capacity, or was registered in accordance with the law and legal viability of an enterprise as a legal person or other economic organizations; 

2、Can fully understand all the risk about the petrochemicals trading business with certain risk tolerance;   

3、The client’s lifestyle or production and operation will not be affected by part or full loss of the fund invested in the petrochemicals trading business;

4、Has certain experience in financial instrument investment;

5、Can fully understand the market invested in and know how to invest;

6、Has read Guandong’s rules and regulations, and understand and accept the related rules from Guandong’s rules and regulations.

II. Related Risk Disclosure

 (a) Client’s engaging in petrochemicals trading business on Guandong’s platform is defined as the trading between the client and the comprehensive member. Guandong only provides clients with related service for petrochemicals trading business, and is neither engaging in trading nor bearing the risk of client’s trading losses, therefore client shall voluntarily bear risks and withstand any losses incurred in engaging in the petrochemicals trading business.

 (b) Orders may not executed at the price set by the client due to high market volatility even if the client places a take profit /stop loss order, consequently the profits / losses could not be confined to the client’s proposed scope.

 (c)Sometimes market volatility may reach to an extent that it requires a margin call according to the rules and regulations, the client may receive a margin calls notification ( which is only a kindly reminder from Guandong or the comprehensive member, but not an obligation ), the client, at this point, should be cautious to deal with his open potions or post additional margin fund as the additional margin fund may result in larger losses, while the client’s open positions may be stopped out in the case that the market moves adversely against the client if there is not enough margin in the client’s account within a specified period.     

 (d)If a comprehensive member voluntarily applies to exit or is forced to exit from the trading business by Guandong, therefore, its entry qualification for trading is terminated or its membership is cancelled by Guandong, the client should complete the related follow-up procedures according with the Client Agreement he or she has signed with the comprehensive member and the Member Exit Regulation Specification as well as provisions of other rules and regulations. In this case clients may transfer his or her account or open positions to another comprehensive member or apply to unregister his trading account. If the client does not take any measure within a period specified by Guandong, his trading account and open positions may be compulsorily transferred to the third party comprehensive member by Guandong.

 (e) Also the client should be aware of the following risks inherent in petrochemicals trading business and must be able to bear such risks and withstand any losses incurred:

1. Policy Risk

The change of the national laws, regulations, policies， and the amendments of emergency measures, the implementation of the relevant regulatory supervision measures, Guandong trading rules, the administrative measures and detailed rules for implementation are likely to influence client’s petrochemicals trading business, the client must withstand the losses incurred. 

2. Price Risk 

Petrochemical is a special commodity with investment value, its price is influenced by many factors, such as the global economic situation, foreign exchange, relevant market trends, supply and demand, political situation and energy prices, the impact of these factors on the petrochemicals’ price mechanism is very complex, which is hard for clients to fully handle in actual operation, and therefore there may be a wrong decision in petrochemicals trading business, which would result in substantial losses if the risk is controlled effectively, and the client must withstand all the losses incurred alone.

3. Trading Cost Risk

During the petrochemicals trading business process, Guandong may adjust risk control strategy through the margin requirement standard, commission fee and storage occupied/unoccupied cost, due to the change of market risk, which may affect the client’s transaction cost budget. In this case the client should make a decision carefully to timely close the open positions or keep holding the positions. The gain and loss of storage occupied/unoccupied cost will be accounted for the client’s balance by Guandong when the open positions are held to the next trading day, therefore, the overall balance in the client’s account may be less than the profits he has made from the trading due to the accrued storage occupied/unoccupied cost. The client should fully understand the risk and withstand all the losses incurred.

4. Technical Risk

Petrochemicals trading business is implemented by electronic communication technology and Internet technology. There are risks on quality and stability in relevant communications services, software and hardware services from different providers. Guandong may neither control the quality and stability of telecommunications signals,  nor guarantee the quality and stability of the configuration or network connection of client’s trading terminal, as well as the instantaneity of data sending and receiving on the internet. Any disconnection or delay caused by the above communication or network failure may affect client’s petrochemicals trading business. In addition, the client’s computer system may be affected by viruses or attacked by hackers, consequently the execution of petrochemicals trade may not be conducted in a correct or a timely manner. There are some risks when these above uncertainties arise, which may affect client’s petrochemicals trading business, the client should fully understand the risk and withstand all the losses incurred. 

5. Trading Risk 

 (1) Clients should be aware that the petrochemicals trading business on Guandong  is with investment features of low margin and high leverage, which could lead to a quick profit or loss. The client may suffer a substantial loss if his trade is against the market move. The client has to meet the requirements to add margin at any time according to the extent of the loss, otherwise the open positions may be stopped out by his comprehensive member, and the client must withstand all the losses incurred.

 (2) The trading system of Guandong integrated international petrochemicals market prices and other domestic petrochemicals market price as well as the supply and demand factors, to continuously quoted petrochemicals spot bid/ask prices. There may be a little difference between these quotes and the quotes from other providers, as a result the trading system does not guarantee that the above market prices are completely consistent with other markets.

 (3) Once the order submitted via the online trading terminal by the client on trading system is executed, the order cannot be withdrawn or cancelled, the client must accept the risk from this order placing.

 (4) Guandong, members and their staff do not guarantee any profit and do not share the benefits and trading risks with clients. Clients should acknowledge that there are no guarantees of profit nor of avoiding losses when trading petrochemicals.

 (5) The client’s trading decision must be based on his discretion. Any market analysis and information provided by Guandong, members and their staff are based solely on the judgment of its personnel and should not be considered as an investment or trading recommendation, and do not constitute any offer or promise, and any trading risks arising should be borne by the client.

 (6) There occasionally may be an obvious quoting error during the process of electronic trading, Guandong afterward may correct the error price and the resulting profit and loss, and any trading risks arising should be borne by the client.

6. Force Majeure Risk

Any reason for Guandong can not control, including but not limited to earthquake, flood, fire, riots, strikes, war, government regulation, international or domestic prohibition, restriction or protection measures and the power failure, technical failure, electronic failure as well as other unpredictable and unpreventable force majeure events, are likely to influence the client's trading, the client should fully understand the risk and withstand all the losses incurred.

III. Trading System Function Risk Warning

The functions of stop order and limit order (including take profit and stop loss functions ) in the trading system provided by Guandong could result in following risks: the order may not be executed at the designated price set for opening or closing the position (take profit and stop loss price) by the client using these functions due to uncontrollable factors such as computer speed and network speed, even if the market is at or move across such designated price.  

As a result, it is a special notice from Guandong that the client should take all the aforementioned risks into consideration when using the functions of stop or limit order to open and close positions in the trading system. It is recommended by Guandong that the client should not use this function for trading if he could not understand and bear the aforementioned risks. The client who insists to use this function is deemed to fully   understand and is willing to assume the entire risk to use this function, and assume all the consequences for using this function.

IV．Special Notice

 (a) Before engaging in the petrochemicals trading business the client must understand the basic knowledge of the petrochemicals investment, related risks and the business rules related to Guandong,, engaging in petrochemicals trading in accordance with law compliance.

 (b) There are differences between Guandong and other existing domestic petrochemicals trading market in respect of trading mode, trade rules. In order to ensure the market is  "transparent, fair and just" and developing the healthily and stably, Guandong will take more stringent measures to strengthen market oversight. Please make sure that the client can pay a  close attention to information such as relevant announcement, risk warning of the market, so as to understand the market’s risk profile in a timely manner, and make a rational investment decision and avoid by all means to follow suit blindly.

 (c) Before applying for trading, the client needs to cooperate with the member to carry out the client appropriate management work, completely and faithfully provide all the materials and information required for account opening and trading, and shall not evade the requirements by fraud and deception, otherwise, all consequences arising (including but not limited to: Guandong accordingly refused to provide the market transaction service) shall be borne by the client.

 (d) The risk disclosure items set forth in this risk disclosure are list only for illustrations which do not comprehensively list all the risks of the petrochemicals trading business. Also the client should understand and manage other potential risk factors before engaging in the petrochemicals trading business.

 (e) We sincerely wish and advise clients to carefully decide whether to engage in the petrochemicals trading business according to his actual situation such as risk tolerance, and reasonably allocate his financial assets.

 

I / We have read, understood and agree to the risk disclosure, and are willing to bear all the risk arising from engaging in the petrochemicals trading business and withstand any losses incurred.