PRODUCT
DISCLOSURE STATEMENT ("PDS")
Issuer: Forex Capital Trading Pty Ltd
ACN: 119 086 270
Address: Level 8, 499 St. Kilda Road, Melbourne, Victoria - 3004, Australia
License No: 306400
Issue Date: 18 March 2011
The information in this PDS is subject to change from time to time and is up to date as at the date stated at the top of the page. Where new information is materially different to that contained in this PDS, we will either issue a new PDS or a supplementary PDS setting out the updated information. Where the new information is not materially different, we will not issue a new PDS or supplementary PDS to you, but you will be able to find the updated information on our web site www.forexct.com.au or you can call 1800 367 392. If you ask us to, we will send you a paper copy of the new information.
We do not and will not give you
personal financial product advice and this PDS does not constitute a
recommendation or opinion that the products referred to in this PDS are
appropriate to you.
The information and any general advice in this PDS do not take into account your personal objectives, financial situation and needs and, unless you are familiar with foreign exchange and/or commodity dealings and products of these types, then these products may not be suitable for you. Before entering into foreign exchange or commodity transactions referred to in this PDS you should give consideration to your objectives, financial situation and needs and take all reasonable steps to fully understand the possible outcomes of trades and strategies that can be employed using our foreign exchange and commodities trading platforms. You should also be aware of the risks involved and be satisfied that trading in foreign exchange and commodities products via our trading platforms is suitable for you in view of your financial circumstances. We therefore recommend that you consult your investment adviser or obtain other appropriate independent advice.
This PDS is not an offer or invitation in relation to our products in any place in which, or to any person to whom, it would not be lawful to make that offer or invitation.
The distribution of this PDS
outside
This PDS is only intended for Australian residents. If you reside outside Australia, then you are not permitted to register with Forex Capital Trading Pty Ltd.
You should be aware that by depositing funds in our client trust account you will be exposed to counterparty risk to Forex Capital Trading Pty Ltd,(see Section 4 below entitled “Significant Risks” which explains the risk that you may not receive all the money held by us on your behalf in the client trust account if there is a deficit in the client trust account and we become insolvent or are otherwise unable to pay the deficiency.
If you have any questions in
relation to this PDS, please do not hesitate to contact us.
Telephone:
1800 367 392
1800 068 022
Mail : P.O Box
St. Kilda Road
E-mail : info@forexct.com
Visit us :
Level
499 St. Kilda Road
Suite 605, Level 6
301 George Street
1.01 Who is Forex Capital Trading Pty Ltd?
Forex Capital Trading Pty Ltd
(“ForexCT”, “us”, or “we”) is a subsidiary of Forex Capital Trading Limited,
which is a company based in
ForexCT was founded by an experienced mix of bankers, venture capitalists, internet experts and foreign exchange (“FX” or “Forex”) specialists. The catalysts for forming this company were the prevalent discrepancies between clients’ needs and the services offered by most companies.
ForexCT’s mission is to provide our customers with an online trading experience which is superior to any of our competitors. ForexCT offers an opportunity to all traders from novice to experienced, to start trading leveraged margin FX and commodities via our trading platforms (which are accessed via the internet) within minutes of registering with us and with an amount as low as $500.
1.02 Purpose of a Product
Disclosure Statement (PDS)
Under the Corporations Act 2001, a retail client must receive a PDS from an AFS licensee before acquiring a financial product. The PDS is the document that sets out the significant features of a financial product, including its risks, benefits and costs. The purpose of this PDS is to provide you with sufficient information about FX and commodities to help you make an informed decision in relation to the acquisition of our financial products. This PDS also also helps you to compare our products with others you may be considering.
The invitation to invest in FX or commodities via our trading platforms is made in Australia and only to persons who receive the PDS within
This PDS is available on the internet at www.forexct.com.au. Paper copies of this PDS will be sent by ForexCT to any person on request, free of charge. To obtain a paper copy, please contact us.
This PDS is an important document and provides you with key information about our FX and commodity products.
1.03 Over the Counter
Products
Our trading platforms offer you the opportunity to enter into Over the Counter (“OTC”) FX and commodities contracts with us, using our 24 hours a day online facilities.
1.04 What is FX?
FX (also known as ‘Forex’) is the exchange of one currency for another at an agreed exchange rate. The exchange rate is the price of one currency in terms of another currency such as the price of the Australian dollar in terms of the US dollar. For example, if the current exchange rate for the Australian dollar as against the US dollar is AUD/USD 0.9800, this means that one Australian dollar is equal to, or can be exchanged for, 98 US cents.
FX transactions made via our trading platforms do not result in the physical delivery of the relevant currency. When positions are opened, the amount required to enter into the contract will be deducted from the account balance. When positions are closed, your account will be either credited or debited according to the profit or loss of the transaction.
1.05 Uses of FX
Commercial
activities for which FX may be useful include:
- importing, where the invoice
is quoted in foreign currencies
- exporting, where the invoice
is quoted in foreign currencies
- foreign currency borrowing
- foreign currency investing
- repatriation of overseas
profits or interest in foreign currencies back to
- other foreign currency
payments
1.06 What is Commodities Trading?
Commodities trading allows you to speculate on the changes in the value of an underlying asset. The underlying asset would be the commodity itself. The commodities products offered on ForexCT’s trading platforms are Gold, Silver and WTI Crude Oil. Although gold and silver are generally regards as a precious metal, for the purposes of this PDS, we refer to gold and silver as a commodity.
ForexCT’s trading platforms allow you to open both ‘long’ (buy) and ‘short’ (sell) commodity positions. By opening a buy position, you would be of the opinion that the value or price of that commodity was going to rise. If you were to open a sell position, you would have the opinion that the value or price of that commodity was going to fall. The measurement of each commodity will either be in ounces (Gold and Silver) or barrels (WTI Crude Oil).
1.07 How do our Online Trading Platforms work?
We provide online trading platforms, enabling you to enter into OTC FX and commodity contracts. We provide direct access to
currency rates and commodity prices via the internet. ForexCT provides you with its trading services via several different
trading platforms including PROfit, iPhone Application and MetaTrader 4 (“MT 4"). You are permitted to open multiple
accounts using the various trading platforms (i.e. you can fund one account on the PROfit trading platform and another
account on the MT 4 trading platform). However, since these are two separate trading platforms, you will not be able to
monitor the trading activity on both trading platforms at the same time. For example, trading activity on PROfit will not be
visible on MT 4. Also, any excess funds in one account can not be used to meet margin requirements on the other account.
Each trading platform may have slightly different features (such as lot sizes, ability to implement trailing stop losses, charting
and news services). This PDS provides a brief overview of all of the trading platforms currently offered by ForexCT and
explains the main differences between them.
Distinct Features of Trading Platforms
| Platform | Minimum initial funding Requirement | Base Currencies Available | Commissions | Currency Pairs and Commodities Available | Guaranteed Stop Loss/Take Profit | Trailing Stop Loss | Margin Call Warning |
|---|---|---|---|---|---|---|---|
| PROfit | $500* | AUD or USD | None | 40** | Yes | No | When equity has reached 95% of exposure |
| iPhone App. | $500* | AUD or USD | None | 40** | Yes | No | When equity has reached 95% of exposure |
| MT 4 | $500* | USD | None | 25** | Yes | Yes | When equity has reached 70% of Used Margin |
*This will differ according to account type chosen
**This is subject to change
1.08 How is the FX Rate Calculated?
We cannot predict future exchange rates and our rate quotations on our website are not a forecast of where we believe FX
rates will be at a future date. The decision to transact at a particular rate will always be your decision.
The calculation of the price to be paid (or the payout to be received) for FX contracts offered by us, at the time the contract is
purchased or sold, will be based on our best estimate of market prices and the expected level of interest rates, implied
volatilities and other market conditions during the life of the contract and is based on a complex arithmetic calculation.span>
1.09 How is the Commodity Price Calculated?
Similar to FX, we cannot predict commodity prices and our price quotations on our website are not a forecast of where we
believe commodity prices will be at a future date. The decision to transact at a particular price will always be your decision.
The calculation of the price to be paid (or the payout to be received) for commodity contracts offered by us, at the time the
contract is purchased or sold, will be based on our best estimate of market prices and the expected level of interest rates,
implied volatilities and other market conditions during the life of the contract and is based on a complex arithmetic calculation.
1.10 The calculation of FX rates and Commodity prices will include a spread in our favour.
The calculation of the FX and commodity prices quoted by us will include a spread in favour of ForexCT. The prices offered to
clients may differ from prices available in the primary or underlying markets where FX and commodites are traded. This is due
to the spread favouring ForexCT in the price calculation. ForexCT acts as a market maker (and not a broker) and generates its
income from the spreads that are embedded in the FX rates and commodity prices which are quoted. The spread is the
difference between the rate/price at which we buy or sell FX and commodity products with our hedging counterparties (where
applicable) and the rate at which we buy and sell FX and commodity products with our clients. Different spreads may also be
applied depending on the value of the transaction and the underlying prevailing market conditions. This spread is factored into
the rates and prices quoted to clients i.e. they are not an additional charge to the client.
For example, we may be offered the following FX quote in the underlying market:
AUD:USD 0.9810:0.9812
We may add our spread such that the quote offered to you is 0.9809:0.9813. Due to the difference in the buying and selling
price, the FX rate or commodity price on your position must move favourably before you can be in a break even position. In
other words, if the FX rate or commodity price does not move at all and you close out your position, you will make a loss to
the extent of ForexCT’s spread and any roll over interest charges which apply to the position.
The quotes we offer are subject to our right to make corrections in the event of mis-priced or typographically incorrect data.
We do not provide a market amongst or between clients for investment or speculation. Each FX and commodity transaction you enter into is an individual agreement made between us and you as a principal and is not transferable, negotiable or
assignable to any third party.
1.11 Roll over interest
Trades that are not completed or terminated prior to at 12:00 AM Greenwich Mean Time (“GMT”) are held overnight (“rolled
over”) and may result in you paying or receiving interest. This is known as rollover interest. Rollover refers to the interest you
may earn or be charged daily on your open positions.
Every currency pair and most commodity contracts have an interest rate associated with them. Depending on the currency
pair or commodity you trade, you will pay or earn interest at the end of the trading day at 12:00 AM GMT. To earn interest,
you must buy a currency with a higher interest rate than the one you are selling.
Take AUD/JPY in March 2011 for example. At the time the AUD earned interest at 4.75% and the Japanese Yen at 0.1%. A
trader that bought this currency pair would have made roll over interest by simply holding the position past 12:00AM GMT
time. On the other hand, if the trader sold this currency pair, then they would be paying roll over interest if the position was
held past 12:00AM GMT. The interest rate refers to the cash rate, which is the overnight money market interest rate.
By holding a commodity position overnight, you will generally be charged roll over interest. However, transactions in Gold are
an exception whereby you will not receive or pay interest for positions held overnight.
Please note that ForexCT reserves the right to change interest rates, at any time, at its discretion. For a list of our current roll
over interest rates, please contact us directly. Alternatively, these rates can be viewed through the trading platforms.
2 PRODUCTS AND SERVICES OFFERED
2.1 FX and Commodity Trading
ForexCT’s trading platforms allow you to carry out daily FX and commodity market orders and entry orders in all currencies
and commodities displayed on each of its trading platforms. Our trading platforms allow you to utilise ‘leverage’ to open a
trade with a minimal margin requirement.
Beginner accounts have a default leverage of 1:200 (0.25%), whilst our professional and VIP accounts have default leverages
of 1:400 (0.5%). This means that you can open a trade with an initial margin outlay of 0.25% and 0.5% of the face value of
the position. Upon request we are able to change your leverage rate. For more information about this leverage rate applied to
your account, please refer to the section entitled “Margin Requirements” further down in this section 2.1. We also allow you to
enter a free guaranteed stop loss order and take profit amount/rate order on every trade. For more information about
guaranteed stop losses and take profits, please refer to the section entitled “Potential loss” further down in this section 2.1.
Market Orders and Entry Orders
A market order allows you to open an FX or commodity trade at the current market rate/price quoted by us on the relevant
trading platform. For example, if the current AUD/USD rate is 0.9950:0.9953, then opening an immediate trade at these rates
would be a market order. In contrast, an entry order is where you request to buy or sell an FX pair or commodity at a
specified rate/price, which may be some distance from the current market rate/price.
Continuing on from the above example, let’s assume the rate is currently 0.9950:0.9953, but you do not want to open a trade
at those current rates. You may elect to set a different rate (say a lower rate of 0.9850) using an entry order, so if the market
rate falls to 0.9850, a buy is automatically opened by the trading platform. All entry order rates or prices must be entered at a
minimum distance from the current market rate. The exact distance will differ according to currency pair or commodity.
In order to better understand how FX or commodity trading works, we should look at some practical
examples:
Example of a market order:
Let’s assume you are of the opinion that the Australian dollar (AUD) will rise against the US dollar (USD) in a 1 week time
frame and were willing to risk US$1,000. You could buy an AUD/USD position via the trading platform for A$100,000. For this
example we will assume that the default leverage is 1:200 (0.5%) and your total account equity is US$5,000. You bought
A$100,000 at an exchange rate of 0.9900. For this example, the per pip movement (each “pip” or incremental price
movement is 0.0001) is US$10. You only want to risk US$1,000. Thus, you set your pre-determined guaranteed stop loss
amount at US$1,000, which means that the stop loss rate is 0.9800. This US$1,000 is the maximum amount you could lose.
Let’s look at different outcomes when the deal ends at various exchange rates:
1. Let’s assume that in 5 days time the exchange rate is at 0.9750. In this case your deal would have been closed at
the pre-determined stop loss price of 0.9800. The result is that you have lost US$1,000 which was the amount you
were willing to risk.
When calculating the total profit or loss of a trade, we must also take into consideration the relevant roll over
interest received or paid. In the example above, you bought AUD. Let’s assume that the AUD is a higher yielding
currency pair compared to the USD (i.e. the cash rate is higher in Australian than the United States of America).
Therefore, you would receive roll over interest payments in this instance. Let’s assume that the daily roll over
interest amount paid on the AUD/USD pair is calculated at a rate of 82% of one pip. If this was the case, then the
daily rollover amount would be calculated as follows:
Roll over rate * 0.0001 * Trade Size
= 0.82 * 0.0001 * 100,000
= US$8.20 roll over interest per day
Since this position was open for five trading days, the total roll over interest received would be US$41 (US$8.20 *
five days). Therefore, the total loss for this trade would be reduced by the amount of interest received to US$959
(US$1000 – US$41 roll over interest received). It is worth pointing out that without the pre-determined stop loss,
your losses would have been far greater i.e. US$10 more for every one pip movement against your chosen
direction. In this example, the loss would be calculated as follows:
0.9900 – 0.9750 equals 150 pips
150 pips * US$10 = US$1,500
Add roll over interest of US$41
Total loss = US$1,459
Thus, if you did not have a stop loss, and the exchange rate went down to 0.9400, your potential loss could be your
entire account equity i.e. 500 pips @ US$10 per pip which is US$5,000. However, that is the maximum you could
lose in this scenario.
2. Let’s assume that in 5 days time the exchange rate is at 1.0060. You would have made a profit of US$ 1,641
(US$1,600 + US$41 roll over interest) . As we mentioned earlier, every one pip movement is US$10, thus 160 pip
movement in your favour would give you a profit of US$1,600.
Now we will go through an example for trading a commodity market order:
Let’s assume you are of the opinion that the price of gold was going to decrease this week. You only have a $600 balance in
your trading account, so you cannot risk more than this. The current price of gold is $1,400.00 an ounce. You decide to sell 75
ounces of gold at this price. Assuming that the default leverage is 1:200 (0.5%), the margin requirement for this trade would
be calculated as follows:
(Price of gold * quantity) / leverage
= ($1400 * 75 ounces)/200
=$525
For this example, the smallest incremental movement in the price of gold is one cent. Therefore, for every one cent movement
in price, you will either earn or lose 75 cents (75 ounces * 1 cent). You only want to risk US$250 i.e. you do not want lose
more than this amount on the trade. Thus, you set your pre-determined guaranteed stop loss amount (refer section below
entitled “Potential Loss” for further explanation of guaranteed stop loss) at US$250, which means that the stop loss gold price
is $1,403.33 ($1400.00 + [$250/0.75]). This US$250 is the maximum amount you could lose. Let’s look at different outcomes
when the deal ends at various gold prices:
1. Let’s assume that in 7 days time the gold price has increased to $1,408.00. In this case your deal would have
already been closed at the pre-determined guaranteed stop loss price of $1403.33. The result is that you have lost
US$250, which was the amount you were willing to risk. Without a stop loss in place, the whole $600 balance would
have been lost.
2. Let’s assume that in the same example, after 7 days, the price of gold fell to $1394.00. This $6 (600 cents) fall
would result in an unrealised profit of $450 (600 x 0.75). Once you close this trade, you would have realised a $450
profit.
In these examples you would not have been charged or be paid roll over interest, as ForexCT does not pay or receive
roll over interest on this commodity. ForexCT is a market maker and therefore receives access to the primary underlying
market. ForexCT has multiple liquidity providers, and it uses its best endeavours to ensure that the rates and prices offered to
clients are in line with the underlying market.
A day trade can therefore be terminated in one of the following events:
- You terminate it by providing instructions to that effect.
- The stop loss or take profit you predefined has been reached.
- A force majeure event or other event which prevents the performance of the transaction occurs.
- If the account equity reaches zero dollars, all open trades are automatically closed by the system.
Example of an entry order:
We will assume that you have US$1000 in your account. The current market rate for AUD:USD is 0.9950:0.9953. You
are of the opinion that the AUD will lose value against the USD later in the day, and then rebound back up to current
levels in a short period of time. Therefore, you decide to set a buy entry order of 100,000 AUD:USD at 0.9900, with a
stop loss rate of 0.9850 and a take profit rate of 0.9950. The maximum amount you are willing to lose is $500 and maximum amount you are prepared to gain is $500 (50 pips * $10 per pip). When the rate falls to 0.9900, your entry
order will be triggered and a trade will be opened at the rate of 0.9900.
Let’s look at different outcomes when the transaction opens and closes at various exchange rates:
1. Let’s assume you were correct and the market rate fell to 0.9900 later in the day. This meant that the trade
opened at a rate of 0.9900. The market rate then rebounded and increased back up to 0.9950 (your take
profit rate). This would have resulted in a $500 profit.
2. Let’s assume that instead of rebounding back up to current levels, the AUD:USD rate continued to fall. In fact,
it decreases to your stop loss rate of 0.9850. This would result in a loss of $500.
If you did not have a stop loss, and the exchange rate went down to 0.9800, your potential loss could be your entire account
equity i.e. 100 pips @ US$10 per pip which is US$1,000. However, that is the maximum you could lose.
In these scenarios, we will assume that the trade was opened and closed on the same day and it was not subject to
any roll over interest charges or earnings.
Now we will go through an example for trading a commodity entry order:
Let’s assume that you have US$1,500 balance in your trading account. You you are of the opinion that the price of gold
is going to increase significantly over the next 5 days. The current price of gold is $1,423 an ounce. You believe that in
2 days the price of gold will rise to $1,430 and then decrease to current levels over the proceeding 3 days. Therefore,
you decide to set two separate entry orders.
The first entry order is a 100 ounce buy position at an opening price of $1,424, with a take profit price of $1,430 and a
stop loss price of $1,423. Therefore, the maximum amount you are willing to lose is $100 (100 ounces * $1) and
maximum amount you are willing to gain is $600 (100 ounces * $6). The margin requirement for this trade would be
$712 ([$1,424 * 100]/200).
The second entry order is a 100 ounce sell position at an opening price of US$1,430, with a take profit price of $1,424
and a stop loss price of US$1,431. Therefore, like the first entry order, the maximum you are willing to lose is $100 and
the maximum you are willing to gain is $600. The margin required for this trade would be $715 ([$1,424 * 100]/200).
1. Let’s assume you were correct and the price of gold increased from $1,423 to $1,424. This would have triggered the
first entry order. The price continued to rise and in 2 days it reached $1,430. This first trade would have been
automatically closed out at $1,430 which was the predetermined stop loss. You would have made $600 profit on
this trade. Once the price hit $1,430 the second entry order was triggered. For the next 2 days the price ranged
between $1,428 and $1,430.50. On day 5 the price increased significantly to $1,440. Fortunately, you had your
guaranteed stop loss in set and the trade closed out at $1,431. This meant that you made a loss of $100 on this
trade. Therefore, your net profit for both trades was $500.
2. Let’s assume that you were incorrect and the price of gold fell significantly to $1,410 on the first day. Neither entry
order was executed. You subsequently decide to cancel those entry orders. The profit or loss on this trade is $0.
Potential loss
Your potential loss can be limited to the amount deposited into your account with us if you:
- choose to close out your open positions at any time before the total loss is the same as the balance in your account;
or
- do not pay any additional amounts into your account following adverse market movements to maintain the
minimum required margin, in which case, once the value of the equity in your account falls to zero, then ForexCT
will close out your open positions immediately and your loss will be limited to the amount which has been deposited
in your account.
However, if you choose to top up the amount in your account by depositing additional funds with us, then the risk of loss will
be the initial amount deposited plus any additional amount(s) deposited into the account. Accordingly, at all times the
potential loss is limited to the amount deposited into your account. We guarantee this to be the case on the basis that we
have implemented systems (within and, as additional protection, outside the online trading platform) that will automatically
close out a position when the value of your account declines to zero. In the unlikely event of a complete system failure
(including our backup systems) then ForexCT has implemented manual procedures which will ensure that any loss which may
be generated which is in excess of the amount deposited by you will be borne by ForexCT and will not be passed on to you in
any circumstances.
If you want to limit the potential loss to less than the amount deposited into your account with us, you can employ the use of
guaranteed stop loss orders at no cost. This means you can eliminate downside risk. If you use a stop loss order, we will
guarantee that your position will be closed out if the exchange rate or commodity price reaches the level specified by you in
advance by using a stop loss order. Furthermore, if you wish to predefine a specified take profit amount or rate/price, then we
also guarantee this. Please note that the predefined stop loss/take profit rate or price must be a minimum and maximum
distance from the market rate. This distance may vary according to the FX pair or commodity. You are able to see these
minimum and maximum rates via the trading platforms or alternatively, please contact us for more information.
To further illustrate how a guaranteed stop loss order will be executed by ForexCT, you should refer to the previous FX and
commodity examples.
Margin Requirements
A margin is payable when you enter or open a transaction. This amount represents collateral for your exposure under the
transaction and covers the risk to ForexCT. You must maintain margin in such amounts and in such forms as we require in our
sole discretion subject to the options available to you to either top-up your account or close out any open positions. We refer
you to Section 4.7 for additional information with respect to the options available to you. To enter into a day trade, the initial
margin required to be held in your account is between 0.25% to 2% of the face value of the transaction, depending on the
contract size you choose. In our sole discretion we will determine the amount of the margin required. The default leverage has
been set to 0.5% (200:1) for beginner accounts and 0.25% (400:1) for professional and VIP accounts; however, ForexCT is
able to change this for clients upon request. Margin requirements are taken on a per transaction basis. Once your margin
leverage is set, the relevant trading platform will not be able to open a position beyond those limits.
The full value of the initial margin is payable to ForexCT immediately upon entering the transaction. This means that sufficient
cleared funds must be deposited in your account with us before you can trade.
Due to changing market conditions, the required margin for a trade with the same currency pair or commodity and the same
value may differ over a period of time. This is commonly referred to as variation margin. In In order to calculate the required
margin to open a trade, you must look at several different factors:
- Trade size;
- Your account leverage; and
- The currency rate or commodity price.
For example, let’s assume you wish to purchase 100,000 AUD:USD at a rate of 0.9500:0.9503. Your account leverage is
200:1. The required margin calculation would be as follows:
(Trade Size / Leverage) * Rate
= (100,000 / 200) * 0.95
= US$475
The variation margin is the unrealised profit or loss on your open positions which is equal to the dollar value movement of
your open transactions calculated from the exchange rate at which you entered the transaction compared against the current
market value. We will not provide you with specific notice of the variation margin. You must log into the trading platforms you
use regularly when you have open positions to monitor the level of equity in your account.
As described above, if you do not maintain the margin requirements (top up the balance of your account) immediately by
depositing the amount of funds that is required to maintain the open position, some or all of your positions will be closed out
by us without further reference to you. If you do not pay any additional amounts into your account following adverse market
movements to maintain the minimum required margin, then as soon as the value of the equity in your account falls to zero,
ForexCT will close out your open positions immediately and your loss will be limited to the amount in which has been
deposited in your account.
You are not able to fund margin requirements with unrealized profits from another transaction. You are only allowed to deal in
and maintain positions on the basis of cleared funds being provided for your margin obligations.
We have the right to limit the size of your open positions under any appropriate circumstances as determined by us.
Generally, such limitation of the size of your open positions will be dependent on the value of funds lodged in your account.
We also have the right to refuse any request made by you to place an order to establish a position at any time at our
discretion without having to give a notice.
2.2 No physical delivery
There is no physical delivery of currency or a commodity as a result of a transaction. Positions will always be closed and your
account(s) will be either credited or debited according to the profit or loss of the transaction.
3 SIGNIFICANT BENEFITS OF OUR ONLINE TRADING SERVICE
The significant benefits of trading FX and commodities as offered by us via our trading platforms are:
3.1 Provide cash flow certainty
By agreeing to a rate or price now for a time in the future you will determine the exact cost of that currency or commodity,
thereby giving certainty over your flow of funds. Any profit (or loss) you make using our trading platforms would be offset
against the higher (or lower) price you physically have to pay for the foreign currency or commodity at the future date.
3.2 Speculation
In addition to using FX and commodity trading as a risk management tool, you can benefit by using FX and commodity trading
offered by us to speculate on changing exchange rates or commodity price movements. You may take a view of a particular
market or the markets in general and therefore invest in FX and commodities according to this belief.
3.3 Trade in small amounts
ForexCT enables you to make transactions in small amounts. You can start using our trading platforms for transactions of at
least $5,000 contract size for FX. Minimum contract sizes for commodities range from 5 ounces for gold and silver and 50
barrels for WTI Crude Oil. When trading in an FX or commodity product offered by us, you may deposit a minimum amount
of $500, or the amount which is in line with the amount you are willing to risk.
There is a minimal withdrawal amount of $100.00 on all accounts with us.
3.4 Access to the foreign exchange and commodity markets at any time
When using our trading platforms, you gain access to systems which are active and being updated 24 hours a day, 5 days a
week. You can control your accounts and positions 24 hours a day. However, we may impose a restriction against trading in
certain currency pairs or commodities for 2 minutes before and after a critical news release. A critical news release is a release
that would significantly affect the currency rate of that currency pair or the or commodity price of the relevant commodity, as
determined by us in our absolute discretion. Generally, no notice will be provided via the trading platform or on our website,
so if you have doubts as to whether a certain currency or commodity will be tradable during a news release, please contact us
and we will provide you with that information. During the period of the trading restriction, your ability to trade in those
currencies or commodities will be disabled. If for some reason the disabling of the currency or commodity was not
implemented and we allowed you to trade through the restricted period, we retain the right to revoke any trades in the
relevant currencies or commodities that you made during the 2 minutes before and after the critical news release.
3.5 Making deposits with your credit card
Our trading platforms allow you to deposit money for your transactions with your credit card, allowing you to lodge your
deposits at any time during FX and commodity trading hours, regardless of banking hours. This can be done directly through
the PROfit trading platform or iPhone application. If you are using our MT 4 trading platform, then all credit card transactions
must be done directly through our deposit site: https://deposit.forexct.com. Alternatively, if you want our Accounts
Department to make the credit card deposit on your behalf, then we will require you to complete our Credit Card Authorisation
form. Please contact us directly for a copy of this form to be sent to you. We use the latest technologies to provide a security
shield for your credit card and personal privacy.
3.6 Real time streaming quotes
Our trading platforms use the latest highly sophisticated technologies in order to offer you up-to-the-minute quotes. You may
check your accounts and positions in real time and you may do so 24 hours a day and make a trade based on real-time
information.
3.7 Full control over your account and positions
With us, you are able to control your costs and risks. We use the latest technologies in order to ensure your stop loss orders
are filled. We are committed to the principle that you should never lose more than you are prepared to lose.
3.8 Tailor-made conditions for frequent traders
The spreads on our trading platforms assume transactions of small, up to medium amounts. If you are a frequent user of our
trading platforms and wish to trade with medium up to large amounts, you can contact us by email or telephone to enable us
to provide you with tailor-made trading conditions.
3.9 Fixed Spreads
We quote fixed spreads during all market conditions to all of our clients types (be it beginner, professional or VIP). This
is in contrast to other providers who may vary spreads during news releases or during other market conditions.
However, we do retain the right to change your account type (which may increase your fixed spread) if you do not
satisfy the account type requirements. For example, if you open a professional account, but do not deposit the
minimum deposit amount of $5,000 then we retain the right to change your account to a beginner account.
Alternatively, if you open a beginner account and have satisfied the requirements of a professional account, then we
retain the right to upgrade your account type to professional. This will result in reduced fixed spreads.
We may amend or change the spreads we quote at any time at our discretion.
Risks may lead to unfavorable changes in the financial outcomes that you expect from use of our trading platforms in the
products we offer. Monitoring of any risks associated with the trading platforms is your responsibility.
4.1 Market Risk
We expect that FX transactions on our trading platforms may be used to manage foreign currency cash flows. However in
most cases we believe that FX transactions are entered into for speculative reasons. If you enter into a foreign exchange
transaction for a purpose other than the immediate exchange of a foreign currency, you will be directly exposed to changes in
the relevant foreign exchange market. These changes may result in losses to you.
4.2 Market Volatility
FX and commodity markets are subject to many influences which may result in rapid fluctuations in rates and prices and
reflect unforeseen events or changes in conditions. This results in market volatility. FX and commodity markets can be highly
volatile and are difficult to predict. Due to such volatility, no FX or commodity transaction available via ForexCT’s trading
platforms may be considered as risk free.
Given the potential levels of volatility in FX and commodity markets, it is recommended that you closely monitor your
transactions at all times.
You can eliminate some downside risk by the use of guaranteed stop loss orders (refer to section above entitled” Potential
Loss”). If you use a guaranteed stop loss order we will enter into a position opposite to your existing position if the exchange
rate or commodity price reaches a level specified by you in advance.
4.3 Counterparty Risk
Given you are dealing with us as a counterparty to every transaction, you will have an exposure to us in relation to each
transaction if we are not ready, willing or able to meet our obligations, for example, if ForexCT were to become insolvent. In
all cases, you are reliant on our ability to meet our obligations to you under the terms of each transaction. This is common to
all OTC products. This risk is described as counterparty risk. You can assess ForexCT’s financial ability to meet its counterparty
obligations by reviewing its financial statements. Should you wish to be provided with a copy of our most recent audited
Balance Sheet and Profit and Loss statement for your review then please request this information directly from us and we
will provide it free of charge.
We have been operating since 2006 and have an unblemished track record i.e. we have not been subject to any
disciplinary action by any regulatory body. We hold an Australian Financial Services (“AFS”) License (AFS License no.
306400).
In addition, we may choose to limit our exposure to our clients by entering into opposite transactions as principal in the
wholesale market i.e. implement hedge transactions. In such cases, ForexCT would then be exposed to the counterparty risk
to its hedging party.
4.4 Market Information
We may in the future make available to you a broad range of financial information generated internally or obtained from
agents, vendors or partners (“Third Party Providers”). This includes, but is not limited to, financial market data, quotes, news,
analyst opinions and research reports, graphs or data (“Market Information”).
Market Information provided by us by email or through our website (or Third Party websites) is not intended as advice and we
do not endorse or approve the Market Information. We make it available to you only as a service for your own convenience. We and any Third Party Providers do not guarantee the accuracy, timeliness, completeness or correct sequencing of the Market Information or warrant any results from your use or reliance on the Market Information.
Market Information may quickly become unreliable for various reasons including, for example, changes in market conditions or
economic circumstances. Neither us nor the Third Party Providers are obligated to update any information or opinions
contained in any Market Information and we may discontinue offering Market Information at any time without notice.
4.5 Systems Risks
We rely on technology to provide our trading platforms to you. A disruption to the facility may mean you are unable to trade
in FX and commodities when desired. Alternatively, an existing transaction may be aborted as a result of a technology failure.
An example of disruption includes the “crash” of the computer systems used to operate the trading platforms.
If we determine in our absolute discretion that you have entered into a transaction that takes advantage of internet
connectivity delays or price feed errors that have caused the prices displayed on our trading platforms to not accurately reflect
market rates, or we determine that transactions individually or together reasonably appear to rely on price latency arbitrage
opportunities, we may revoke those transactions without further liability to you and we may make any necessary or prudent
corrections or adjustments to your account that we deem necessary in our absolute discretion.
4.6 Use and Access to our Website
You are responsible for providing and maintaining the means by which you access our website. These may include, without
limitation, a personal computer, modem and telephone or other access system available to you.
While the internet and the World Wide Web are generally reliable, technical problems or other conditions may delay or prevent
you from accessing our website or trading platforms. If you are unable to access the internet and thus, our trading platforms,
it may mean you are unable to enter into new FX or commodity transactions or update/amend existing FX and commodity
transactions when desired and you may suffer a loss as a result. If you are unable to access the internet you may contact our
office during business hours and place an instruction to trade with one of our representatives.
Furthermore, in unforeseen and extreme situations, we reserve the right to suspend the operation of our website and trading
platforms or any part or sections of them. In such an event, we may, at our sole discretion (with or without notice), close out
your open positions at rates or prices we consider fair and reasonable.
We may impose trading volume limits on client’s accounts, at our sole discretion.
4.7 Margin Risks
If your losses from an open position are equal to the initial out lay of margin used to fund your account (see section 2.1), then
we will close out all of your positions. We are not obliged to contact you or to give you notice before we close out your
positions. You are solely responsible for monitoring any open positions you have and the level of account equity in your
trading account.
Market volatility or market losses that result in a decline in the market value of your transactions may require you to deposit
more funds into your account with us or close out your positions prior to the total loss bringing your account to zero. The
decision whether to top up your account to maintain the required margin or close out your positions at this point is your
decision. However, if the funds in your account fall below the required margin, we will immediately close out all of your
positions without reference or liability to you. For example, you deposit $50,000 into your account. You open 5 trades and 4 of
those trades cause you to reach a total unrealised loss of $60,000. The other open trade has an unreaslised profit of $10,000.
All your positions will be closed out because the running losses for all open positions are equal to the cash amount in your
account ($50,000). You can avoid this closing out by us by topping up the margin in your account (paying additional amounts into your account) prior to your Account Equity reaching zero dollars. This must be done in accordance with the requirements
that we would have already specified to you in this PDS or by subsequent communication.
4.8 Client Monies
Money paid to ForexCT in connection with a financial service or a product offered by us will be paid into an account
designated as a client trust account, with an Australian bank, no later than the next business day after it is received. Only
such money, interest and other money permitted by the Corporations Act will be paid into this account. The client money is
taken to be held in trust by ForexCT for the benefit of the client.
This means that client funds deposited with us are held in safe keeping and segregated from our own funds. Those funds are
not available to pay general creditors in the event of receivership or liquidation by ForexCT. Monies lodged or deposited with
us to meet margin requirements, are not treated as funds belonging to ForexCT but are treated as funds belonging to the
client.
However, for money deposited in our client trust accounts, you should be aware that individual client accounts are not
separated from each other and all clients’ funds are co-mingled into the one client trust account.
The client waives the right to any interest on funds deposited in our client trust account. All such interest will be retained by
and for the benefit of ForexCT and will not be available to clients. Money may also be invested from our client trust account in
accordance with the Corporations Act 2001. Any income generated from such investments will also be retained by and for the
benefit of ForexCT and will not be available to clients.
For money deposited in our client trust account, the client is required to acknowledge as part of our Terms and
Conditions that:
- Individual client accounts are not separated from each other;
- All clients’ funds are co-mingled into the one client trust account;
- The client money provisions in the Corporations Act 2001 may not insulate any individual client’s funds from a
default in our client trust account if such a default were to occur. Such a default may arise from any clients’
trading i.e. by a client failing to pay for all losses incurred on their account; and
- Assets in the client trust account belonging to non-defaulting clients are potentially at risk, even though they
did not cause the default. However, in the case of ForexCT, no default by any client is likely to occur on the basis
that we have implemented systems and procedures whereby the potential loss for any one client is limited to the
amount deposited into their account with us (refer Section 2.1 under the heading “Potential Loss” for additional
detail as to how ForexCT guarantees this). Thus, no client will be in a position where they incur a loss in excess of
the amount they have deposited with us and accordingly, no client can become a debtor to ForexCT and default on
the payment of that debt. Although generally assets in the client trust account belonging to non-defaulting clients
are potentially at risk, even though they did not cause the default, this is not the case with ForexCT.
Notwithstanding the above, client’s are still exposed to the risk that they may not receive all money owed to
them, if there is a deficiency in the client trust account, and ForexCT becomes insolvent or otherwise unable
to meet the deficiency. It is possible that the hedging counterparty used by ForexCT may become insolvent
and fail to return client money that ForexCT has lodged with them to meet its hedging obligations (refer
section 4.9 below).
ForexCT is entitled to withdraw, deduct or apply any amounts payable to ForexCT under the terms of this PDS or the
Terms and Conditions or the Corporations Act 2001. These amounts will generally only be debited from the client trust
account when a client closes their positions in loss.
Payments may be made out of or withdrawn from the client trust account in limited circumstances, including:
(a) payments in accordance with any written direction of the client including a direction included in the
Terms and Conditions to pay fees and other expenses relating to transactions and to settle
transactions and to otherwise execute client instructions;
(b) when a financial product is issued or transferred according to client instructions;
(c) to meet proper charges;
(d) to pay ForexCT money to which it is entitled;
(e) to return monies to the client;
(f) to make payments otherwise authorised by Law; and
(g) making certain investments authorised by the Corporations Act 2001 or Regulations (for example, an
investment on deposit at interest with an Australian authorised deposit taking institution).
We are also permitted to use money belonging to a client to meet the margin obligations of other clients and our own
positions. Thus, one client’s money deposited in the client trust account may be used to satisfy obligations arising from
dealing on behalf of another client (or ForexCT) which exposes each client to counterparty risk i.e. the risk that they
may not receive all of the money held by us on their behalf in the client trust account if there is a deficit in the client
trust account and we become insolvent or otherwise unable to pay the deficiency.
Please contact ForexCT if you have further questions about the client trust account.
4.9 Client Monies to which ForexCT is entitled
Where a client incurs a loss as a result of entering into a transaction in a product offered by ForexCT, then at the time that
loss is realised (i.e. when the open position is closed out) ForexCT is entitled to the amount of funds held in the client trust
account equivalent to the value of the loss.
Following is a description of the timing of cash flows during a typical transaction and when the funds are held as client money
and when the funds cease to be held as client money (note this is a simplified example and disregards any fees or charges
which may apply):
Day 1:
(i) Client A opens an account and deposits US$10,000.
(ii) ForexCT deposits the US$10,000 in its client trust account.
(iii) The balance of the client trust account is US$10,000.
Day 2:
(i) Client A decides to buy Gold contracts with a total quantity of 50 ounces. Our quote is
1450.10/1450.70. The value of a movement from 1450.10 to 1451.10 is US$50 (50 ounces * 1
dollar).
(ii) Client A opens a transaction, say buy 50 ounces at a price of $1450.70 per ounce. This
represents a notional value of US$72,535 (being: buy price (US$1,450.70) x 50 (number of
ounces)). Let’s say the margin obligation is the equivalent of $362.67 (US$72,535/200).
(iii) As counterparty to the transaction, ForexCT sells 50 ounces to Client A at a price of
US$1450.70.
ForexCT does not always hedge its exposure. However, where the transaction is in excess of a certain amount (that
is determined by ForexCT at its discretion) it is hedged with a hedging counterparty. In circumstances where it is
considered appropriate to hedge, ForexCT enters into on a transaction with a hedging counterparty. However, even
where ForexCT does hedge its exposure to clients, it does not use money held in the client trust account to meet its
own obligations. This is an added protection to client monies.
In this example, whether ForexCT hedges the risk or not, Client A’s $10,000 will remain in the client trust account.
Days 3 to 5:
(i) Client A continues to hold an open position;
(ii) The underlying price of gold has decreased and our quote is 1410.20/1410.80 on Day 5.
(iii) The notional value of Client A’s open positions is now US$70,510 (being: sell price
(US$1410.20) x 50 (number of ounces)). Thus, Client A’s margin obligation has increased by
US$2,025 (being the unrealised loss on the open positions namely, US$72,535 less US$70,510
= US$2,025).
Day 6:
(i) The underlying price of gold has decreased further and our quote is now 1400.20/1400.80.
(ii) Client A enters into a transaction to close the open positions (by selling 50 ounces to ForexCT at
a price of US$1400.20) and realises a loss of US$2,525 (as Client A had originally bought at a
price of US$1450.70 i.e. US$1450.70 less sale price of US$1400.20 equals US$50.50 per ounce
* 50 ounces resulting in a loss of $ US$2,525).
Client A’s account would be debited with the US$2,525 loss reducing the account balance to US$7,475.
ForexCT has made a profit of US$2,525 (as it had sold to Client A at US$1450.70 and bought from Client A at
US$1400.20).
At this point, ForexCT is entitled to the US$2,525 which Client A has lost. This amount would still be held in the
client trust account but would be money to which ForexCT is entitled i.e. it would no longer constitute client money
but it would be money belonging to ForexCT. ForexCT is then entitled to withdraw the money from the client trust
account. The current balance of the client trust account is $10,000 of which Client A is entitled to US$7,475 and
ForexCT is entitled to US$2,525.
Day 7:
(i) Client A notifies ForexCT it wishes to close its account. The balance of the account would be
US$7,475 (being the original deposit of $10,000 less the loss of US$2,525).
(ii) ForexCT transfers US$7,475 to Client A form the client trust account.
5 ENTERING INTO AN FX COMMODITY TRANSACTION
5.1 Engaging in a Transaction
In order to use our trading platforms and engage in a transaction, you must do the following:
1. Read this PDS and our Financial Service Guide
2. Read, acknowledge and accept the Terms and Conditions contained on our website at www.forexct.com.au
3. Set up an account with us in accordance with the steps set out on our website at www.forexct.com.au
4. Commence entering into contracts with us using ForexCT’s platform.
5.2 Prohibition on Scalping
We prohibit the practice referred to as “Scalping” on our trading platform. We consider scalping to have occurred if a client
opens a position and then closes that position within a 2 minutes timeframe. We consider this practice an illegal use of our
trading platforms and reserve the right to revoke any transaction at your cost if we determine, in our absolute discretion, that
a transaction constituted scalping. If a client has a losing trade, then the system will allow them to close the trade at a loss
within the two minute timeframe to enable the client to avoid incurring further losses. We do not regard this as sclaping.
6.1 Confidentiality of login details
You, the account holder and/or the Authorised Person on your trading account must keep all security information relating to
your account confidential. You are responsible for all orders and instructions and for the accuracy of all information sent
electronically using the login details that have been linked to your trading account. If you are aware or suspect that your
username or password has been compromised and is no longer confidential, then you should contact us immediately (please
refer to our contact details on page 2 of this PDS).
6.2 Account statements
All past trading history is accessible from the trading platforms. However, if you require a printed account statement, which
shows your past trades, all cash movements and your profit or loss, then please contact our accounts department and we will
send this to you free of charge.
6.3 Promotions
On occasion, we run promotions as an incentive to register, deposit funds or trade on our trading platforms. These promotions
are all subject to specific terms and conditions. Generally these terms and conditions are on our website or are communicated
to you via email, telephone or in person. If you have any queries regarding any of our promotions, then we advise you to
contact us directly.
7 TERMINATING AN FX AND COMMODITY TRANSACTION
An FX and commodity transaction may be terminated by agreement between you and us. A transaction will also be terminated
if:
- You terminate it by providing instructions to that effect;
- The stop loss or take profit you predefined has been reached;
- A force majeure event or other event which prevents the performance of the transaction occurs; or
- If the account equity reaches zero dollars, all open trades are automatically closed by the system.
8.1 Notifications
You will automatically receive notification by pop-up message when you execute the following actions:
- Opening a trade
- Closing a trade
- Changing the stop loss
- Changing the take profit
- Depositing funds
- Placing an order
- Execution of the pre-defined order
Trading in FX and commodity transactions may have tax implications. These can be complex and are invariably specific to your
circumstances. Therefore, you should discuss any taxation issues with your tax adviser before entering a transaction.
ForexCT has an internal dispute resolution process in place with the aim to resolve any complaints or concerns you may have,
swiftly and fairly. Any complaints or concerns should be directed to the complaints officer (by telephone, facsimile, or letter) at
the address and telephone/fax numbers provided in Section 1 of this PDS or by email to complaints@forexct.com.
ForexCT will firstly acknowledge receipt of written complaints within 5 business days, and aim to resolve and respond to
complaints within 30 business days of receipt. We will investigate your complaint, and provide you with our decision, and the
reasons on which it is based, in writing.
Should you be dissatisfied with the outcome, you have the right to lodge a complaint with the Financial Ombudsman Service
Ltd (contact details below), an approved external dispute resolution scheme, of which ForexCT is a member. You may also
make a complaint via the ASIC free call Infoline on 1300 300 630.
Financial Ombudsman Service Ltd
GPO Box 3
Melbourne VIC 3001
Toll free: 1300 78 08 08
Facsimile: +613 9613 6399
Website: www.fos.org.au
Email: info@fos.org.au
11.1 Collection of personal information
We collect personal information (including customers' full names, addresses and contact details) so that we may administer
the trading account and our customer relationships and provide customers with the products and services they request from
us as well as information on the ForexCT Group's ("the Group") products and services.
Where necessary, we also collect information on individuals such as company directors and officers (where the company is our
customer), as well as customers' agents and persons dealing with us on a "one-off" basis.
The law also requires us to collect personal information, e.g. the Anti-Money Laundering and Counter-Terrorism Financing Act
2006, requires us to identify and verify persons who open or operate accounts. We may take steps to verify the information
collected, e.g. a birth certificate provided as identification may be verified with records held by the Registry of Births, Deaths
and Marriages to protect against impersonation, or we may verify with an employer that employment and remuneration
information provided in an application for credit is accurate. Your identification may also be verified electronically by ForexCT
via third parties. From time to time we may request additional identification documentation from you. If you do not comply
with our requests for such information, then we reserve the right to restrict or suspend your access to our trading platforms.
11.2 You must provide us with accurate and relevant information
If you provide us with incomplete or inaccurate information, we may not be able to provide you with the products or services
you are seeking. We rely on the information you provide to us, by giving such information you warrant that the information is
true and correct. If information we received from you is not true and correct then we reserve the right to restrict or suspend
access to your account or cancel any trades previously made by you. If the information provided by you in our account
information form has changed (i.e. change of name, address etc), then you must inform us of this change as soon as
practically possible.
11.3 Other disclosures
Personal information may be disclosed to:
- Other members of the Group for the purpose of providing services to you or for the purpose of providing you with
information about those services;
- brokers and agents who refer your business to us;
- any person acting on your behalf, including your financial adviser, solicitor or accountant, executor, administrator,
trustee, guardian or attorney;
- other financial product providers to which your investment might be transferred; and
- organisations, including overseas organisations, to whom we outsource certain functions.
Personal information may only be used by our agents, contractors and outsourced service providers for the purposes set out
in this PDS.
We may also disclose personal information to other financial institutions and organisations at their request if you seek credit
from them.
We may be allowed or obliged to disclose information by law, e.g. under court orders or statutory notices pursuant to taxation
or social security laws.
By using our trading platforms you confirm that you consent to the use and disclosure of your personal information, as set out
in this PDS.