RISK DISCLOSURE ON OTC CFD TRANSACTIONS

1. HIGH RISK OF OTC CFD TRADING

1.1 OTC CFD Trading is highly speculative and is suitable only for those who (i) understand and are willing to assume the economic, legal and other risks involved, and (ii) are financially able to assume losses significantly in excess of margin or deposits.

1.2 Foreign currency prices are highly volatile. Price movements of foreign currencies are influenced by various factors, including but not limited to interest rates, changes in balance of payments and trade, domestic and international rates of inflation, international trade restrictions and currency devaluations and revaluations. For example, there can be serious market disruptions if economic or political events locally or overseas affect the market. It is not possible to foresee all risks in advance.

1.3 Client represents, warrants and agrees that he understands these risks and is willing and able, financially and otherwise, to assume the risks of foreign exchange trading and that the loss of your entire Account balance will not change your life style. Client recognizes that guarantees of profit or freedom from loss are impossible of performance in OTC CFD trading. Client acknowledges that he has received no such guarantees from Basel Financial Inc. or from any of its representatives or any introducing agent or other entity with whom you are conducting your Basel Financial Inc. account and have not entered into this client trading agreement in consideration of or in reliance upon any such guarantees or similar representations.

2. RISK OF RAPID AND TOTAL LOSSES AS A RESULT OF LOW MARGIN/HIGH LEVERAGE

 2.1 The high leverage and low margin associated with OTC CFD may result in significant losses due to
 price changes in OTC CFD. A relatively small market movement will have an above average impact on the funds that you have deposited or will have to deposit; this may work against as well as for the Client. Client may sustain a total loss of initial margin funds and any additional funds deposited with Basel Financial Inc. to maintain their position.

2.2 If the market moves against Client’s position or if margin levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your position. If Client fails to comply with a request for additional funds in due time, his account may be liquidated at a loss and Client will be liable for any resulting deficit.

3. ABSENCE OF REGULATORY AND FINANCIAL PROTECTION

3.1 When trading OTC CFD with Basel Financial Inc. Basel Financial Inc. acts as dealer, trader etc. in a private contract with Client. Basel Financial Inc. may, in turn, enter into “back-to-back” transactions with other dealers, traders, etc. including its affiliates. Prices quoted to the Client by Basel Financial Inc. include a price margin. Basel Financial Inc. does not execute OTC CFD transactions on an exchange and transactions are not cleared by a central clearing organization. Therefore, any transaction with Basel Financial Inc. will be solely a private obligation of Basel Financial Inc. and not an obligation of a clearinghouse. As a result, the Client does not benefit from the regulatory and financial protections that exist for transactions traded on an exchange.

3.2 All obligations of the Client and Basel Financial Inc. with respect to CFD trades are based on the terms as set out in (i) the Basel Financial Inc. Client Trading Agreement including the General Terms and Conditions and Risk Disclosure Statement, and (ii) the confirmation of the dealing desk which applies to the individual transaction only. Client’s obligations from the transaction may not be transferred to a third party, unless with the written express consent of Basel Financial Inc.

3.3 Basel Financial Inc. reserves the right, without obligation, and with good reason to terminate or close out any transaction prior to its expiration date at any time. At its discretion, Basel Financial Inc. is free to quote a price for an early close of a transaction upon request of the Client.

4. CLIENT’S SOLE AND FULL RESPONSIBILITY FOR HIS TRADING DECISIONS

4.1 Basel Financial Inc. acts solely in the capacity of an arm’s length contractual counterparty to the Client with respect to OTC CFD transactions. Basel Financial Inc. does not offer or assume the function of the Client’s financial adviser or fiduciary. Transaction proposals, suggested hedging strategies or other written materials or oral communications from Basel Financial Inc. are not to be understood as investment recommendations or advice or as expressing Basel Financial Inc.’s view as to whether a particular transaction is suitable for the Client or meets his financial objectives. Basel Financial Inc. accepts no responsibility arising out of any trading decisions.

4.2 In addition, any market or quote that Basel Financial Inc. makes for the Client may be based solely on markets or quotes that are made or quoted to Basel Financial Inc. by the counterparties with which it does business. Such quotes or markets may not represent the best quotes or markets available to the Client or Basel Financial Inc. from other sources and Basel Financial Inc. undertakes no obligation to obtain competitive quotes or markets from other counterparties.

4.3 Basel Financial Inc. and its affiliates may from time to time have substantial positions in, and may make a market in or otherwise buy or sell instruments similar or economically related to, OTC CFD transactions entered into with the Client. Basel Financial Inc. and its affiliates may also carry out proprietary trading activities, including hedging transactions related to the initiation or termination of a foreign currency transaction with you that may adversely affect the market price or other factors underlying the foreign currency transaction entered into with you and consequently, the value of such transaction.

4.4 Basel Financial Inc., its personnel and affiliates and various other parties may execute orders at the same or better prices ahead of a Client order.

5. OFF-EXCHANGE TRANSACTION AND LIMITED LIQUIDITY

5.1 Basel Financial Inc. does not occur on a regulated exchange and 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. As a result, transactions involve additional risks. Off exchange transactions may be less regulated or subject to a separate regulatory regime.

5.2 Before undertaking OTC transactions, the Client should familiarize himself with applicable rules and attendant risks (see Risk Disclosure).

5.3 Transactions on markets in other jurisdictions, including markets formally linked to a domestic market, may increase the risk. Such markets may be subject to regulation, which may offer different or diminished investor protection. Before commencing trading, you should enquire about any rules relevant to particular transactions. The local regulatory authority will be unable to compel the enforcement of the rules of regulatory authorities or markets in other jurisdictions where Client’s transactions have been effected. The Client 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.

6. YOUR OBLIGATIONS AND RISKS IN SPOT AND FORWARD TRANSACTIONS

6.1 From time to time the Client will be responsible to meet the obligations, in accordance with the terms of the Client Trading Agreement, arising under a foreign currency spot or forward transaction. These transactions may be used to establish long or short positions in the market.

6.2 A spot transaction is a cash market transaction to buy or sell a specific quantity of currency immediately. Physical settlement will be required in a maximum of two (2) days.

6.3 The OTC CFD market is (i) unregulated; (ii) there are no limitations on daily price movements (unless imposed by a government or central bank authority), (iii) no rules to regulate valuation or settlement procedures, and (iv) no minimum financial requirements for market participants.

6.4 On the defined settlement dates for spot and forward transactions may be obligated to pay Basel Financial Inc. or receive payment through either the physical delivery of currency or cash settlement. The means of settlement are governed by the terms of the specified transaction.

7. DEPOSIT OF CLIENT’S FUNDS IN FOREIGN BANKS

7.1 Basel Financial Inc. is entitled to hold Client’s funds in accounts denominated in a foreign currency with depositories located outside of Mauritius if (i) Client is domiciled in a foreign country or (ii) if the funds are held in connection with positions priced and settled in a foreign currency.

7.2 Such accounts are subject to the risk that events could occur which would hinder or prevent the availability of these funds for distribution to Client. Such accounts may also be subject to foreign currency exchange rate risks.

8. ELECTRONIC TRADING

8.1 OTC CFD is generally completed through Basel Financial Inc.’s Internet trading platform. Trading on an electronic trading system differs from trading in the open outcry market. 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.

8.2 Basel Financial Inc.'s automated order entry system provides immediate transmission of Client's irrevocable instruction once Client enters the notional amount and clicks “Buy/Sell.” There is no “second look” at transmission, and market orders cannot be cancelled. 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.

8.3 The Basel Financial Inc. Automated System serves to place orders for transactions in OTC CFD and to access other account services and products provided by Basel Financial Inc. Client acknowledges and understands that the use of Automated Systems entails risks, including, but not limited to, interruption of service, system or communications failure, delays in service, and errors in the design or functioning of such Automated Systems (collectively, a “System Failure”) that could cause substantial damage, expense or liability to the Client. Basel Financial Inc. makes no representation or warranty of any kind, express or implied, with respect to the selection, design, functionality, operation, title or non- infringement of any automated system, and makes no express or implied warranty of merchantability or fitness for a particular purpose, title and/or non- infringement, and specifically disclaims any implied warranty with respect thereto. Without limiting the foregoing, Basel Financial Inc. expressly disclaims any representation that any automated system will operate uninterrupted or be error-free.

8.4 Basel Financial Inc. has no responsibility to inform Client of (i) any decision to use, not use or cease using any Automated System, (ii) the characteristics, functions, design or purpose of any Automated System, or (iii) any specific risks inherent in any Automated System.

9. COMMISSIONS AND OTHER CHARGES

Before trading, Client will obtain a clear explanation of all commissions, fees and other charges for which the Client will be liable. These charges reduce your net profit (if any) and/or increase your loss.

10. ACCESS AND SECURITY

10.1 The Automated Systems may be used to transmit, receive and confirm execution of orders, subject to prevailing market conditions and applicable rules and regulations.

10.2 Basel Financial Inc. consents to grant to the Client the access and the use of the Automated Systems, provided that the Client adopts the required procedures to prevent unauthorized access to and use of the Automated Systems.

10.3 The Client accepts full responsibility for all trades executed through the Automated System, including the risk of financial liability for trades executed by unauthorized third parties.

10.4 The Client is responsible for monitoring of his Account(s). The Client shall immediately notify Basel Financial Inc. in writing if he becomes aware of any of the following: a) any loss, theft or unauthorized use of your password; b) any failure by you to receive a message stating that an order was received and/or executed; c) any failure to receive an accurate confirmation of an order execution; d) any receipt of confirmation of an order and/or execution not placed by the Client; e) any inaccurate information in the Account balances, positions or transaction history.