Important Information about Trading Contracts for Difference (CFDs)

This summary does not cover all the risks and significant aspects of trading Contracts for Difference ("CFD"). Given the risks, you should only engage in these transactions if you fully understand the nature of CFDs, the contractual relationships involved, and the extent of your exposure to risk. Trading CFDs may not be suitable for many people. Carefully consider whether trading CFDs aligns with your experience, objectives, financial resources, and other relevant circumstances. It's your responsibility to maintain sufficient margin in your account to sustain your positions, and CERMAK LLC does not make margin calls to clients. Ensure you understand the order entry software ("OMS") used in your trading account. CERMAK LLC advises you to be aware of the following when considering CFD trading:

Leveraged CFD Trading

1. Effect of Leverage or Gearing:

All trading transactions, particularly those involving complex instruments like CFDs, carry a high degree of risk. The initial margin amount is small relative to the contract value, making the transactions "leveraged" or "geared". Small market movements can have a larger proportional impact on the funds you have deposited or will need to deposit; this can work both in your favor and against you. You may lose all your initial margin funds and any additional funds deposited to maintain your position. If the market moves against your position or margin levels increase, you may need to deposit substantial additional funds on short notice. Failure to do so may result in your position being liquidated at a loss, and you will be liable for any resulting account deficit.

2. Risk-Reducing Orders or Strategies:

Placing certain orders (e.g., "stop-loss" or "stop-limit" orders) intended to limit losses may not be effective due to market conditions that make it impossible to execute such orders. Sometimes, it may be difficult or impossible to liquidate a position without substantial losses. Strategies using position combinations, such as "spread" and "straddle" positions, may be as risky as taking simple "long" or "short" positions.

3. Suspension or Restriction of Trading and Pricing Relationships:

Market conditions (e.g., illiquidity) and certain market rules (e.g., trading suspension due to price limits, government intervention, or other factors beyond the counterparty’s control, such as communication failures) can increase the risk of loss by making it difficult or impossible to effect transactions or liquidate/offset positions. CERMAK LLC does not accept liability for losses in these instances.

4. Deposited Cash and Property:

Understand the protections for money or other property deposited for trading CFDs, especially in the event of your counterparty’s insolvency or bankruptcy. Recovery of your money or property may be governed by specific legislation or local rules. In some jurisdictions, property identifiable as your own will be pro-rated like cash for distribution in case of a shortfall.

5. Commission and Other Charges:

Before starting to trade, obtain a clear explanation of all commissions, fees, markups, markdowns, and other charges you will be responsible for. These charges will affect your net profit (if any) or increase your loss.

6. Price Risks:

The profit or loss in CFD transactions is influenced by price fluctuations, and market volatility can significantly increase both profits and the substantial risk of loss.

7. Principal’s Market:

CFDs are traded in the over-the-counter ("OTC") dealer market and not on a regulated contract market. CERMAK LLC is a broker for CFDs and forwards your orders to a counterparty for execution. Thus, you will transact at prices established by CERMAK LLC’s counterparty. Despite computer-based systems assisting CERMAK LLC’s quotations and prices, they may vary due to market liquidity and might not be as favorable as those from other dealers. CERMAK LLC’s trading facilities are supported by computer-based systems for order-routing, execution, or trade matching, which are vulnerable to temporary disruption or failure. Your ability to recover certain losses is subject to liability limits in CERMAK LLC’s Client Agreement and the Online Services and Electronic Trading Agreement, as well as the agreements of other dealers, banks, or financial institutions that may act as your counterparty.

8. Electronic Trading:

Trading on an electronic system differs from open outcry markets and other electronic systems. When trading on an electronic system, you face risks such as latency and hardware/software failures. These failures might result in your order not being executed according to your instructions or not being executed at all.

9. Off-Exchange Transactions in CFDs:

Firms are not restricted from effecting off-exchange (OTC) transactions. CERMAK LLC acts as your broker rather than a direct counterparty to these transactions. It may be challenging or impossible to liquidate an existing position, assess value, determine a fair price, or assess the risk exposure of a CFD position. Therefore, CFD transactions may involve increased risks. Before engaging in CFD transactions, familiarize yourself with the applicable rules, attendant risks, and the policies, procedures, and agreements related to trading in OTC CFD instruments.