Risk Disclosure Statement of OTC Securities and Structured Products Trading

Risk Disclosure Statement of OTC Securities and Structured Products Trading


Before you invest, you should carefully read the Risk Disclosure Statement of OTC Securities and Structured Products Trading (the “Risk Disclosure Statement”) provided by Tiger Brokers (NZ) Limited (“Tiger Brokers”).

Tiger Brokers accepts orders to trade certain symbols from OTC Markets [1] (the “OTC Securities”) and allows some of its clients to trade structured products. The Risk Disclosure Statement is to provide relevant information concerning the OTC Securities and structured products trading and assist you in making an informed assessment of the risks and uncertainties associated. In light of these risks, you should undertake such transactions only if you understand nature of the transactions and the extent of your risk exposure. Not all clients are suitable for OTC Securities and structured products trading; therefore, you should carefully consider whether it is appropriate in the light of your experience, objectives, financial resources, risk tolerance, and other relevant factors. You should carefully read the terms and conditions of OTC Securities and structured products and any rules associated and relevant responsibilities before you decide to invest. If in any doubt, you should seek professional advice. It would be best if you also read the other risk disclosure statements concerning stock and derivatives trading.


1.     About OTC Securities

Tiger Brokers enables its clients to trade certain OTC Securities. Not all OTC Securities are available to trade. Before you invest, you should determine whether a symbol is available as it may influence your investment objectives.

Investment in OTC Securities is speculative and involves a high degree of risk, this is because some OTC Securities are not subject to financial reporting standards or disclosure requirements. Additionally, reliable information regarding issuers of OTC Securities, their prospects, and risks associated with the business of any particular issuer or an investment in the issuer's stocks may not be available. As a result, it may not be easy to value an investment in OTC securities properly.

OTC Securities are suitable for professional and sophisticated investors with a high risk-tolerance for trading stocks which have limited information available and limited regulatory oversight. Some OTC Securities are typically penny stocks, low-priced shares of small companies or shell companies, shares of distressed companies not willing or able to disclose information, delisted symbols, or foreign equity issues unqualified to list on New York Stock Exchange or Nasdaq.

By trading in OTC securities, you accept the risk that you may lose all or part of your initial investment amount. Given that OTC Securities disclosure requirements are less stringent, OTC Securities are frequent targets of market manipulation. Some market participants may dominate the market and set prices that are not based on competitive forces. Some market participants may create fraudulent markets and control the sudden sharp increase or collapse in share price.


2.     About Structured Products

A structured product is an unsecured obligation that generally takes the form of notes issued by the respective issuer (structured notes), but can also be certificates of deposit (structured CDs), as well as derivatives such as warrants, or the combination of any of the above products. In general, the return on a structured product is linked to the performance of its underlying asset—which is typically an investable asset (e.g.: stock) or market index.

Structured products often provide features designed to enhance the return and/or reduce the market risk of the exposure to the underlying asset when compared to a direct investment in the underlying asset.


3.     Market Liquidity

Many OTC Securities are relatively illiquid, which makes them difficult for investors to buy or sell without dramatically affecting the quoted price. Fewer market participants can lead to less liquidity and more volatile price fluctuations. In some cases, the liquidation of a position in OTC Securities may not be possible within a reasonable period of time. You may find it hard selling OTC Securities with little or no value in the open market.

For structured products, unless the relevant offering documents specifically state otherwise, they are generally not listed on any exchange, which means they are not readily tradable. The issuers of the structured products are not obligated to provide a liquid secondary market, and you may not be able to sell your investment.


4.     Counterparty Risk

The presence of counterparty risk should be considered when assessing OTC transactions. OTC Securities are unlike exchange traded securities, to the extent that the participants in such markets are typically not subject to the same level of credit requirement and regulatory oversight as are members of the regular “exchange based” markets. This may expose you to the risk of counterparty(ies) not fulfilling the relevant settlement obligations in accordance with the terms and conditions of the transaction. Possible reasons for such failures may include, but are not limited to, a dispute over the terms of the transaction or a credit / liquidity problem of the counterparty(ies). Counterparty risk may be accentuated for transactions where the settlement date is further away from the execution date and/or upon any event that may incentivize the counterparty(ies) to default or jeopardize the ability to fulfill the relevant settlement obligation.


5.     Trading Commission and Fees

As a brokerage firm, Tiger Brokers does not solicit or recommend transactions in OTC Securities and structured products. Because accounts with Tiger Brokers are self-directed, please perform your own ‘due diligence’ before investing in any products. In all OTC Securities transactions, the commissions charged is published on the Tiger Brokers’ official website; as for structured products, you may consult our customer service team for detailed information of the commissions and/or fees charged.


6.     Trading Hours and Trading Unit

You can only trade OTC Securities during regular trading hours that last from 9:30 AM to 16:00 PM US Eastern Standard Time. Pre-market and extended trading are not available. On a half trading day, the trading hours will last from 9:30 AM to 14:00 PM US Eastern Standard Time.

The minimum trading unit of OTC Securities is 1 share. You may place at tick size of US$ 0.01. Margin trading and short selling are available for some OTC Securities, and such availability may be modified by Tiger Brokers from time to time without prior notice.

For structured products, the trading hours are listed as follows and may subject to changes from time to time without prior notice, depending on the issuers’ and any relevant parties' requirements:

Structured products with underlying assets in HK market

9:00 AM (HK time) – 16:00 PM (HK time)

Structured products with underlying assets in US market

9:00 AM (HK time) – 18:00 PM (HK time)

The number of underlying assets delivered/sold at or prior to maturity of the structured products may differ from each other and are also determined by the issuers and any relevant parties. Investors could refer to detailed information prescribed on the offering documents and/or fact sheets.


7.     Available Order Types and Limitation

You should note that due to the volatile nature of OTC Securities, currently you may only place limit price orders and stop-loss limit orders when trading OTC Securities, and the available order types may be updated from time to time without prior notice to you. You must understand that your order may be delayed due to large order volume.

For structured products, the order will be placed based on parameters chosen by investors with reference to previous closing price of the underlying assets. Tiger Brokers may also set up upper and/or lower limit of the investment amount for investors regarding any specific structured products.


8.     Market Quotation and Additional Fees

By trading in OTC securities, you accept that real-time quotations for OTC Securities is not available. The market price displayed is the market price 15 minutes before. For some OTC Securities, additional fees may be charged to your account due to transfer and custody issues.

The quotations for structured products displayed on Tiger Brokers’ trading platform are provided by the issuer and may subject to break-off, delay, incorrectness, omission or other factors during the data transmission. The issuer may update the quotations at any time and orders placed previously may be cancelled due to the updated quotations.


9.     Credit & Issuer Risk

Since the structured product is not backed by any collateral, any payment on them, including coupon/interests payment and repayment of principal, depends solely on the ability of the issuer to pay. If the issuer defaults, is bankrupt or is otherwise unable to pay its obligations as they come due, you may lose some or all of your investment in the structured product. Tiger Brokers is not obliged to claim the losses for the investors resulting from the issuer’s default/bankruptcy, although it may choose to provide certain assistance, and investors shall be fully aware of and accept the credit and issuer risks before investing in any structured products.


10.  Interest rate risk

Generally, as market interest rates rise, the value of the structured product will tend to decline. Conversely, as market interest rates fall, the value of the structured product will tend to rise. However, this relationship may not always apply, and may have no bearing on some structured products. You shall consult your financial advisers on how changes in interest rates may impact the value of a particular structured product before maturity.


11.  Foreign exchange risk

You should be aware that your transactions may be influenced by foreign exchange rates. The profit and loss in transactions denominated or settled in a different currency from the currency you carry on your ordinary business or keep your accounts will be affected by fluctuations in currency rates, whether such transactions are effected in your home jurisdiction or a foreign jurisdiction. The bid-ask spread of a currency conversion may influence as there is a need to convert from one currency to another.


12.  Reinvestment risk

If a structured product is called or terminated prior to maturity, the payment you receive will depend upon the stated terms of the investment. If a structured product is called or terminated, you may not be able to reinvest the proceeds of the investment in a similar investment with similar risk and return characteristics. You should carefully evaluate this reinvestment risk before you make an investment in a structured product with a call feature.


13.  Leverage risk

Some structured products may embed leverage for investors with higher risk appetite to magnify return potentials. However, investors should be aware that leverage magnifies the impact of both the potential positive and negative performance of the underlying assets, resulting in increased sensitivity to the market risk of the underlying assets both at and prior to maturity. And the investors may lose a substantial portion or all of their initial investment on an accelerated basis due to the leverage.

This Risk Disclosure Statement is for reference purposes only and is neither an offer nor a solicitation to purchase or sell any financial product or service. None of the information provided in this Risk Disclosure Statement constitutes a recommendation that any product or service is suitable for any person. This Risk Disclosure Statement does not purport to disclose or discuss all of the risks and other significant aspects of any transaction. In light of the risks, you should undertake such transactions only if you understand the nature of the above financial products, the contracts that you are entering into, and the extent of your exposure to risk. You should therefore consult with your own legal, tax, and financial advisers before entering into any particular transaction.


This Risk Disclosure Statement is written in English and Chinese languages. In the event of any discrepancy or inconsistency, the English version shall prevail.



[1] https://www.otcmarkets.com/