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  • Risks

    • BC-8.8.4

      Conventional bank licensees must disclose adequate information to all classes of customers about risks underlying the financial instrument that are not readily apparent and which relate to the regulated banking service being provided.

      Added: April 2008

    • BC-8.8.5

      Without prejudice to the scope of the requirement under Rule BC-8.8.2(c), conventional bank licensees must provide retail customers with appropriate guidance on, and warnings of, relevant risks when providing regulated banking services, in relation to:

      (a) Transactions in illiquid financial instruments;
      (b) Leveraged transactions, including asset portfolios or collective investment schemes that have embedded leverage;
      (c) Financial instruments subject to high volatility in normal market conditions;
      (d) Securities repurchase agreements or securities lending agreements;
      (e) Transactions which involve credit, margin payments, or deposit of collateral;
      (f) Transactions involving material foreign exchange risk;
      (g) Interests in real estate; and/or
      (h) Islamic financial instruments.
      Amended: January 2011
      Added: April 2008

    • BC-8.8.6

      In relation to transactions involving warrants or derivatives, conventional bank licensees must provide retail customers with a written statement that includes explanations of their characteristics, in particular their leverage effect, liquidity and price volatility.

      Added: April 2008

    • BC-8.8.7

      To satisfy Rule BC-8.8.6, with respect to warrants, conventional bank licensees should provide retail customers with a statement that includes, at a minimum, the information contained in Paragraph BC-8.13.3.

      Added: April 2008

    • BC-8.8.8

      To satisfy Rule BC-8.8.6, with respect to futures contracts, conventional bank licensees should provide retail customers with a statement that includes, at a minimum, the information contained in Paragraph BC-8.13.4.

      Added: April 2008

    • BC-8.8.9

      To satisfy Rule BC-8.8.6, with respect to option transactions, conventional bank licensees should provide retail customers with a statement that includes, at a minimum, the information contained in Paragraphs BC-8.13.5 and BC-8.13.6.

      Added: April 2008

    • BC-8.8.10

      In relation to a transaction in a financial instrument that is not readily realisable, conventional bank licensees must:

      (a) Warn the retail customer that there is a restricted market for such financial instruments, and that it may therefore be difficult to deal in the financial instrument or to obtain reliable information about its value; and
      (b) Disclose any position knowingly held by the conventional bank licensee or any of its associates in the financial instrument or in a related financial instrument.

      Added: April 2008

    • BC-8.8.11

      The risk warning given to a retail customer or potential retail customer must be given due prominence in all related materials and must not be concealed or masked in any way by the wording, design or format of the information provided.

      Added: April 2008

    • BC-8.8.12

      Risk warnings provided to a retail customer or potential retail customer about warrants or derivatives must make clear that the instrument can be subject to sudden and sharp falls in value. Where the retail customer may not only lose his entire investment but may also be required to pay more later, he must also be warned about this fact and the possible obligation to provide extra funding.

      Added: April 2008