Derivative (Saudi Share Swap) Risk Closure

This is a risk warning notice of USI Capital, the brokerage trading name of Universal Securities and Investments Ltd.

This notice is provided to you in compliance with FSA requirements because you are proposing to undertake dealings in financial instruments in the form of Saudi Equity Swap Trades (SSST) with a firm which is carrying on regulated investment business. This notice cannot and does not disclose or explain all of the risks and other significant aspects involved in dealing in such a product.

Universal Securities and Investments Ltd is prohibited under FSA requirements from providing you with investment advice relating to investments or possible transactions in investments or from making investment recommendations of any kind. We can give you factual market information or information, in relation to a transaction about which you have enquired, as to transaction procedures, potential risks involved and how those risks may be minimised.

Engaging in SSST (in this notice referred to as “Transaction”) carries a high risk to your capital. You should not engage in this form of investing unless you understand the nature of the Transaction you are entering with and the true extent of your exposure to the risk of loss. Your profit and loss will vary according to the extent of the fluctuations in the price of the underlying instrument.

For many members of the public, these Transactions are not suitable. You should, therefore, consider carefully whether they are suitable for you in the light of your circumstances and financial resources and investment objectives. In considering whether to engage in this form of investing, you should be aware of the following:

  1. The term of the investment is valid for up to four years from the time USI signed the swap agreement with its Saudi based Authorised Person. Such an agreement is renewable.
  2. All trades are settled in cash (fully pre-funded where no margin trading or credit facilities are allowed).
  3. The shares held by the ultimate beneficiary owner do not carry any voting rights.
  4. The underlying shares will be held under the name of an approved Authorised Person (a Saudi Arabian based financial institution) for the account of USI on behalf of its clients and who will retain silent voting rights.
  5. The shares are held with the Saudi Stock Exchange (the Tadawul), who’s share price will be denominated in Saudi Riyals. So, there will be foreign exchange fluctuations to consider.
  6. Under certain trading conditions, it may be difficult or impossible to liquidate a position. This may occur, for example, at times of rapid price movement if the price rises or falls in one trading session to such an extent that trading is restricted or suspended. Placing a stop-loss order will not necessarily limit your losses to the intended amounts because market conditions may make it impossible to execute such as order at the stipulated price.
  7. The Transaction does not provide any right to the underlying instrument or to any voting rights.

Under the current regulations and the rules of the FSA, we are required to satisfy ourselves that clients have the experience or knowledge to enable them to understand the risk involved when dealing in ‘complex instruments’ such as a SSST. You should not deal in these instruments unless you understand their nature as well as the extent of your exposure to risk and you should also be satisfied that the instrument is suitable for you in the light of your circumstances and financial position. In general, these instruments can be so risky and volatile that you should not use them unless you are prepared to sustain a total loss of the money you have invested, plus any commission.

Your business with USI Capital may be covered by the Financial Services Compensation Scheme (“FSCS” or the “Scheme”). Client money will be deposited into a client money bank account opened at an approved bank. In the event that USI Ltd become insolvent, all client money held in the third party bank account would be protected. If you are an eligible claimant, you may be entitled to compensation from the scheme if we cannot meet our obligations. This depends on the trade concerned, your status, the circumstances of the claim and the rules of the Scheme. In general, eligible claimants are covered for 100% of the first £85,000. Further information about compensation arrangements is available from the FSCS at

It is your responsibility to monitor your trade and while you have open trades, you should always be in a position to do so. We do not monitor on your behalf whether the amount of money you have sent to us or your profit and losses are consistent with the information you may have sent to us previously. It is up to you to assess whether your financial resources are adequate and what level of risk to take.

We do not aim to profit from our clients from the outcome of corporate events such as rights issue, takeovers and mergers, share distributions or consolidations, and open offers. However:

  1. the treatment you receive may be less advantageous than if you owned the underlying instrument.
  2. you may have to make a decision on a corporate event earlier than if you owned the underlying instrument.
  3. the options we make available to you might be more restricted and less advantageous to you than if you owned the underlying instrument.

I/We have read and understood the risk warnings specific to the Saudi Share Swap Trades as set out above.

Client’s Name ___________________________Signed ________________________

Client’s Name ___________________________Signed________________________(joint account)

Date (dd/mm/yyyy) ____________________

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