Risk Disclosure Statement of Tiger Vault Product and Auto-Sweep Service

Before you invest, you should carefully read this Risk Disclosure Statement provided by Tiger Fintech (NZ) Limited (“Tiger Brokers”).

The objective of the Risk Disclosure Statement is to provide information concerning investing in the Tiger Vault products and for you to make an assessment of the risks and uncertainties associated.

You should consider whether to participate in Tiger Vault and Auto-Sweep Service (hereinafter referred to as “the Service”) based on your investment objectives, investment experience, financial status, risk tolerance and other relevant factors. The risks listed in this Risk Disclosure refer to some possible risks that an investor will need to assume when participating in the Service.

You need to know and understand the risks involved in any transaction you may undertake. This Risk Disclosure Statement does not include all the risks and material information of your transactions. Before you invest, you should fully understand the fundamentals of your transactions, the market(s) underlying such transactions, the nature and scope of your contractual relationship with Tiger Brokers and other parties, the legal terms and conditions of your transaction, the extent of your risk exposure, and the potential fees, loss, and tax that could possibly be incurred. You should carefully consider whether such a transaction is appropriate for you in light of your financial resources, investment experience, investment objectives, risk tolerance, and other related factors.

1. About Tiger Vault

Tiger Vault is a platform that Tiger Brokers provides its wholesale clients to subscribe and redeem some wholesale product units online. Wholesale products grouped under the Tiger Vault category are monetary market funds but are subject to update from time to time. Each fund is accompanied by its own offering documents, including but not limited to fund prospectus, risk disclosure statement, and historical performance. Before you invest, you should carefully read this information and determine if a certain fund fits your risk appetite and if it could fulfil your investment objective(s).

2. Agreements and Legal Documents

You should familiarize yourself with terms and conditions of any agreement, contract, or confirmation that you may enter with Tiger Brokers and any other parties in relation to your investment via Tiger Vault. You must fully understand your rights and obligations under that agreement, contract, or confirmation, and carefully study the transaction mechanism and understand the potential risks involved. You may not sign any agreement, contract, or confirmation unless you are familiar with the contents or effects or you have been explained the contents and effects by your professional advisers.

3. Nature of Service

You should note and accept that the Tiger Vault is purely an execution-only function to you. In either case, while you could expect Tiger Brokers or our employees or representatives to answer your queries, such answers do not constitute any advice to your investment in question and should not be assumed to be backed by any prior reasonable due diligence or research or specifically suitable for you to rely on. You could seek professional consultation services independently to acquire specific advice for your specific financial need(s) and investment objective(s).

4. Investment Performance

Due to market conditions and many other factors, past performance does not guarantee future results. Investment principal and returns value will fluctuate, and the market value of your position may be more or less than your initial investment amounts. You should compare the potential future returns and other features of the investment to other available investments before you undertake any transaction. The actual return paid from your investment may be higher or lower than the rates on other investments.

Before you invest, you should fully understand all the commissions, fees, and other charges you will be liable for, as such costs must be considered in any risk assessment made by you. The charges may reduce your net profit (if any) or increase your net loss (if any). Your net returns from a transaction will be affected by the transaction costs including but not limited to the costs charged by Tiger Brokers and any other parties in relation to your investment.

5. Potential Loss

Your payments or receipts under a transaction will be linked to the particular financial market(s), and you will be exposed to price fluctuation, currency exchange, interest rate, and/or other volatility in such market(s). You may sustain substantial losses on your transactions if market conditions move against your investment objective(s). It is in best your interest to fully understand the impact of market movements, in particular to the extent of profit or loss you would be exposed to when desirable or undesirable occasion occurs. Under certain market conditions, your position may be liquidated mandatorily, and you may be liable for the deficit if incurred.

Under certain market conditions, you may find it difficult or impossible to liquidate your position. This may arise from the rules in certain markets (for example, the rules of an exchange may provide for “circuit breakers” where trading is suspended or restricted at times of rapid price movements). Placing contingent orders, such as "stop-loss" or "stop-limit" orders, will not necessarily limit your losses up to the intended amounts, as you may find it difficult or impossible to execute such orders without incurring losses under certain market conditions.

6. Deposited Cash and Property

You should familiarize yourself with the protection to your money or other property deposited for domestic and foreign transactions, particularly in case of a firm’s insolvency or bankruptcy. The extent to which you may recover your money or property may be governed by specific legislation or local rules, whereas such regulation may differ from your home jurisdiction’s. In some jurisdictions, property specifically identified as yours will be distributed proportionately in the same manner as cash for distribution in the event of a shortfall. Under certain circumstances, you may not be able to fully recover your positions or your initial investment amounts.

7. Electronic Trading Facilities and Systems

Before you undertake any transaction via electronic trading facilities and systems, you should understand the features and details of such facilities and systems. Trading on an electronic trading system may be different from trading on an open-outcry market. Most trading facilities are supported by electronic component systems as your transactions will be executed through the systems. If you undertake transactions on an electronic trading system, you will be exposed to risks associated with the system including hardware and software failure or disruptions.

As with other types of facilities and systems, electronic trading facilities are vulnerable to blackout, failure, and any other disruptions, which may incur losses to your investment. The result of any system failure may include unexecuted order(s), unliquidated position(s), or any other undesirable results against your investment objective(s). Your ability to recover losses may be subject to limits on liability imposed by the system provider, the market, the clearing house, the member firms, and/or other related parties. Such limits may vary. Under certain circumstances, you may not be able to fully recover your positions or your initial investment amounts.

8. Transactions in Foreign Jurisdictions

Transactions on markets in other jurisdictions, including markets formally linked to your domestic market, may involve additional risk. Foreign jurisdictions may implement different regulations and provide different protection for your home jurisdiction. Consequently, your investment may not enjoy the same protection conferred by your local authorities. Before you undertake any transaction, you should enquire about any rules or ask for professional advice relevant to your transactions.

Your local regulatory authorities may be unable to compel the enforcement of the rules of regulatory authorities or markets in other jurisdictions where the transactions have been effected. You should understand indemnification available in both your home jurisdiction and other relevant jurisdictions before you transact. Restrictions on foreign capitals, limited repatriation of investment capitals and profits, and special tax treatments may exist in foreign jurisdictions.

9. Liquidity risk

You should be aware that products grouped under the Tiger Vault category (hereafter as "Tiger Vault products") may be exposed to the risk that the product's assets cannot be converted into cash quickly and inexpensively, or that they cannot cope with possible large redemptions. The former refers to the possibility of losses arising from financial assets that cannot be liquidated in a timely manner or cannot be traded at normal market prices. In order to cope with investor redemptions, the fund assets need to maintain a certain level of liquidity, thus there may be some losses in terms of income and affect the achievement of the fund's investment objectives; the latter refers to the possibility of large redemptions in the course of open-end fund transactions, which may generate difficulties in adjusting the fund's position, leading to liquidity risk and even affecting the net value of the fund units. When the fund experiences situations including but not limited to the above two situations, it may not be able to satisfy all investors' redemption requests, and investors' redemption payments may arrive later than expected, which may also increase the cost of redemptions for investors.

10. 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 should be taken into consideration as there is a need to convert from one currency to another. Changes in foreign exchange rates could affect the value of the portfolio positively or negatively.

11. Underlying risk

You should be aware that Tiger Vault products will be exposed to specific risks that a certain fund invests in. Some of the following categories would not apply to some Tiger Vault products.

11a. Bonds and Debt Securities

You should understand and be aware of the natures and characteristics of bonds and debt securities. Bonds and debt securities investments offer fixed returns over a defined period. These instruments carry risks such as credit risk, counterparty risk, default risk, liquidity risk, and currency risk.

Tiger Vault products may be exposed to the credit/default risk of the fixed-income securities as underlying assets. In the event of a bankruptcy or default of a securities issuer, the fund may experience losses. The actual or perceived downgrading of a rated debt security could decrease its value and liquidity and may have an adverse impact on the fund. The fund may invest in bonds issued or guaranteed by governments or authorities, which may involve political, economic, default or other risks. Credit risk arises from default events that may result in the inability of the issuer to pay interest or principal outstanding. Default risk is high when the bond or debt securities are rated as non-investment grade or even have no credit rating. In a default situation, the buyer may lose interest and principal. Liquidity refers to the availability for investors to buy or sell a product in a market at an efficient price. Some bonds and debt securities are in poor liquidity since they are not actively traded. Currency risk arises when holding bonds or debt securities denominated in foreign currency, thus exposing to fluctuations in exchange rate. Under certain market conditions, you may lose more than your original investment amounts if exchange rates move adversely.

11b. Equity Securities

Equity securities include common stocks, preferred stocks, convertible securities, equity-linked products, and funds investing in these products. Unlike fixed-income products, equity securities do not offer fixed returns over a defined period, and the yield on equity investments depends on multiple factors, such as price difference, dividend distribution, and market conditions.

Equity markets can be volatile. Stock prices rise and fall based on changes in a company’s financial condition and overall market conditions. Stock prices can decline significantly in response to adverse market conditions, company-specific events, and other domestic and international political and economic conditions.

Investment in mid-cap, small-cap, or micro-cap companies generally involves greater risks than investment in larger companies. The market value of a company may fluctuate dramatically.  As a result, under certain conditions, holdings of mid-cap, small-cap, or micro-cap stocks may decline in price even though their fundamentals are solid. They may be more difficult to buy and sell, subject to greater business risks, and more sensitive to market changes, than larger capitalization securities.

11c. Over-the-Counter (OTC) Products

You should understand and be aware of the nature and characteristics of OTC products. Since OTC transactions are individually negotiated, the OTC markets may be not active as open markets, and the OTC product pricing is not efficient and transparent. Subject to different regulatory requirements and business practices, OTC markets participants may not disclose enough information as open market participants should do. As a result, you may be exposed to the credit risk of the counterparty in which you enter into an agreement with. You may also be exposed to liquidity risk since an active trading market may not exist.

11d. Derivatives

You should understand and be aware of the nature and characteristics of derivatives. For the purpose of efficient account management, your investments may include derivatives such as futures, options, and warrants. The risk of investment in derivatives includes but is not limited to product terms, underlying assets and their prices, and market volatility. Normally, derivative investment only requires a minimum investment amount, the so-called initial margin, which lifts the leverage for your portfolio. Consequently, unfavourable execution of a short position when the price of the underlying asset increases rapidly and forced liquidation upon insufficient margin may cause you to lose more than your initial investment amounts.

11e. Exchange-Traded Funds (ETFs)

You should understand and be aware of the nature and characteristics of ETFs. ETFs are collective investment schemes traded on stock exchanges and may typically replicate or correspond to a stock market index, market sector, commodity, or a basket of assets. ETFs can be broadly grouped into two types. Traditional ETFs track, replicate, and correspond to the performance of an underlying index, such as Standard & Pool 500 Index, Dow Jones Industrial Average, and Hang Seng Index. Synthetic ETFs mimics the behaviour of traditional ETFs by means of leverage and derivatives such as swaps and performance-linked notes. ETFs are exposed to the economic, political, currency, legal, and other risks of a specific sector or market related to the underlying equity, commodity, asset or index that the ETF is designated to track.

ETFs are subject to tracking error risk, namely the disparity between the performance of the ETF, measured by its net asset value, and the performance of the underlying index, measured by asset price of its index components. Tracking error may arise due to various factors, including but not limited to failure of the ETFs tracking strategy, the impact of fees and expenses, foreign exchange spread between the investment currency and the currency the index is denominated in, and corporate actions by the index component companies.

Trading ETFs on an exchange does not guarantee that a liquid market exists for ETFs. A higher liquidity risk is also involved if an ETF invests in financial derivative instruments that are not actively traded or the asset price is not easily accessible. This may result in a bigger bid and offer spread and may cause loss.

Investment in synthetic ETFs may be exposed to both the risks of index components and the credit risk of the counterparty in relation to the investment. Synthetic ETFs typically invest in derivatives, some of which are standardized products while others may be customized and issued by counterparties. Investors of synthetic ETFs may sustain losses potentially equal to the full value of derivatives if the counterparty defaults or more if the market conditions move against their investment objectives.

12. Policy Risks

The Service is designed and provided by Tiger Brokers in accordance with the current and relevant laws, regulations, regulatory provisions and policies in New Zealand. Any change in relevant laws, regulations, regulatory provisions and policies affecting the normal process of trading and investment in the financial products involved in the Service and affecting the provision of the Service may expose you to loss of partial or whole principal amount.

12a. NZ
Wholesale Investor qualification

 TFNZ has assessed you as meeting the qualifications for wholesale investor status on the basis of your trading activity with TFNZ and supporting documents that you have provided to TFNZ.  Subject to the Financial Markets Conduct Act 2013 (the Act), TFNZ reserves the right to adjust its wholesale criteria from time to time, and you may not continue to meet the required qualifying criteria for wholesale status in the future. 

A client who is granted wholesale client status can choose to opt out of being a wholesale client by contacting TFNZ's Client Service Team. A client will need to be free of TFNZ wholesale product holdings before they submit their request to opt out of being a wholesale client. A client who chose to opt out of being a wholesale client, or who no longer continues to meet the qualifying criteria, once processed will no longer be able to acquire TFNZ’s wholesale products. Upon the expiration of a client's wholesale client status, the client's existing wholesale products' holdings will not be forced to be sold, redeemed, or a wholesale product's position closed.  However new wholesale offers or products will no longer be available. A client who is granted wholesale client status but does not agree with any one of TFNZ’s assessments can contact TFNZ's Client Service Team.

TFNZ's assessment and act of granting any client wholesale client status is not financial advice nor is a suggestion that any of the wholesale products made available to a client is suitable for that specific client. The range of wholesale products available for wholesale clients to trade or invest in will change from time to time, and could vary significantly in their structures, risk levels, rates of return, etc. Wholesale products in general carry a high level of risk and may not be suitable for all investors.

Warning:  New Zealand law normally requires people who offer financial products to give information to investors before they invest. This information is designed to help investors make an informed decision.  The usual rules do not apply to wholesale products made available to wholesale clients and wholesale investors. As a result, wholesale clients and wholesale investors may not receive a complete and balanced set of information. Wholesale clients and wholesale investors will also have fewer other legal protections for these investments. You need to make sure you fully understand these consequences.  This statement does not purport to be a disclosure of all known material risks of being a wholesale client or investor under the Act, nor does it propose to have disclosed all the risks with wholesale investments. A client is responsible for reading, understanding, and agreeing to this statement and all other material made available to the client to peruse relating to a wholesale product that such client intends to invest/trade in. A client should consider the appropriateness of any information having regard to their individual objectives, financial situation or needs.

12b. Abroad
Some Tiger Vault products invest in markets other than those in the country or region where you reside, and the extent to which investors are protected by the regulatory rules of those markets may vary. You should thoroughly consult with legal counsel in connection with your participation in the Service and understand all the relevant rules of this investment before making an investment. You may be unable to enforce the regulatory rules or market rules of the jurisdiction where you invest to be executed by a regulatory authority of your resident country or region. Before you begin to invest, you should consult your broker in detail about the remedies available in the jurisdiction where you reside and other relevant jurisdictions.

13. Operational Risks

System malfunction, personnel mis-operation or mistakes may happen in the Service, and you may be subject to the risk of partial or total loss of principal and proceeds.

14. Early Termination Risks

Tiger Brokers has the right to terminate the Service anytime due to unforeseen circumstances, and you may as a result of such termination be exposed to reinvestment risk.

16. Reinvestment Risks

Change in interest rates may adversely affect your ability to reinvest the proceeds from the Service at the same or similar return rates.

17. Historical Performance

You should be aware that some Tiger Vault products may lack a historical performance reference due to its short period in operation, and that any past performance is no guarantee of future results. The Service is not committed to securing principal and proceeds, nor guarantees a minimum rate of return.

18. Other Risks

You should be aware that Tiger Vault products may be subject to changes in market conditions, such as changes in political environment, economic cycles, interest rates, etc. This could adversely affect the value of the portfolio. Pandemics, natural disasters, financial market crisis, war and other force majeure events that are unforeseeable, unavoidable and insurmountable, and/or system failure, communication failure, suspension of trading in the investment market and other contingencies may occur for reasons beyond the control of Tiger Brokers, which may affect the Service’s development, investment operation, return of funds, information disclosure, public announcement, etc., and may even result in a decrease in or loss of the principal and proceeds of the Service and the delay in the payment of principal or proceeds of the Service. You shall be responsible for any losses and delays in payment resulting from force majeure and/or contingencies.

This Risk Disclosure Statement does not purport to disclose or discuss all the risks and other significant aspects involved in Tiger Vault and Auto-Sweep services. You should read and sign the Tiger Vault and Auto-Sweep Service Agreement before investing and consider carefully and decide whether the investment is suitable for your particular investment needs and risk tolerance in light of your own financial status and needs, investment objectives, and experience. You should seek independent financial and professional advice before entering into any trade or investment. In light of the risks, you should undertake such a transaction only if you understand the nature of the above financial products and the contracts which you are entering into, and the extent of your risk exposure. You should therefore consult with your own legal, tax and financial advisers before entering into any particular transaction. The information contained in this Risk Disclosure is not, and shall not be construed as, a financial advice and shall not constitute a solicitation of any person to invest in any of the products described in the Risk Disclosure. By agreeing to this Risk Disclosure, you will be deemed to be accepting that you have read all the provisions of this Risk Disclosure, fully understood and voluntarily agreed to all the risks described above.

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