TradeWind Markets Risk Disclosure Statement

The risk of loss in trading gold can be substantial. You should, therefore, carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should be aware of the following points, among others, before purchasing or selling gold through the TradeWind Markets, Inc. (“TWM”) Program (“TWM Program”):[1]

  1. Although considered a store of value by some, the price of gold may fall. In addition, the price of gold can be volatile, meaning that there can be substantial changes in the price of gold from hour to hour, day to day, week to week, month to month and year to year.
  2. Under certain market conditions, you may find it difficult or impossible to liquidate a position (for instance, sell gold that you own through the TWM Program for United States Dollars or other legal tender).
  3. Although there are industrial applications for gold in electronics, dentistry, medicine and aerospace, among others, the vast majority of gold production is used for investment and jewelry.[2] As a result, the price of gold, unlike some other commodities, tends not to be very responsive to changes to the supply of gold being produced or the demand for industrial uses for gold.[3]
  4. Funds deposited by customers with a Custodial Participant[4] in the TWM Program may not be held in a separate account for your individual benefit. A Custodial Participant may commingle the funds received from customers in one or more accounts which may expose you to losses incurred by other customers if the Custodial Participant does not have sufficient capital to cover such other customers’ trading losses.
  5. The funds you deposit with a Custodial Participant are not generally guaranteed or insured by a clearinghouse in the event of a bankruptcy or insolvency of the Custodial Participant. The funds you deposit with a Custodial Participant for trading gold in the TWM Program are not protected by the Securities Investor Protection Corporation even if the Custodial Participant is registered with the Securities and Exchange Commission as a broker or dealer.
  6. The funds that you deposit with a Custodial Participant may be invested in one or more financial instruments. The Custodial Participant may retain the interest and other earnings realized from its investment of customer funds depending in its agreements with its customers. You should be familiar with the types of financial instruments that a Custodial Participant my invest customer funds in.
  7. A Custodial Participant may deposit customer funds with affiliated entities, such as affiliated banks, securities brokers or dealers, futures commission merchants, or foreign brokers. You should inquire as to whether your Custodial Participant deposits customer funds with affiliates and assess whether such deposits by the Custodial Participant with its affiliates increases the risks to your funds.
  8. You should consult your Custodial Participant concerning the nature of protections available to safeguard funds or property deposited in your account.
  9. If your Custodial Participant or another person provides margin for you to trade gold in the TWM Program, you should be aware that margin can work against you as well as for you. Margin can lead to large losses as well as gains. If you trade on margin, it is possible for you to sustain a total loss of the funds that you deposit with your Custodial Participant, and you may incur losses beyond these amounts. If the market moves against your position, you may be called upon by your Custodial Participant (or other margin provider) to deposit substantial amounts of additional margin funds, on short notice, in order for you to maintain your position. If you do not provide the required funds within the time required by your Custodial Participant (or other margin provider), your position may be liquidated at a loss, and you will be liable for any resulting deficit in your account.
  10. The TWM Program operates an “over-the-counter” trading platform. Transactions executed on the TWM Trading Platform must be bilaterally settled between the Custodial Participants representing the buyer and seller in each transaction. There is no clearing agency or clearinghouse guaranteeing the settlement of each trade. If a Custodial Participant fails to perform in settling a transaction you have engaged in, you may be exposed to replacement and credit risk causing a loss to you.
  11. Depositories storing gold traded in the TWM Program have placed certain limitations on their liability for the loss of gold held by them for the TWM Program. Please see the depository limitations of liability set forth in the applicable Product Specification. Certain depositories may be located outside of the United States. As such, the rights and responsibilities of such depositories as bailees of gold held on your behalf may be governed by the law of the country in which they are located. Any such laws may provide for different rights and responsibilities of these depositories as bailees in their safekeeping of the gold that you own and that they hold on your behalf than the laws of the United States.
  12. TWM provides Custodial and Trading Participants[5] the TWM Program’s services, including but not limited to the TWM Trading Platform and the TWM Distributed Ledger, subject to the following limitations of liability and disclaimers of warranty. These limitations of liability and disclaimers of warranty may limit your ability to recover damages in certain situations:
    1. LIMITATIONS OF LIABILITY
      1. NO LIABILITY FOR TRADES

        ABSENT FRAUD OR WILLFUL MISCONDUCT BY TWM OR A CLAIM ARISING OUT OF TWM’S INDEMNIFICATION OBLIGATION, YOU[6] UNDERSTAND AND AGREE THAT: (i) TWM IS NOT DIRECTLY OR INDIRECTLY A PARTY TO OR A PARTICIPANT IN ANY TRADE OR TRANSACTION ENTERED INTO OR OTHERWISE CONDUCTED THROUGH TWM’S SYSTEMS; AND (ii) TWM IS NOT LIABLE IN ANY MANNER TO ANY PERSON (INCLUDING WITHOUT LIMITATION YOU AND ANY PERSON FOR WHOM YOU ARE AUTHORIZED TO TRADE OR ACT) FOR THE FAILURE OF ANY PERSON ENTERING INTO A TRADE OR TRANSACTION BY MEANS OF TWM SOLUTIONS TO PERFORM SUCH PERSON’S SETTLEMENT OR OTHER OBLIGATIONS UNDER SUCH TRADE OR TRANSACTION. ABSENT FRAUD OR WILLFUL MISCONDUCT BY TWM OR A CLAIM ARISING OUT OF TWM’S INDEMNIFICATION OBLIGATION, NEITHER TWM, NOR ANY OF ITS AGENTS, AFFILIATES OR LICENSORS WILL BE LIABLE FOR ANY LOSSES, DAMAGES, OR OTHER CLAIMS, ARISING OUT OF TWM OR ITS USE AND ANY LOSSES, DAMAGES, OR OTHER CLAIMS, RELATED TO A FAILURE OF THE TWM TO DELIVER, DISPLAY, TRANSMIT, EXECUTE, COMPARE, SUBMIT FOR CLEARANCE AND SETTLEMENT, OR OTHERWISE PROCESS AN ORDER, MESSAGE, OR OTHER DATA ENTERED INTO, OR CREATED BY, TWM WILL BE ABSORBED BY THE CUSTOMER THAT ENTERED THE ORDER, MESSAGE OR OTHER DATA INTO TWM SOLUTIONS.

      2. NO CONSEQUENTIAL DAMAGES

        ABSENT A CLAIM ARISING OUT OF TWM’S INDEMNIFICATION OBLIGATION, UNDER NO CIRCUMSTANCES WILL TWM OR ITS AGENTS, AFFILIATES OR LICENSORS BE LIABLE FOR ANY LOSS, DAMAGE, CLAIM OR EXPENSE, INCLUDING WITHOUT LIMITATION ANY DIRECT, CONSEQUENTIAL, INDIRECT, SPECIAL, PUNITIVE OR INCIDENTAL DAMAGES OR LOST PROFITS, WHETHER FORESEEABLE OR UNFORESEEABLE, BASED ON THE YOUR CLAIMS OR THE CLAIMS OF YOUR CUSTOMERS, EMPLOYEES OR AGENTS (INCLUDING, BUT NOT LIMITED TO, CLAIMS FOR LOSS OF DATA, GOODWILL, USE OF MONEY OR USE OF TWM SOLUTIONS, INTERRUPTION IN USE OR AVAILABILITY OF TWM SOLUTIONS, STOPPAGE OF OTHER WORK OR IMPAIRMENT OF OTHER ASSETS), ARISING OUT OF BREACH OR FAILURE OF EXPRESS OR IMPLIED WARRANTY, BREACH OF CONTRACT, MISREPRESENTATION, NEGLIGENCE, STRICT LIABILITY IN TORT OR OTHERWISE. THIS SECTION WILL NOT APPLY ONLY WHEN AND TO THE EXTENT THAT APPLICABLE LAW SPECIFICALLY REQUIRES LIABILITY.

    2. DISCLAIMER OF WARRANTY

      THE SERVICES OFFERED BY TWM TO USERS OF THE TWM SOLUTIONS, ARE PROVIDED AS-IS, WITHOUT WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED CONDITIONS OR WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE, ANY IMPLIED WARRANTY ARISING FROM TRADE USAGE, COURSE OF DEALING OR COURSE OF PERFORMANCE, AND OF ANY OTHER WARRANTY OR OBLIGATION WITH RESPECT TO THE TWM SOLUTIONS OR ANY SOFTWARE OR OTHER MATERIALS MADE AVAILABLE TO YOU AND ALL SUCH OTHER WARRANTIES ARE HEREBY DISCLAIMED. THERE IS NO GUARANTY THAT THE SERVICES OFFERED TO PARTICIPANTS THROUGH THE TWM SOLUTIONS WILL MEET THE CUSTOMER’S REQUIREMENTS, BE ERROR FREE, OR OPERATE WITHOUT INTERRUPTION. TWM GIVES NO WARRANTIES OF ANY KIND AS TO THE FITNESS, CAPACITY, OR CONDUCT OF ANY OTHER PERSON HAVING ACCESS TO THE TWM SOLUTIONS AND WILL NOT BE HELD LIABLE TO OR THROUGH THE CUSTOMER OR OTHERWISE FOR ANY USE OR ABUSE WHATSOEVER OF TWM AND THE TWM SOLUTIONS BY ANOTHER PERSON HAVING ACCESS TO TWM AND THE TWM SOLUTIONS, INCLUDING, WITHOUT LIMITATION, ANY FAILURE TO CONCLUDE TRANSACTIONS OR OBSERVE APPLICABLE TWM TECHNOLOGY POLICIES OR CONVENTIONS OR TO PAY REQUISITE TAXES OR OTHER CHARGES ON ANY TRANSACTIONS OR TO OTHERWISE ACT LAWFULLY.

This brief statement does not disclose all of the risks and other significant aspects of trading in gold through the TWM Program. In light of the risks, you should undertake such transactions through the TWM Program only if you understand the nature of the contracts and contractual relationships into which you are entering and the extent of your exposure to risk. Trading in gold is not suitable for many members of the public. You should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances.

Footnotes

[1] The TWM Program provides, among other things, a trading platform for the trading of gold and a distributed ledger for the recording of ownership of the gold owned by participants in the TWM Program.

[2] GFMS Gold Survey 2017 (Thompson Reuters 2017) at 13; Gold Demand Sectors (World Gold Council 2018); Annual Gold Focus Report (Metals Focus 2015).

[3] What Really Drives Gold Prices (ETF Securities 2017) at 1.

[4] A “Custodial Participant” in the TWM Program is a firm authorized to settle transactions executed on the TWM Trading Platform by paying or receiving legal tender funds in connection with a purchase or sale of gold executed through the TWM Trading Platform, on the one hand, and transferring records of gold ownership held on the TWM Distributed Ledger, on the other.

[5] A “Trading Participant” in the TWM Program is a firm with direct access to the TWM Trading Platform through which it can place orders for the purchase or sale of gold held in the TWM Program, either for its own account or for the account of customers. A Trading Participant may also be a Custodial Participant.

[6] In this disclosure of TWM’s limitations of liability and disclaimer of warranty, “YOU” refers to the Custodial and Trading Participants that have contracted with TWM to use the TWM Program’s services.