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Currency Transaction Risks

Foreign exchange transactions involve risks. Before entering into a transaction you must carefully consider the risks. These risks will depend on your objectives at the time and may include, but not be limited to, the following:

Market Risk
As foreign exchange markets are influenced by many factors, market risk is always present. This can result in extremely volatile market movements as the risk of these influences is priced into the market. Your contract may lose value because of market conditions. Conversely, market movements may increase the value of a contract.

Counterparty Risk
This is the risk that an organisation does not pay out on a foreign exchange transaction when required. When dealing with Direct FX, you will be exposed to counterparty risk with us. You will be reliant on us to complete our obligations to deliver to you or your beneficiary, the currency purchased.

Direct FX has procedures and policies in place to limit the counterparty risk you face. We do not settle trades until we have received client sold currency in cleared funds. All client trades are offset “back to back” with our wholesale liquidity providers. As a result, we are not exposed to market risk. We do not at any time speculate in the foreign exchange market. We are authorised by the Australian Securities and Investments Commission (ASIC) to provide our services. ASIC have issued us with an Australian Financial Services Licence, which sets out certain financial requirements we must meet. Our financial statements are audited by PricewaterhouseCoopers and lodged annually with both ASIC and the New Zealand Financial Markets Authority.

Liquidity Risk
This is the risk that a foreign exchange transaction can’t be traded quickly enough in the market to prevent a loss, or make the required profit. It is solely your decision to enter a foreign exchange transaction. Direct FX will always endeavour to act as quickly as possible when executing your instructions. However, we have no control over exchange rate fluctuations.

Strategy Risk
This risk is the exposure to loss resulting from a defective or inappropriate strategy. We will give you general product advice that allows you to make an informed decision. But it is solely your decision to choose the right strategy for your circumstances.