Appendix 5 to the Regulation on Brokerage services in the Stock market.
Warning about risks associated with conducting transactions in the Stock market.

1. Quotations of securities and/or contracts are liable to significant changes as a result of political, economic and financial events in Russia and the rest of the world.

2. The situation in the financial market can change very quickly, which may lead to a dramatic decline in the market value of the Client’s investment portfolio and loss of all or part of the funds invested in securities and/or contracts.

3. If in the contracts market there develops a situation unfavourable for the position the Client has taken up in this market, there is a possibility to lose within a relatively short period of time all the funds intended to serve as security for positions being opened in the contracts market on the Client’s instructions.

4. Price dynamics unfavourable for the Client may require that a considerable amount of additional funds (variation margin, additional security, etc.) be contributed within a short period for supporting a position in the market, and should the Client fail to contribute such funds on time, their position may forcibly be closed at a loss and the Client will bear responsibility for any and all losses arising therefrom.

5. If the Client, presented with a margin requirement, contributes property or any other valuables under a security agreement, he will not be entitled to dispose of such property or valuables once the transaction he orders has been conducted and until the closing of the positions. Besides, in cases provided by the exchange rules and the security agreement, stated property or other valuables may be subject to recovery and sale.

6. In consequence of the situation evolving in the contracts market, it may become difficult or impossible to close a position opened by the Client. This can happen for example when trading in the contracts market has been suspended or limited due to rapid price changes.

7. Stop/loss orders will not necessarily limit the Client’s loss to an expected level because such an order may be impossible to fulfil at an agreed-upon price in a situation evolving in the market.

8. Buying an option presents much lesser risk than trading in futures contracts because the Client’s loss will not exceed the amount of the premium, commission of the exchange broker and other charges they have paid. Selling an option compares in risk with transactions with futures contracts: relatively small unfavourable price shifts in the market put the Client at risk of potentially unlimited loss surpassing the premium earned when selling the option. Conducting option sale transactions may only be recommended to experienced investors having significant financial resources and experience in the use of strategies.

There are different types of options and before starting to conduct transactions in the options market the Client should discuss their investment needs and risks related to such deals with specialists.

9. Accounting for the Client’s funds on the same account with the funds of other clients and/or the provision for the Broker of the opportunity to use them for their own benefit, including when funds are credited to the Broker’s proprietary account, may lead to unfavourable circumstances which under certain conditions may result in the one or several risks: technical, operating, liquidity risk, etc.

10. Declaration of risks arising when margin trading transactions are conducted.

10.1. The terms used herein shall be construed in accordance with the meanings assigned to them in Appendix 11 to the Regulation.

10.2. The client shall be notified that:

• quotations of securities are liable to significant changes as a result of political, economic and financial events in Russia and the rest of the world;
• conducting margin trading transactions is associated with significant risk and may lead to the loss of all or part of the assets constituting the Client’s investment portfolio within a short period of time;
• conducting margin trading transactions may lead to CDb* exceeding CCe** and VCSe*** and the Client becoming liable for CDb to the Broker with all property owned by the Client;
• change in the Maintenance Margin Level may result in the Broker refusing to fulfil the Client’s order potentially leading to the Current Margin Level becoming lower than the Maintenance Margin Level;
• change in the Margin Call Level, the Discount and the list of securities accepted by the Broker as security for the Client’s obligations under provided loans may lead to a situation when the Margin becomes lower than CDb and the Broker becomes entitled to conduct transactions with the assets constituting the Client’s investment portfolio in order to liquidate CDb;
• the Client shall be responsible for the entire risk of loss that may result from the Broker acting in accordance with Clause 4.1. of Appendix 11 to the Agreement.

This warning does not reveal all risks associated with conducting transactions in the stock market.

* CDb – the Client’s Debt to the broker under a loan, arising from the broker conducting margin trading transactions or that may result from payments under all transactions concluded on behalf of the client that are to be made before the end of the current business day.
** CCe – the Client’s Cash on a special brokerage account of the broker and cash to be credited for the client to the special brokerage account of the broker under earlier concluded deals before the end of the current business day, net of cash to be paid from the special brokerage account of the broker under earlier concluded deals before the end of the current business day.
*** VCSe – the current market Value of the Client’s Securities accepted by the broker as security for the Client’s obligations that are on the Client’s custody account or are to be credited to the Client’s custody account under earlier concluded deals before the end of the current business day, net of the current market value of the securities to be debited from the Client’s custody account under earlier concluded deals before the end of the current business day.