Q1: What is my potential loss when I trade on margin in OTC Derivatives?

Leverage means that the product is traded on margin. Excessive price movement that is against the client’s open position may expose them to losses greater than their initial margin deposit.
Example: Client deposits 100,000 USD and trades a single stock CFD with a 10% margin requirement. The stock trades at 50 USD. The client’s exposure will be 1,000,000 USD. If the stock moves excessively and loses 25% of its value and trades at 37.5 USD, the client lost 250,000 USD. In that case the client lost 150,000 USD more than his initial deposit.

 

Q2: What will happen if I do not have enough margin to cover my losses?

A margin requirement limit will be set by OPL which needs to be respected by the client. If the client’s used margin starts to reach this limit, the company will send out warning emails or calls to inform the client and protect him from a possible forced closing of his positions. If the client is not responsive after several warnings, the company has the right to reduce the positions to decrease the used margin. This can be decided without the client’s consent.
In the unlikely event of a sudden margin call on a client’s account, due to an abrupt move in the market, the company will be forced to close or reduce the client’s position(s) in order to avoid a possible negative account balance. This can be decided without further notice as the decision must be made instantly.
If the client has a negative balance after all his positions have been closed due to a margin call, the client is responsible to cover the losses to avoid facing legal actions.

 

Q3: How is the OTC Derivative quoted?

As OPL will not offer market making and therefore not offer any OTC self-quoted derivatives, all the products will be at market quotation.
For single stock CFD’s, the underlying equities will be traded at the market price on the different stock exchanges and will be converted into CFD’s later by Orion’s Prime Brokers. The bid-ask prices will never vary from the market prices quoted on the exchange.

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Q4: Can my order be executed at a price that is less favourable than the price quoted on the trading system, or the price that I have submitted?

The trading platform provided will offer different sell limit and stop-loss functions which can be used directly by the client to take profits or limit losses. In the event of a sudden market drop or high volatility, the stop-loss can be triggered at a less favourable price than the price entered in the trading system. The stop-loss algorithm will always execute the order at the entered price, or the next best price quoted if volatility kicks in. This happens when the demand is not available anymore at the entered price.

 

Q5: Will my order be manually executed? If so, under what circumstances does the Firm rely on manual execution?

In the unlikely event of a sudden margin call on a client’s account, due to an abrupt move in the market, the company will be forced to close or reduce the client’s position(s) in order to avoid a possible negative account balance. This can be decided without further notice as the decision must be made instantly. The order will be manually executed by OPL and can vary from the price entered earlier by the client. Another reason for manual execution can be a server failure or any other trading platform issues from the client’s side that will restrict from entering any automatic orders. Orion’s trading desk can offer manual execution whenever it is not facing any technical problems from their side.
For High net worth clients, all the trading will be executed manually if the client does not use the platform.

 

Q6: Where are my margins kept and maintained? Can the Firm use my margins for its own purposes?

Orion Principals Limited would maintain a separate omnibus account for clients with reputable banking institutions. The account would be further segregated for each client.

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Q7: What will happen to my margins if Orion Principals Ltd becomes insolvent? Will I be able to get back my money or other assets?

Every client will have its own segregated sub account under the omnibus account with reliable partner banks of Orion Principals Ltd. This would help in controlling the risk to Clients in case OPL goes bankrupt. In case of such an event, open positions on the trading platform and the client accounts will be closed as the company can no longer provide any brokerage service and the rules applicable to the bank which holds the client’s funds, the terms and conditions of the local banking system will apply
Q8: Under what circumstances can Orion Principals Ltd close my position or void my order?
OPL has the right to void any further orders or close the client’s position(s):
1. If the account is facing a margin call
2. If the account is in negative balance
3. For any OPL- or any regulatory compliance reasons
4. If OPL compliance has any doubts on the client
5. In the event of high market volatility and the client is not responsive, OPL has the right to close down the position(s) for risk purposes.
Kindly refer Clause 11 of the Client Agreement for the Events of Default.

 

Q9: What are the commissions, fees, and other charges that I have or may have to pay?

Kindly refer to the commissions table provided.

 

Q10: What happens when trading in the underlying share asset is suspended or halted? How can I exit my position, and will I suffer losses?

When the underlying share asset is halted, the client can start selling/closing the position at the next offered price as soon as trading resumes.
When the stock stops trading on the exchange due to non-compliance with regulations, it is called suspension (i.e the stock is no longer traded on the market).

Suspension of a company from trading, by the exchange, might be for several reasons but if the suspended company complies with all regulations, the suspension will be revoked, and the shares will start trading again. In the unlikely event of a company suspension following a closure of the company, the maximum loss will be applicable for any long position. Short positions will realize the maximum profit.

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