Risk of Trading Exchange Sample Clauses
The 'Risk of Trading Exchange' clause defines the allocation of risks associated with using a trading exchange platform. It typically clarifies that parties engaging in transactions through the exchange accept the inherent risks, such as market volatility, technical failures, or regulatory changes that may impact trades. For example, if the exchange experiences downtime or sudden price swings, the parties bear the consequences rather than the exchange operator. This clause's core function is to ensure that all participants acknowledge and accept these risks, thereby limiting the liability of the exchange and promoting transparency about potential trading hazards.
Risk of Trading Exchange. Traded Notes (ETNs)
Risk of Trading Exchange. TRADED FUNDS 買賣交易所基金涉及的風險
(a) Market risk 市場風險 ETFs are typically designed to track the performance of certain indices, market sectors, or groups of assets such as stocks, bonds, or commodities. ETF managers may use different strategies to achieve this goal, but in general they do not have the discretion to take defensive positions in declining markets. Investors must be prepared to bear the risk of loss and volatility associated with the underlying index/assets. 交易所買賣基金主要為追蹤某些指數、行業／領域又或資產組別(如股票、債券或商品)的表現。交易所買賣基金經理可用不同策略達至目標，但通常也不能在跌市中酌情採取防守策略。投資者必須要有因為相關指數／資產的波動而蒙受損失的準備。
(b) Tracking errors 追蹤誤差 Tracking errors refer to the disparity in performance between an ETF and its underlying index / assets. Tracking errors can arise due to factors such as the impact of transaction fees and expenses incurred to the ETF, changes in composition of the underlying index / assets, and the ETF manager’s replication strategy. 這是指交易所買賣基金的表現與相關指數／資產的表現脫節，原因可以來自交易所買賣基金的交易費及其他費用、相關指數／資產改變組合、交易所買賣基金經理的複製策略等等因素。
(c) Trading at discount or premium 以折讓或溢價交易 An ETF may be traded at a discount or premium to its Net Asset Value. This price discrepancy is caused by supply and demand factors, and may be particularly likely to emerge during periods of high market volatility and uncertainty. This phenomenon may also be observed for ETFs tracking specific markets or sectors that are subject to direct investment restrictions. 交易所買賣基金的價格可能會高於或低於其資產淨值，當中主要是供求因素的問題，在市場大幅波動兼變化不定期間尤其多見，專門追蹤一些對直接投資設限的市場／行業的交易所買賣基金亦可能會有此情況。
(d) Foreign exchange risk 外匯風險 Investors trading ETFs with underlying assets not denominated in Hong Kong dollars are also exposed to exchange rate risk. Currency rate fluctuations can adversely affect the underlying asset value, also affecting the ETF price. 若投資者所買賣結構性產品的相關資產並非以港幣為單位，其尚要面對外匯風險。貨幣兌換率的波動可對相關資產的價值造成負面影響，連帶影響結構性產品的價格。
(e) Liquidity risk 通量風險 Securities Market Makers (“SMMs”) are Exchange Participants that provide liquidity to facilitate trading in ETFs. Although most ETFs are supported by one or more SMMs, there is no assurance that active trading will be maintained. In the event that the SMMs default or cease to fulfill their role, investors may not be able to buy or sell the product. 證券莊家是負責提供流通量、方便買賣交易所買賣基金的交易所參與者。儘管交易所買賣基金多有一個或以上的證券莊家，但若有證券莊家失責或停止履行職責，投資者或就不能進行買賣。
(f) Counterparty risk involved in ETFs with different replication strategies 交易所買賣基金的不同複製策略涉及對手風險 Where ETFs utilising a synthetic replication strategy use swaps or other derivative instruments to g...
Risk of Trading Exchange. TRADED FUNDS (ETFs)
Risk of Trading Exchange. Traded Funds (“ETF”):
16.10.1 Market risk: ETFs are typically designed to track the performance of certain indices, market sectors, or groups of assets such as stocks, bonds, or commodities. ETF managers may use different strategies to achieve this goal, but in general they do not have the discretion to take defensive positions in declining markets. Investors must be prepared to bear the risk of loss and volatility associated with the underlying index/assets.
Risk of Trading Exchange. TRADED FUNDS (ETFS)
A. Market risk ETFs are typically designed to track the performance of certain indices, market sectors, or groups of assets such as stock, bonds, or commodities. ETF managers may use different strategies to achieve this goal, but in general they do not have the discretion to take defensive positions in declining markets, Investors must be prepared to bear this risk of loss volatility associated with the underlying index/assets.
B. Tracking errors Tracking errors refer to the disparity in performance between an ETF and its underlying index/assets. Tracking errors can arise due to factors such as the impact of transaction fees and expenses incurred to the ETF, changes in composition of the underlying index/assets, and the ETF manager’s replication strategy. (The common replication strategies include full replication/representative sampling and synthetic replication which are discussed in more detail below.)
C. Trading at discount or premium An ETF may be traded at a discount or premium to its Net Asset Value (NAV). This price discrepancy is caused by supply and demand factors, and may be particularly likely to emerge during periods of high market volatility and uncertainty. This phenomenon may also be observed for ETFs tracking specific markets or sectors that are subject to direct investment restrictions.
D. Foreign exchange risk Investors trading ETFs with underlying assets not denominated in Hong Kong dollars are also exposed to exchange rate risk. Currency rate fluctuations can adversely affect the underlying asset value, also affecting the ETF price.
E. Liquidity risk Securities Market Makers (“SMMs”) are Exchange Participants that provide liquidity to facilitate trading in ETFs. Although most ETFs are supported by one or more SMMs, there is no assurance that active trading will be maintained. In the event that the SMMs default or cease to fulfill their role, investors may not be able to buy or sell the product.
F. Counterparty risk involved in ETFs with different replication strategies
(a) Full replication and representative sampling strategies An ETF using a full replication strategy generally aims to invest in all constituent stocks/assets in the same weightings as its benchmark. ETFs adopting a representative sampling strategy will invest in some, but not all of the relevant constituent stocks/assets. For ETFs that invest directly in the underlying assets rather than through synthetic instruments issued by third parties, counterp...