7.2.2. FCM and IB Risk Disclosure Statements
For its non-institutional customers, a futures commission merchant or introducing broker may never open a customer futures account without first furnishing the customer with a written risk disclosure statement. The statement may be a stand-alone document, or it may be attached to another document, such as a company’s commodity customer agreement. An attached disclosure statement may be a cover page or the first page of the document, but in either case, it must be the only material on the page. The FCM or IB must receive an acknowledgment signed and dated by the customer, stating that the customer has received and understood the statement prior to trading.
The written disclosure document must contain in part the following language:
Risk Disclosure Statement
The risk of loss in trading commodity futures contracts 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:
(1) You may sustain a total loss of the funds that you deposit with your broker to establish or maintain a position in the futures market, and you may incur losses beyond these amounts. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice to maintain your position. If you do not provide the required funds within the time required by your broker, your position may be liquidated at a loss, and you will be liable for any resulting deficit in your account.
(2) The funds you deposit with a futures commission merchant for trading futures positions are not protected by insurance in the event of the bankruptcy or insolvency of the futures commission merc