Risk Disclosure

This Risk Disclosure Statement describes some, but not all, of the risks of trading in the over the counter foreign currency market ("OTC foreign currency"). Trading in the OTC foreign currency market on a cash, spot or forward basis is not suitable for many members of the public. You should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances.

Trading is Speculative and Involves a High Degree of Risk. Trading and investment in leveraged OTC foreign currency contracts is speculative and involves a high degree of risk. In particular, because of the low margin required for foreign currency trading, price changes in OTC foreign currency contracts may result in significant losses, which losses may substantially exceed the funds or other assets deposited as margin. Therefore, foreign currency contracts are appropriate only for persons that (a) understand and are willing to assume the economic, legal and other risks involved in such transactions, and (b) are financially able to withstand losses significantly in excess of their initial margin funds and any additional funds deposited with the prime broker to maintain their positions.

No Centralized Marker and Limited Government Regulation. There is no central market and no global regulatory agency responsible for monitoring the activity of the foreign currency markets. Regulation is left to each country, and in the United States the Federal Reserve Bank monitors the banking system. vCap FX is an affiliate of firms (vCap Futures and vCap Investments) that are registered with the US Commodity Futures Trading Commission ("CFTC"), NFA and Texas State Securities Board. As such, vCap FX is subject to the antifraud provisions of its affiliated companies. However, neither the CFTC nor any other federal or state authority has adopted a comprehensive regulatory scheme governing OTC foreign currency trading with foreign currency dealers such as vCap FX. In addition, there are no limits on daily price movements and, unlike the regulated exchange markets, the OTC foreign currency markets do not have speculative position limits. Therefore, not all of the customer protections gene rally found in the regulated exchange markets are present in the OTC foreign currency market.

Currency Risks. Foreign currencies represent the legal tender of one or more foreign nations and normally are not linked to any intrinsically valuable commodity (such as precious metals). Any transaction involving foreign currencies, including OTC foreign currency contracts, involves risks not common to investments denominated entirely in a person's domestic currency. Such enhanced risks include the risks of political or economic policy changes in a foreign nation, which may substantially and permanently alter the conditions, terms, marketability or price of a foreign currency. The profit or loss in transactions in foreign currency-denominated contracts (whether they are traded in a customer's own or another jurisdiction) will also be affected by fluctuations in currency rates where there is a need to convert from the currency denomination of the contract to another currency.

Risk Reducing Orders or Strategies. The placing of certain orders (e.g., 'stop-loss' or 'stop-limit' orders) that are intended to limit losses to certain amounts may not always be effective because market conditions or technological limitations may make it impossible to execute such orders. Strategies using combinations of positions, such as 'spread' and 'straddle' positions, may be as risky or even riskier than simple 'long' or 'short' positions.

CAX Prices May Be Different From Prices Reported Elsewhere. The prices posted on CAX FX may not necessarily reflect the broader market for foreign currencies. Although CAX FX expects that these prices will be reasonably related to those available in what is known as the interbank market, prices CAX FX uses may vary from those available to banks and other participants in the interbank market.

Suspension or Restriction of Trading and Pricing Relationships. Market conditions (e.g. illiquidity, changes in government regulation or trading restrictions with respect to certain markets) may increase the risk of loss by making it difficult or impossible to effect transactions or liquidate/offset positions. vCap FX will bear no liability for any failure to effect any such transactions should such events arise.

Electronic Trading. vCap FX makes available to customers an electronic system that allows customers to enter orders to buy and sell foreign currency contracts ("CAX FX System"). Trading in OTC foreign currency contracts through the CAX FX System may differ from trading on other electronic trading systems as well as from trading in a conventional or open market. Customers that trade on an electronic trading system are exposed to risks associated with the system including the failure of hardware and software and system downtime, with respect to the CAX FX platform, the individual customer's system(s), and the communications infrastructure (including, without limitation, the Internet), connecting the CAX FX platform. As a result of any system failure or other interruption, orders either may not be executed according to the customer's instructions or may not be executed at all, or a customer may not be able to place or change orders. vCap FX shall not be liable for any such failure of hardw are or software, system downtime or communications interruption.

Deposited Cash and Other Property; Risk of Default. The transactions you are entering into are not traded on an exchange. Therefore, under the U.S. Bankruptcy Code, your funds may not receive the same protections as funds used to margin or guarantee exchange-traded futures and options contracts, which receive a priority in bankruptcy. Since that same priority has not been given to funds used for off-exchange forex trading, if your prime broker becomes insolvent and you have a claim for amounts deposited or profits earned on transactions with your prime broker, your claim may not receive a priority. Without a priority, you are a general creditor and your claim will be paid, along with the claims of other general creditors, from any monies still available after priority claims are paid. Even customer funds that the prime broker keeps separate from its own operating funds may not be safe from the claims of other general and priority creditors.

Introducing Broker. vCap FX acts as the introducing broker to CAX FX. vCap FX does not operate a dealing desk nor does it trade against you. Furthermore, vCap FX does not act as the counterparty to your transactions and does not participate in the mark-up of the bid-ask spread. Unless otherwise disclosed to you, the prices at which your trades are executed are the same prices that we receive in offsetting your trades. vCap FX does not profit when you place a trade that loses money nor does vCap FX lose money when you place a trade that makes money.

Nonetheless, it is important to understand that the prime broker acts as the counterparty to all foreign currency contracts executed through the CAX FX System. The prime broker is not required to continue to make markets in foreign currency and may refuse to accept any order for any or no reason, including but not limited to the failure of a customer to have sufficient funds on deposit with the prime broker to margin the position, market volatility and illiquidity in the related interbank foreign currency market. In particular, during periods of market volatility, it may be difficult or impossible to liquidate an existing position, to assess the value of open positions, to determine a fair price or to assess the exposure to risk. For these reasons, transactions in foreign currency involve increased risks.

What Investors Need to Know

If you DO NOT meet the minimum requirements, you may be eligible for our alternate vCap Aggregated Solution. Please contact us at sales@vcap.com for your available options.