FOREIGN EXCHANGE CASE STUDY

Foreign Exchange Case Study



Foreign Exchange Case Study

Financial Services are provided by, and this PDS has been prepared and issued by, Sylvia Stock Financial Services Pty Ltd. Please note that the information contained in this Product Disclosure Statement (“PDS”) does not constitute a recommendation, advice or opinion and does not take into account your individual objectives, financial situation, needs or circumstances. This is a general advice document and should be read in its entirety. Before entering into a FFS Margin Foreign Exchange (“Margin FX”) transaction, you should obtain independent advice to ensure this is appropriate for your particular financial objectives, needs and circumstances. The distribution of this PDS (electronically or otherwise) in any jurisdiction outside Australia may be restricted by law and persons who come into possession of this PDS should seek advice on and observe any such restrictions.

Any failure to comply with such restrictions may constitute a violation of applicable law.We recommend that you also obtain independent taxation and accounting advice in relation to the impact of foreign exchange gains and losses on your particular financial situation. The taxation consequences of Margin FX transactions can be complex and will differ for each individual's financial circumstances, and your tax adviser should be consulted prior to entering into a Margin FX transaction (Porteous, 2005). FFS does not guarantee the investment performance of Margin FX products or the investment performance of the underlying markets or instruments.

Past presentation is no suggestion or assurance of future performance. Further few stages related to general are given below:

Step 1

Establishing a connection with the client

Some examples of foreign exchange and derivative products/services that you would like to be authorised to provide advice in:

*Hedging*Over the counter

*Speculation*Exchange traded

*Arbitrage*Options

1.2There are two benefits of explaining these products/services to the client.

Derivatives are utilised by investors to:

Provide leverage (or gearing), such that a little action in the underlying value can origin a large distinction in the worth of the derivative;

Speculate and make a profit if the value of the underlying asset moves the way they expect (e.g., moves in a given main heading, resides in or out of a specified variety, comes to a certain level);

Hedge or mitigate risk in the underlying, by going into a derivative agreement whose value moves in the converse direction to their underlying position and cancels part or all of it out;

Obtain exposure to the underlying where it is not possible to trade in the underlying (e.g., climate derivatives);

Conceive option proficiency where the value of the derivative is linked to a specific status or happening e.g., the underlying coming to a specific cost level (Berger, 2002).

2.Commissions and Fees

2.1Describe the types of fees clients are likely to pay in relation to your services and provide indicative costs.

Management fees

Performance fees

High water marks

Hurdle rates

Withdrawal/redemption fees

2.2There are two benefits of explaining fees to the client.

Hedge fund supervisor will typically obtain both an administration fee and a presentation charge (also known as an incentive charge) from the fund. Atypical supervisor may charge charges of "2 and 20", ...