Not a time deposit - CLD is NOT the same as NOR should it be treated as a substitute for normal time deposits NOR exchange of currency.
Not a protected deposit - CLD is NOT principal protected and is NOT protected by the Deposit Protection Scheme in Hong Kong.
Not the same as buying the Linked Currency - Investing in CLD is NOT the same as buying the Linked Currency directly.
Derivatives risk - CLD is embedded with currency option. Option transactions involve risks, especially when selling an option. Although the premium received from selling an option is fixed, you may sustain a loss well in excess of such premium amount, and your loss could be substantial.
Limited potential gain - The amount of gain is limited to the pre-determined interest rate no matter how high the price of the Linked Currency has increased.
Maximum potential loss - CLD is NOT supported by any collateral and its earning is subject to the market risk. You will bear the potential losses due to the fall in exchange of the Linked Currency. Such losses may reduce the principal amount AND the interest earnings. You could lose the entire principal amount in the worst case scenario.
Market risk - The return of CLD is linked to the exchange rates of the Deposit Currency against the Linked Currency. Movements in exchange rates can be unpredictable, sudden and drastic, and affected by complex political and economic factors. You must be prepared to take risk, as the principal and interest may be converted into the Linked Currency.
Liquidity risk - CLD is designed to be held till maturity. You DO NOT have a right to request early termination of this product before maturity.
Credit risk of the Bank - CLD is NOT secured by any collateral and is subject to the credit risk / insolvency risk of the Bank. If the Bank becomes insolvent or defaults on its obligations under this product, you may lose the entire principal amount and will become an unsecured creditor of the Bank regardless of the performance of the Linked Currency.
Currency risk - If the Deposit Currency and / or Linked Currency is NOT in your home currency, and you choose to convert it back to your home currency upon maturity, you may make a gain or loss due to exchange rate fluctuations.
Risk of early termination by the Bank - The Bank has the right to terminate the account and services as described in the relevant Terms and Conditions which may induce loss to you.
Concentration risk - You have to be aware of the concentration risk of investment and are reminded to avoid over-concentration of investment in CLD.
