LMEX MARKETS · LEGAL

Risk Warning — Trading Leveraged Perpetual Contracts

[Effective at LD4 launch — date to be set]

Read This Before Trading

LMEX Markets is a venue for trading leveraged perpetual contracts and forex pairs. Trading these products carries a substantial risk of loss, including the potential loss of your entire posted Collateral. This Risk Warning sets out the specific risks of trading on LMEX Markets and supplements (rather than replaces) the general Disclaimers.

You are advised to read this Risk Warning in full before opening an account. By accepting our Terms of Service, you confirm that you have read, understood and accepted the risks set out below.

You should consult an independent financial, legal or tax advisor if you are in any doubt about whether leveraged derivatives trading is appropriate for your circumstances.

1. Leverage Risk

LMEX Markets offers leverage of up to 125× on certain markets. Leverage amplifies both gains and losses.

A 1% adverse move on a 100× leveraged position eliminates your entire posted Collateral on that position. A 0.8% move on a 125× position has the same effect. In practice, sustained high-leverage trading results in repeated full-Collateral losses for the majority of retail traders.

The published maximum leverage is what the Platform allows you to request; it is not a recommendation. Most active professional traders use leverage far below the published cap.

You may lose 100% of your posted Collateral. You may also incur losses exceeding your Collateral if the Liquidation engine cannot close a position at or before the bankruptcy price (see Section 7).

2. Liquidation Risk

When your account margin ratio falls below the maintenance margin requirement, the Platform's Liquidation engine will forcibly close one or more of your positions to restore the ratio.

Liquidation:

•can occur in seconds during periods of high volatility;

•requires no prior warning from the Platform;

•typically incurs a Liquidation fee (set out in the Fee Schedule);

•may close positions at prices materially worse than the calculated Liquidation price if the order book is thin.

You are responsible for monitoring your own margin ratio and for taking timely action to avoid Liquidation, including by adding Collateral or closing positions before the engine does so for you.

3. Cross-Margin Contagion

In Cross-Margin mode (the default), a single Collateral pool supports every open position on your account. This means:

•profits on one position increase the margin available for other positions;

•losses on one position consume margin that other positions rely upon;

•a large loss on a single position can trigger Liquidation of unrelated positions whose individual P&L is unaffected.

If you want to ring-fence a particular position so that losses on it cannot cascade into your other positions, use Isolated Margin for that position. Cross-Margin is operationally simpler but carries contagion risk; Isolated Margin caps a position's loss at its dedicated margin sleeve at the cost of losing the offsetting benefit.

4. Funding Rate Cost

Perpetual Contracts settle a Funding payment every eight hours (at 00:00, 08:00 and 16:00 UTC). The funding flows between traders holding long positions and traders holding short positions, in proportion to the divergence between the Mark Price and the Index Price.

If you hold a position into a Funding settlement, you will either pay or receive a Funding payment. Funding rates can be material — during periods of one-sided market positioning, annualised funding can exceed 100% of position notional. A trader holding a position for several weeks during a sustained directional move can pay more in cumulative Funding than the gain or loss on the position itself.

Forex perpetual Funding rates additionally embed the interest rate differential between the two currencies and may flip sign as central bank policy shifts.

You should model the expected Funding cost into any long-hold strategy.

5. Mark Price and Index Price

Liquidation is triggered by the Mark Price, not by the Last Traded Price.

Mark Price is derived from the Index Price (an external reference) plus a moving-average premium over the Platform's own order book. This design protects against manipulation of the order book to trigger Liquidations.

During periods of low liquidity or extreme volatility, the Mark Price and the Last Traded Price can diverge meaningfully. A position may be Liquidated based on a Mark Price that is several percent away from where trades are currently occurring on the order book. You should not assume that the price shown on the trading screen is the price at which Liquidation will occur.

6. Off-Hours Liquidity (Equity and Commodity Perpetuals)

Equity perpetuals (AAPL-PERP, TSLA-PERP, NVDA-PERP and others) and certain commodity perpetuals have meaningfully thinner order books during off-peak hours — overnight, weekends, and US-market holidays.

In these windows:

•bid-ask spreads widen substantially;

•order book depth is reduced;

•Liquidation slippage is materially higher;

•a position carrying a leverage that is safe during peak hours may be effectively unsafe during off-peak hours.

You should consider reducing leverage on equity and commodity perpetual positions held overnight or into weekends.

7. Insurance Fund and Auto-Deleveraging

The Platform maintains an Insurance Fund that absorbs the shortfall between a position's calculated Liquidation price and its actual close price when the Liquidation engine cannot fill at the target. A healthy Insurance Fund protects profitable traders from socialised loss.

The Insurance Fund balance is published live at lmexmarkets.com on the home page and on the Fees page.

In extreme conditions — a flash crash deeper than the Insurance Fund can absorb, or an isolated market event in a thinly-traded contract — the Insurance Fund may be insufficient to cover the shortfall. In such circumstances the Platform reserves the right to apply Auto-Deleveraging (ADL), under which the gains of profitable traders on the opposite side of an under-collateralised position may be partially clawed back to make the affected position whole.

You should be aware that ADL, while rare, is a possibility in extreme conditions.

8. 24/7 Gap Risk

LMEX Markets operates 24 hours a day, 365 days a year. There are no market hours, no overnight halts, and no weekend closes during which losses are paused.

This is a feature for traders who want to react to news outside conventional market hours. It is also a risk: a position that moves adversely overnight or on a weekend will continue to move; there is no halt to limit the loss.

You should size positions and set risk parameters with the awareness that no market close will pause adverse movements on your behalf.

9. Concentration Risk

Cross-Margin allows you to allocate your Collateral across many positions simultaneously. This can be useful for diversification — but it can also create concentration risk if your positions are correlated.

A long crypto perpetual, a long crypto-correlated equity perpetual (e.g. NVDA, COIN, MSTR) and a short of a hedge that is itself crypto-correlated can together behave as a single concentrated bet — even though it appears as several separate positions on the account.

You should consider the correlation structure of your positions, not just the position count.

10. Hedge Unwind Risk (Arbitrage and Hedged Strategies)

Strategies that rely on offsetting two positions across different venues or asset classes — such as Funding Rate Arbitrage — depend on both legs remaining in place.

If the hedge leg fails (the spot exchange has an outage, withdrawals are frozen, an off-venue broker rejects the trade, or you lose API connectivity), the LMEX Markets leg becomes a directional position. A market move against an uncovered leveraged perpetual can wipe out the position rapidly.

You should plan for hedge-leg failure and either size positions to survive a temporary uncovered window or use stop-out logic to close the LMEX Markets leg automatically.

11. Regulatory and Tax Uncertainty

The regulation of leveraged crypto derivatives, equity perpetuals, and 24/7 forex products remains uncertain and varies significantly by jurisdiction. Laws and regulatory interpretations may change with little notice and may materially affect:

•whether the Services are available to you;

•the leverage available to you;

•the tax treatment of your trading activity.

You are solely responsible for understanding the legal and tax position in your jurisdiction.

12. Account-Security Risk

Account takeover is the most common cause of irrecoverable loss on any leveraged-derivatives venue — a stolen session can drain Collateral and place liquidation-triggering positions before the trader notices.

LMEX Markets offers TOTP-based two-factor authentication and email verification to mitigate this risk. With 2FA enabled, withdrawals and API-key rotation require a 6-digit code (or a single-use backup code) in addition to your session, so an attacker who steals only your password cannot drain funds. Without 2FA, the only thing standing between an attacker and your Collateral is your password.

We strongly recommend that every trader:

•enables 2FA before depositing significant funds;

•saves the backup codes in a password manager (printed copies tend to get lost);

•verifies their email so the security-event notifications and the withdrawal-blocking gate function as intended;

•never shares the API secret with anyone — LMEX Markets staff will never ask for it.

These measures are offered by the Platform but are not enforced; the consequences of an account compromise on an account without them are borne by the User.

13. Acknowledgement

By trading on LMEX Markets, you acknowledge that you have read, understood and accepted each of the risks set out above. You confirm that:

•you are aware that you may lose all of your posted Collateral;

•you have considered whether leveraged derivatives trading is appropriate for your financial circumstances;

•you are not relying on the Platform, its Affiliates, or any of their representatives for investment advice;

•you have read the Terms of Service, Disclaimers, Privacy Policy, Cookie Policy and Fee Schedule.