Additional Risk Disclosures for Commodity Perpetuals

IMPORTANT
Trading in Commodity Perpetuals and using the trading and related services involve risks, some of which are set out below. These risks, and additional risks arising either now or in the future, could result in the loss, failure or destruction of your assets, inability to receive any benefits available to you, other losses and termination of our trading and related services. You must consider carefully whether the risks set out below, as well as all other applicable risks, are acceptable to you prior to any transaction in Commodity Perpetuals. You must seek professional advice regarding your particular situation before trading in Commodity Perpetuals or using the trading and related services.

THE RISK OF LOSS IN TRANSACTIONS INVOLVING COMMODITY PERPETUALS CAN BE SUBSTANTIAL. YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRANSACTIONS ARE SUITABLE FOR YOU IN LIGHT OF YOUR INVESTMENT OBJECTIVES, FINANCIAL CIRCUMSTANCES, RISK TOLERANCE AND INVESTMENT EXPERIENCE. YOU SHOULD BE CAPABLE OF BEARING A TOTAL LOSS OF THE COLLATERAL AND OTHER ASSETS ALLOCATED BY YOU TO SUPPORT YOUR COMMODITY PERPETUALS POSITIONS. COMMODITY PERPETUALS ARE COMPLEX, HIGHLY LEVERAGED DERIVATIVE PRODUCTS AND ARE NOT SUITABLE FOR ALL INVESTORS. IN CONSIDERING WHETHER TO TRADE OR INVEST, YOU SHOULD INFORM YOURSELF AND BE AWARE OF THE RISKS GENERALLY, AND IN PARTICULAR SHOULD NOTE THE FOLLOWING SPECIFIC RISK FACTORS WHICH MAY APPLY TO ANY GIVEN COMMODITY PERPETUALS TRANSACTION.

RISK DISCLOSURES FOR COMMODITY PERPETUALS

Commodity Perpetuals are intended only for those Clients whom HMF permits to access the product in accordance with Applicable Laws and HMF’s product eligibility, onboarding, knowledge assessment and account-opening requirements from time to time. Commodity Perpetuals are settled and/or margined only in USDT or another Virtual Asset permitted under Applicable Laws and compliant with the VARA Rulebooks, as specified by HMF from time to time. Unless otherwise defined in this document, capitalised terms shall have the same meanings as in the Investor Business Terms, the Additional Terms Applicable to Perpetual Futures Products and the Additional Terms Applicable to the Commodity Perpetuals Product.
1.    Commodity Perpetuals are derivative products and may not be suitable for all Clients. Commodity Perpetuals are complex, leveraged derivative contracts that allow you to speculate on the price movements of one or more Underlying Commodity References, for example, crude oil, natural gas, agricultural commodities, metals, commodity indices or exchange-traded products, without owning or taking delivery of the underlying commodities. Commodity Perpetuals are settled and/or margined only in USDT or another Virtual Asset permitted under Applicable Laws and compliant with the VARA Rulebooks, as specified by HMF from time to time. Unlike traditional commodity futures, Commodity Perpetuals have no fixed expiry date, enabling Positions to be held indefinitely, subject to margin and risk controls. Key features include:
•    Price tracking and convergence mechanisms: Commodity Perpetuals aim to track the Reference Price of the Underlying Commodity References through Funding mechanisms, roll conventions and other pricing adjustments, where periodic Funding payments are exchanged between long and short Position holders and, where applicable, roll adjustments are applied when reference contracts change.
•    Leverage and margining: Positions are leveraged, meaning you can control a larger notional exposure with a smaller initial margin. Gains and losses are amplified, and you may lose all of the Collateral allocated to a Position in a short period of time.
•    Trading and settlement: Trades are executed on our platform via order matching. Positions are managed through margin requirements, real‑time mark‑to‑market valuations, Funding payments, roll adjustments and automated liquidation processes to prevent credit exposure, and settlement is effected only in USDT or another Virtual Asset permitted under Applicable Laws and compliant with the VARA Rulebooks, as specified by HMF from time to time.
•    Risk management: We employ risk-management mechanisms, including an Insurance Fund and loss-allocation procedures, for example, Auto-Deleveraging, to support orderly markets and manage default risk.
By trading Commodity Perpetuals, you acknowledge that these characteristics can lead to rapid and substantial financial outcomes, positive or negative. You should monitor your Positions closely, as commodity markets and Commodity Perpetual prices can change unpredictably.

2.    Reference-contract roll risk. Where a Commodity Perpetual references a commodity futures contract, index or benchmark that rolls from one delivery month or reference contract to another, HMF may periodically roll the reference in accordance with its published roll procedure or applicable methodology. A roll may cause a price step, roll gap, change in basis or other discontinuity affecting the Reference Price, Mark Price, Funding, margin requirement, liquidation price and realised or unrealised profit and loss on your Position.

3.    Term-structure risk, including contango and backwardation. Commodity futures prices may reflect storage costs, financing costs, insurance, convenience yield, supply-demand expectations and other cost-of-carry factors. These factors may result in contango, backwardation or other term-structure effects that are reflected in Funding, roll adjustments or pricing. In persistent contango, long Positions may incur sustained adverse Funding or roll effects that erode value even if the spot commodity price is unchanged. In backwardation, short Positions may face comparable adverse effects.

4.    Commodity trading calendars and maintenance windows. Commodity markets observe their own trading sessions, holidays, settlement cycles and maintenance windows. During such periods, out-of-hours pricing, clamping, reduce-only mode, leverage reductions, trading restrictions or other controls may apply. These measures may limit your ability to open, close, reduce or hedge Positions and may increase the risk of liquidation or losses when markets reopen.

5.    Supply, seasonality and geopolitical shock risk. Commodities are affected by physical supply and demand, inventory levels, weather, natural disasters, seasonal patterns, transportation constraints, storage capacity, production decisions, government policy, sanctions, export controls, geopolitical events and other shocks. Such events may cause abrupt gaps, extreme volatility, exchange limit moves or prolonged market dislocation, frequently outside regular trading hours.

6.    Exchange limit moves and market halts. Reference commodity markets may reach limit-up or limit-down levels, be halted or suspended, or become subject to emergency exchange action. In such circumstances, HMF may clamp the Reference Price or Mark Price, apply reduce-only mode, reduce leverage, restrict Orders, suspend trading, modify methodologies, or settle or terminate the Contract in accordance with the applicable terms. You may be unable to trade or hedge at the time when risk management is most needed.

7.    Benchmark discontinuity and methodology change risk. Changes to the referenced commodity contract, benchmark, index construction, data source, calculation methodology, roll methodology or settlement convention may create discontinuities in the Reference Price or Mark Price. HMF may replace, adjust or modify the relevant reference, methodology or data source in accordance with the applicable terms and Website disclosures. Such changes may affect your Position, Funding, margin requirement, liquidation price and realised or unrealised profit and loss.

8.    General leveraged, margin and liquidation risks. In addition to the commodity-specific risks described above, Commodity Perpetuals are subject to the general risks applicable to Perpetual Futures Products, including leveraged exposure, margin calls, cascading liquidations, Funding Rate volatility, mark-to-market processes and default-management processes such as Auto-Deleveraging. You should ensure that you maintain sufficient eligible Collateral in USDT or another Virtual Asset permitted under Applicable Laws and compliant with the VARA Rulebooks, as specified by HMF from time to time.

You must be prepared to sustain a total loss of the Collateral and other assets allocated to support your Commodity Perpetual Positions. If sufficient eligible Collateral is not available within the time required by HMF’s systems and rules, your Collateral may be used, applied, transferred, converted, sold or otherwise dealt with in accordance with the applicable terms, and forced position reduction, liquidation, close‑out, novation, settlement and other loss‑allocation actions may be taken without your consent. Any such margining, settlement or related application of Collateral in respect of Commodity Perpetuals will be conducted only in USDT or another Virtual Asset permitted under Applicable Laws and compliant with the VARA Rulebooks, as specified by HMF from time to time.

Hypothetical Scenario: A sharp move in energy Commodity Perpetual prices triggers widespread margin calls and liquidations. As Positions are forcibly closed, prices gap further, causing additional Positions, including those initially well-margined, to breach Risk Ratio thresholds. Your long Position, which previously had comfortable margin headroom, is liquidated at a worse-than-expected price as cascading liquidations accelerate the market move.

9.    Client responsibility and suitability. The risk of loss in Commodity Perpetuals is borne solely by you. It is your responsibility to understand the nature, features and risks of Commodity Perpetuals, to assess carefully whether they are suitable for you in light of your experience, objectives, financial condition and risk tolerance, and to seek professional advice where appropriate. You must continuously monitor your Positions, margin levels, Risk Ratios, Funding, roll schedules and the status of the relevant commodity markets, and ensure that sufficient eligible Collateral is maintained at all times. If you are uncomfortable with the risks described in these disclosures, you should not trade Commodity Perpetuals.