It is a regulatory requirement for financial advisers to explain any potential additional obligations for...

Derivatives (e.g., options, futures, swaps) carry high complexity and risk, requiring financial advisers to disclose additional obligations under regulatory guidelines.

Why Required?

High Leverage Risk: Clients may lose more than their initial investment.

Margin Calls: Clients may be required to add additional funds if the position moves against them.

Complex Nature: Not all retail investors understand derivative pricing and risk exposure.

Regulation: The FCA Conduct of Business Sourcebook (COBS 14) requires full disclosure for derivative products.

???? Reference: FCA Handbook (COBS 14), CISI Wealth & Investment Management.