RISK DISCLOSURE STATEMENT
The purpose of the Risk Disclosure Statement (“the Statement”) is to provide the Client appropriate guidance on the nature and risks of the specific types of financial instruments offered by LeadCapital Markets Limited (hereafter the “Company”).
The Client acknowledges, understands and agrees with the risks, disclosed below.
This Statement is based on the provisions of the Investment Services and Activities and Regulated Markets Law of 2007 (No. 144(I)/2007), implementing Directive 2004/39/EC of the European Parliament and of the Council on Markets in Financial Instruments (“MiFID”). When trading in CFDs in Cryptocurrency, you should be aware that the Cryptocurrencies are not recognized as Financial Instruments for the purposes of MiFID. Cryptocurrencies are traded on non-regulated decentralized digital exchanges. It should be noted that this Statement does not purport to disclose, or discuss all of the risks and other significant aspects of all transactions entered into with or through the Company. We outline the general nature of the risks of dealing in Financial Instruments on a fair and non-misleading basis. Therefore, you need to ensure that your decision is made on an informed basis and as a minimum you should be taking into consideration all the following disclosed below.
Trading is very speculative and risky. Contracts for Difference (‘CFDs’) are complex financial products, most of which have no set maturity date. Therefore, a CFD position matures on the date you choose to close an existing open position. CFDs, which are leveraged products, incur a high level of risk and can result in the loss of all of your invested capital. Trading in CFDs is highly speculative and therefore is suitable only for those Clients who (a) understand and are willing to assume the economic, legal and other risks involved, (b) are financially able to assume the risk of losses up to their invested capital and (c) understand and are knowledgeable about CFDs and the underlying assets. The Client represents, warrants and agrees that he/she understands these risks, is willing and able, financially and otherwise, to assume the risks of trading in CFDs. Before deciding to trade, a client should ensure that he understands the risks involved and take into account his level of experience, and if necessary seek independent advice. The Client is responsible for all the losses suffered in his account. Consequently, the Client should be prepared to lose all the invested capital.
Risks Associated with Transactions in CFDs When trading in CFDs you need to take into account the following main risks:
• CFDs are leveraged products; therefore, they carry a higher level of risk to your capital compared to other financial products and may result in the loss of all of your invested capital. However, it should be noted that the Company operates on a ‘negative balance protection’ basis; this means that you cannot lose more than your initial investment.
• The value of CFDs may increase or decrease depending on market conditions, and the potential for profit should be balanced alongside the significant losses that may be generated over a very short period of time when trading CFDs.
• CFD trading, unlike traditional trading, enables you to trade the markets by paying only a small fraction of the total trade value. However, this entails that a relatively small market movement may lead to a proportionately much larger movement in the value of your position. The Company offers flexible leverage starting from 1:1 to 1:300. However, it should be noted that the leverage for Cryptocurrencies are set to 1:5.
• The Client needs to make sure that he has sufficient margin in his trading account, at all times, in order to maintain an open position. In addition, the Client needs to continuously monitor any open positions in order to avoid positions being closed due to the unavailability of funds; it should be noted that the Company is not responsible for notifying you for any such instances.
Conflicts of Interests. The Company is the counterparty to all transactions entered into under the Client Agreement and, as such, the Company’s interests may be in conflict with the Client’s. The Conflicts of Interest Policy is available at the Company’s website.
Prices are set by the Company and may be different from prices reported elsewhere. The Company will provide the prices to be used in trading and valuation of the Client’s positions in accordance with its Trading Policies and Procedures. As such, they may not directly correspond to real time market levels at the point in time at which the sale of options occurs. The price formation and movements of the Cryptocurrencies are subject to internal rules of the particular digital exchange, which can change at any point in time and without notice. This often leads to a very high intra-day volatility in the prices of the Cryptocurrencies which may be considerably higher in comparison with other Financial Instruments which are recognized under the MiFID. Our pricing data and market in Cryptocurrencies are originated from the digital non-regulated and decentralized exchanges the Cryptocurrencies are traded on where the market data and price feed information provided could be subject to the internal rules and practices which differ from the rules and practices of regulated exchanges. For this reason, considering the pricing formation rules of the Cryptocurrency exchanges are not subject to any regulatory supervision could be changed at the relevant digital exchange’s discretion at any time. Also, such digital exchanges may introduce trading suspensions or take other actions that may result in suspension or cessation of trading on such exchanges or the price and market data feed becoming unavailable to us. The above factors could result in material adverse effect on your open positions, including the loss of all of your invested amounts. Where a temporary or permanent disruption to or cessation of trading occurs on any digital exchange from which we derive our price feeds for the relevant Cryptocurrency, your positions in such Cryptocurrency will be priced at the last available price for the relevant Cryptocurrency, and you may be unable to close or liquidate your position or withdraw any funds related to such position until the trading on the relevant digital exchange resumes (if at all). You accept that where trading resumes again at either the relevant initial digital exchange or on any successor exchange thereof, there may be significant price differential (price gapping) which may impact the value of your CFD positions in the relevant Cryptocurrencies and result in significant gains or losses. Where trading does not resume your entire investment will potentially be lost altogether.
Rights to Underlying Assets. The Client have no rights or obligations in respect of the underlying instruments or assets relating to the CFDs.
Telephone Orders and Immediate Execution. Market orders executed over the telephone through the Company’s Dealing Room are completed when the Company’s telephone operator says “deal” or “done” following the Client’s placing of an order. Upon such confirmation of the telephone operator, the Client has bought or sold and cannot cancel the order. By placing orders through the Company’s Dealing Room, the Client agrees to such immediate execution and accepts the risk of this immediate execution feature.
The Company is not an adviser or a fiduciary to customer. Where the Company provides generic market recommendations, such generic recommendations do not constitute a personal recommendation or investment advice and do not consider any of the Client’s personal circumstances or investment objectives, nor is it an offer to trade, or the solicitation of an offer to trade, in any CFD. Each decision taken by the Client to trade in CFDs with the Company and each decision as to whether a transaction is appropriate or proper for the Client is an independent decision made by the Client. The Company is not acting as an advisor or serving as a fiduciary to the Client. The Client agrees that the Company has no fiduciary duty to the Client and no liability in connection with and is not responsible for any liabilities, claims, damages, costs and expenses, including attorneys’ fees, incurred in connection with the Client following the Company’s generic trading recommendations or taking or not taking any action based upon any generic recommendation or information provided by the Company.
Recommendations are not guaranteed. The generic market recommendations provided by the Company are based solely on the judgment of its personnel and should be considered as such. The Client acknowledges that it enters into any transactions relying on his/her own judgment. Any market recommendations provided are generic only and may or may not be consistent with the market positions or intentions of the Company and/or its affiliates. The generic market recommendations of the Company are based upon information believed to be reliable, but the Company cannot and does not guarantee the accuracy or completeness thereof or represent that following such generic recommendations will reduce or eliminate the risk inherent in trading CFDs.
No guarantees of profit. There are no guarantees of profit nor of avoiding losses when trading in CFDs. The Client has received no such guarantees from the Company or from any of its representatives. The Client is aware of the risks inherent in trading CFDs and is financially able to bear such risks and withstand any losses incurred. In case of any dispute with the Company regarding the Cryptocurrencies transactions, clients have no right to escalate the complaints to the Cyprus Financial Ombudsman.
a. Technical Risks
• Internet Trading. When the Client trades online (via the internet), the Company shall not be liable for any claims, losses, damages, costs or expenses, caused, directly or indirectly, by any malfunction or failure of any transmission, communication system, computer facility or trading software, whether belonging to the Company, the Client, any exchange or any settlement or clearing system.
• Telephone Orders. The Company is not responsible for disruption, failure or malfunction of telephone facilities and does not guarantee its telephone availability. For the avoidance of doubt, the Client is aware that the Company may not be reachable by telephone at all times and thus the Client can place his orders through online access to the Company’s Trading Platform.
b. Market Conditions. The Client acknowledges that under Abnormal Market Conditions the Company may be unable to execute the Client’s instructions and therefore the period during which the Instructions and Requests are executed may be extended.
• The Company bears no responsibility for any loss that arises as a result of delayed or unreceived communication sent to the Client by the Company.
• The Company bears no responsibility for any loss that arises as a result of encrypted information sent to the Client by the Company, that has been accessed via unauthorised means.
• The Company bears no responsibility for any unreceived or unread internal messages sent to the Client through the trading platform(s); in case a message is not received or read within 3 (three) calendar days, the message gets automatically deleted.
• The Client is solely responsible for the privacy of any information contained within the communication received by the Company.
• The Company has no responsibility regarding any loss as a result of authorized/unauthorised access to all information between the Company and the Client by third persons.
d. Force Majeure Event. In case of a Force Majeure Event the Client shall accept the risk of any loss arising.
e. Taxes. The Client shall make sure that investing in CFDs is not subject to tax and/or any other duty in the Client’s jurisdiction. The Client is responsible for any taxes and/or any other duty which may accrue in respect of his trades.
Costs, Swap Value and Other Considerations. Prior to investing in CFDs the Client needs to be aware of any costs involved, such as spread(s), commission(s) and swap(s). For the purposes of this Statement, a swap means the interest added or deducted for holding a position open overnight. The swap for a position opened on Wednesday and held open overnight is three times that of other days; the reason for this is that the value date of a trade held open overnight on a Wednesday would normally be Saturday, but since banks are closed, the value date is Monday and the client incurs an extra 2 (two) days of interest. From Friday to Monday swap is charged once.
Expiry System Errors. In case the expiry system fails for any reason, it will auto detect un-expired options and expire them in accordance to the rates stored historically in the archive. If any position did not expire on time, the system will issue a notification to Risk Manager and Compliance Officer, detailing all position information, in order to be resolved manually.
Compensation. The Company participates in the Investor Compensation Fund for clients of Investment Firms regulated in the Republic of Cyprus. The Client will be entitled to compensation under the Investor Compensation Fund where the Company is unable to meet its duties and obligations arising from the Client’s claim. Any compensation provided to the Client by the Investor Compensation Fund shall not exceed twenty thousand Euro (EUR 20.000). This applies to the Client’s aggregate claims against the Company. The Fund does not cover compensation for Cryptocurrencies considering that there is no specific EU regulatory framework which governs trading in such products and such trading falls outside the scope of the Company MiFID regulated activities.
I / WE HAVE READ, UNDERSTOOD AND AGREE TO THE RISK DISCLOSURE STATEMENT AND THE TRADING POLICIES AND PROCEDURES SET OUT ABOVE.