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Key Information Document

Забележка: Английската версия на това споразумение е основната версия и ще има предимство, когато има несъответствие между английската версия и версиите на други езици.

Key Information Document

Key Information – CFDs Generic


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This document provides you with key information about this investment product. It is not marketing material. The information is required by law to help you understand the nature, risks, costs, potential gains and losses of this product and to help you compare it with other products.

Date of the Document: 22 December 2017

TRADE.com is a trade name which offers CFDs and is operated by Leadcapital Markets Ltd, which is authorized and regulated by the Cyprus Securities and Exchange Commission, license number 227/14. Office Address: Strovolos, 128 – 130 Limassol Avenue, Office 301, 3rd floor, CY 2015, Nicosia, Cyprus.

YOU ARE ABOUT TO PURCHASE A PRODUCT THAT IS NOT SIMPLE AND MAY BE DIFFICULT TO UNDERSTAND.

 

What is this product?

Type

A contract for difference (CFD) is a popular form of derivative trading. CFD trading enables you to speculate on the rising or falling prices of fast-moving global financial markets (or instruments) such as stocks, indices, commodities, forex and bonds. Some of the benefits of CFD trading are that you can trade on margin, and you can go short (sell) if you think prices will go down or go long (buy) if you think prices will rise.

With CFD trading, you don’t buy or sell the underlying asset (for example a physical share, currency pair or commodity). You buy or sell a number of units for a particular instrument depending on whether you think prices will go up or down. For every point the price of the instrument moves in your favour, you gain multiples of the number of CFD units you have bought or sold. For every point the price moves against you, you will make a loss. Please remember that losses can exceed your deposits.

 

Objectives and means for achieving them

CFDs are a leveraged product, which means that you only need to deposit a small percentage of the full value of the trade in order to open a position. This is called ‘trading on margin’ (or margin requirement). While trading on margin allows you to magnify your returns, your losses will also be magnified as they are based on the full value of the CFD position, meaning you could lose more than any capital deposited.

Spread: When trading CFDs you must pay the spread, which is the difference between the buy and sell price. You enter a buy trade using the buy price quoted and exit using the sell price. The narrower the spread, the less the price needs to move in your favour before you start to make a profit, or if the price moves against you, a loss.

For example, if you think the price of oil is going to go up then you could place a buy trade of 5 CFDs at the price of 5325. If the market rose 30 points to 5350 and you closed out your position, you would make a $150 profit, 30 times the 5 contracts that you bought. However, if the market moves against you and the price of oil falls 30 points to 5300 then you would lose $150.

Unlike traditional share dealing, if you believe a market will fall in value, with CFD trading you can sell a market – known as going short – and make a potential profit from falling prices.

Example
The US 500 is trading at 2340. You believe the US 500 will fall as you expect the forthcoming US earning season to disappoint.

You open a sell position of 5 US 500 CFDs at 2340.

The US 500 falls by 65 points to 2275 and you decide to close your trade.

Hedging

As CFDs allow you to short sell and therefore make a potential profit from falling market prices, they can be used as a tool by investors as ‘insurance’ to offset losses made in their physical portfolios.

For example, if you hold £5,000 of Barclays shares and you are concerned that they are due for an imminent sell-off, you can help protect your share portfolio by short selling £5,000 of Barclays CFDs.

Should Barclays share prices fall by 5% in the underlying market, the loss in value of your share portfolio would be offset by a gain in your short sell CFD trade. In this way, you can protect yourself without going through the expense and inconvenience of liquidating your stock holdings.

 

Description of the type of intended retail investor

In order to trade in CFDs, investors should have knowledge and experienced in leveraged products. It is also expected investors to understand how the prices of CFDs are derived, the key concepts of margin and leverage and the fact that losses may exceed deposits. Indeed, they will understand the risk/reward profile of the product compared to 2 traditional shares dealing. Investors will also have appropriate financial means and the ability to bear losses in excess of the initial amount invested.

 

What are the risks and what could I get in return?

Risk Indicator

risk Smiley face

 

 

 

The risk indicator assumes that the actual risk can vary significantly if you cash in at an early stage and you may get back less considering also illiquid or not and have to pay significant extra costs to cash in early. When considered to have a materially relevant liquidity risk you may not be able to sell your product easily or you may have to sell at a price that significantly impacts on how much you get back. This product is classified as 7 out of 7, which is the highest risk class. These rates classify the potential losses from future performance of the product at a very high level.

CFDs are leveraged products that, due to underlying market movement, can generate losses rapidly. The capital protection against market risk, credit risk or liquidity risk is not available.

You need to be careful with the currency risk. The platform gives you the possibility to buy or sell CFDs in a different currency than the one of your account and the return you can get depends on the exchange rate between the two currencies. This risk is not considered in the indicator shown above.

Due to specific market conditions we can close your trades at a less favorable price, which could significantly impact how much you get back in case you do not maintain the minimum margin that is required or if you contravene market regulations. This product does not include any protection from future market performance, so you could lose some or all of your investment.

If we are not able to pay you what is owed, you could lose your entire investment. However, you may benefit from a consumer protection scheme (see the section “What happens if we are unable to pay you”). The indicator shown above does not consider this protection.

 

Performance scenarios

We are using indicative scenarios to illustrate how your investment could perform which can be compared with scenarios of any other products. Considering that the data are estimation of future performance based on previous data, please note that are not indicators for investments. Your results strongly depend on the market and maturity of the CFD.

Assuming that a CFD, that is held intraday, has the following specifications:

Price at Position Opening: 500 USD

Trade Size of CFD: 10

Margin Percentage: 3%

Margin Requirement: 150 USD

Nominal Value of the Trade: 5,000 USD

Investment Scenarios –

Long Position

Position close

Profit / (Loss)

Price Movement

Stress Scenario

Price at Position Closing: 480 USD

(200) USD

-4%

Unfavourable scenario

Price at Position Closing: 490 USD

(100) USD

-2%

Moderate scenario

Price at Position Closing: 510 USD

100 USD

2%

Favourable scenario

Price at Position Closing: 520 USD

200 USD

4%

 

What happens if the Company is unable to pay out?

Leadcapital Markets Ltd (“the Company”) is a member of the Investor Compensation Fund (the “Fund”) for Customers of Cyprus Investment Firms (CIFs) and other Investment Firms (IFs) which are not credit institutions, which was established under the Investment Firms Law 2002 as amended and replaced by Law 144(I)/2007 (the “Law”) and the Establishment and Operation of an Investor Compensation Fund for Customers of CIFs Regulations of 2001, which were issued under the Law.

On failure by a Company to fulfil its obligations, the fund compensation shall be up to a maximum amount of twenty thousand Euro (€20.000).

 

What are the costs?

The impact each year of the different types of costs on the investment return you might get at the end of the recommended holding period are shown below (impact on return per year).

 

One-off costs

Spread and Currency conversions

Ongoing costs

SWAPs

Incidental costs

Rollover, Distributor Fees

 

How can I complain?

You may submit a complaint through the following options: By post or by hand the attached Complaints Form at the address: Strovolos, 128 – 130 Limassol Avenue, Office 301, 3rd floor, CY 2015, Nicosia, Cyprus and by submitting the Complaints Form electronically at the Email: compliance@leadcapitalmarkets.com.

All complaints will be treated strictly confidential. If you believe that your Complaint has not been handled in a fair and equitable manner by the Company you have the right to refer the matter to the Financial Ombudsman of the Republic of Cyprus (complaints@financialombudsman.gov.cy), ADR Mechanism, or the relevant Courts.

 

Other relevant information

Leveraged trading in foreign currency contracts, contracts for difference or other off-exchange products carries a high level of risk and may not be suitable for everyone. Before trading, you are strongly advised to read and ensure that you understand the relevant risk disclosures and warnings here: Risk Disclosure Statement and our Terms & Conditions.

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