Coverdeal Holdings Limited (hereinafter referred to as the “Company”) is an Investment Firm regulated by the Cyprus Securities and Exchange Commission with license no. CIF 231/14.This notice is provided to you in accordance with Markets in Financial Instruments Directive (MiFID) of the European Union and the Investment Services and Activities and Regulated Markets Law of 2007 of Cyprus (Law 144(I)/2007).
The Client should not engage in any investment directly or indirectly in Financial Instruments unless he/she knows and understands the risks involved for each one of the Financial Instruments. So, prior to applying for an account the Client should consider carefully whether investing in a specific Financial Instrument is suitable for him/her in the light of his/her circumstances and financial resources.
The Client is warned of the following risks:
1. The Company does not and cannot guarantee the initial capital of the Client’s portfolio or its value at any time or
any money invested in any financial instrument.
2. The Client should acknowledge that, regardless of any information which may be offered by the Company, the value of any investment in Financial Instruments may fluctuate downwards or upwards and it is even probable that the investment may become of no value.
3. The Client should acknowledge that he/she runs a great risk of incurring losses and damages as a result of the purchase and/or sale of any Financial Instrument and accepts that he/she is willing to undertake this risk.
4. Information of the previous performance of a Financial Instrument does not guarantee its current and/or future performance. The use of historical data does not constitute a binding or safe forecast as to the corresponding future performance of the Financial Instruments to which the said information refers.
5. The Client is hereby advised that the transactions undertaken through the dealing services of the Company may be of a speculative nature. Large losses may occur in a short period of time, equaling the total of funds deposited with the Company.
6. Some Financial Instruments may not become immediately liquid as a result e.g. of reduced demand and the Client may not be in a position to sell them or easily obtain information on the value of these Financial Instruments or the extent of the associated risks.
7. When a Financial Instrument is traded in a currency other than the currency of the Client’s country of residence, any changes in the exchange rates may have a negative effect on its value, price and performance.
8. A Financial Instrument on foreign markets may entail risks different to the usual risks of the markets in the Client’s country of residence. In some cases, these risks may be greater. The prospect of profit or loss from transactions on foreign markets is also affected by exchange rate fluctuations.
9. A Derivative Financial Instrument (i.e. option, future, forward, swap, contract for difference) may be a non delivery spot transaction giving an opportunity to make profit on changes in currency rates, commodity, stock market indices or share prices called the underlying instrument.
10. The value of the Derivative Financial Instrument may be directly affected by the price of the security or any other underlying asset which is the object of the acquisition.
11. The Client must not purchase a Derivative Financial Instrument unless he/she is willing to undertake the risks of loosing entirely all the money which he/she has invested and also any additional commissions and other expenses incurred.
12. Under certain market conditions it may be difficult or impossible to execute an order.
13. Placing Stop Loss Orders serves to limit your losses. However, under certain market conditions the execution of a Stop Loss Order may be worse than its stipulated price and the realized losses can be larger than expected.
14. Should the margin capital be insufficient to hold current positions open, you may be called upon to deposit additional funds at short notice or reduce exposure. Failure to do so in the time required may result in the liquidation of positions at a loss and you will be liable for any resulting deficit.
15. A Bank or Broker through whom the Company deals or the Company itself may act in the same market as you, its own account involvement could be contrary to your interests.
16. The insolvency of the Company or of a Bank or Broker used by the Company to effect its transactions may lead to your positions being closed out against your wishes.
17. The Client’s attention is expressly drawn to currencies traded so irregularly or infrequently that it cannot be certain that a price will be quoted at all times or that it may be difficult to effect transactions at a price which may be quoted owing to the absence of a counter party.
18. Trading on-line, no matter how convenient or efficient, does not necessarily reduce risks associated with currency trading.
19. There is a risk that the Client’s trades in Financial Instruments may be or become subject to tax and/or any other duty for example because of changes in legislation or his/her personal circumstances. The Company does not warrant that no tax and/or any other stamp duty will be payable. The Client should be responsible for any taxes and/or any other duty which may accrue in respect of his/her trades.
20. Before the Client begins to trade, he/she should obtain details of all commissions and other charges for which the Client will be liable. If any charges are not expressed in money terms (but for example as a dealing spread), the Client should ask for a written explanation, including appropriate examples, to establish what such charges are likely to mean in specific money terms.
21. Investing in some Financial Instruments entails the use of “gearing” or “leverage”. In considering whether to engage in this form of investment, the Client should be aware that the high degree of leverage that is obtainable in Spot Foreign Exchange Trading can work against him/her as well as for him/her. The use of leverage can lead to large losses as well as gains. So, the Client should unreservedly acknowledge and accept that he/she runs a great risk of incurring losses and damages as a result of the dealing in some Financial Instruments and accepts and declares that he/she is willing to undertake this risk.
22. Transactions may not be undertaken on a recognised or designated investment exchange and, accordingly, they may expose the Client to greater risks than exchange transactions. The terms and conditions and trading rules may be established solely by the counterparty. The Client may only be able to close an open position of any given contract during the opening hours of the exchange. The Client may also have to close any position with the same counterparty with whom it was originally entered into. In regard to transactions in CFD’s with the Company, the Company is using a Trading Platform for transactions in CFD’s which does not fall into the definition of a recognised exchange as this is not a Multilateral Trading Facility because the Company may be a in a client transaction.
23. The Company will not provide the Client with investment advice relating to investments or possible transactions in investments or make investment recommendations of any kind.
24. The Company may be required to hold the Client’s money in an account that is segregated from other clients and the Company’s money in accordance with current regulations, but this may not afford complete protection. This notice cannot and does not disclose or explain all of the risks and other significant aspects involved in dealing in all Financial Instrument and investment services.
Please refer to the below additional information specific for Contract for Differences:
RISK DISCLOSURE FOR CONTRACTS FOR DIFFERENCE
This notice is provided to you in accordance with Markets in Financial Instruments Directive (MiFID) of the European Union and the Investment Services and Activities and Regulated Markets Law of 2007 of Cyprus (Law 144(I)/2007), because you are considering dealing with Company in the underlying financial instrument of Contract for Differences (CFDs).
This notice cannot and does not disclose or explain all of the risks and other significant aspects involved in dealing in CFDs. The notice was designed to explain in general terms the nature of the risks involved when dealing in CFDs and to help you take investment decisions on an informed basis.
The Client should consider carefully whether trading in the financial instruments of CFDs is suitable for him/her in the light of his/her circumstances and financial resources. In considering whether to engage in this form of trading, the Client should be aware of the following:
Risks Associated with Transactions in CFDs
It is emphasized that for many members of the public dealings in CFDs will not be suitable. The Client should not engage in any dealings directly or indirectly in CFDs unless he/she knows and understands the features risks involved in them.
1. The Client should unreservedly acknowledge and accept that, regardless of any information which may be offered by Company, the value of CFDs shall fluctuate downwards or upwards and it is even probable that the investment may become of no value.
2. The high degree of “gearing” or “leverage” is a particular feature of CFDs. This stems from the margining system applicable to such trades, which generally involves a comparatively modest deposit or margin in terms of the overall contract value, so that a relatively small movement in the underlying market can have a disproportionately dramatic effect on the Client’s trade. If the underlying market movement is in the Client’s favor, the client may achieve a good profit, but an equally small adverse market movement can not only quickly result in the loss of the Clients’ entire deposit, but may also expose the Client to a large additional loss. The CFDs available for trading with Company are non-deliverable spot transactions giving an opportunity to make profit on changes in currency rates, commodity, stock market indices or share prices called the underlying instrument. If the underlying instrument movement is in the Client’s favor, the Client may achieve a good profit, but an equally small adverse market movement can not only quickly result in the loss of the Clients’ entire deposit but also any additional commission and other expenses incurred. So, the Client must not enter into CFDs unless he/she is willing to undertake the risks of losing all the money which he/she has invested and also any additional commission and other expenses incurred.
3. Securities / Markets can be highly volatile. The prices of CFDs may fluctuate rapidly and over wide ranges and may reflect unforeseeable events or changes in conditions, none of which can be controlled by the Client or Company. Under certain market conditions it can be impossible to execute any type of Clients order at declared price.
4. The prices of CFDs will be influenced by, amongst other things, changing supply and demand relationships, governmental, agricultural, commercial and trade programs and policies, national and international political and economic events and the prevailing psychological characteristics of the relevant market place. Therefore Stop Loss order can not guarantee the limit of loss.
5. CFDs Transactions have a contingent liability, and the Client should be aware of the implications of this in particular the margining requirements as set out below.
6. Clients are required to deposit funds in their trading account in order to open a position. The Margin requirement will depend on the underlying instrument of the CFDs. Margin requirements can be fixed or can be calculated from the current price of the underlying instrument. Company will not notify the Client of any Margin Call to sustain a loss making position.
7. Some of the CFD instruments may not become immediately liquid as a result of reduced demand for the underlying instrument and Client may not be able to obtain the information on the value of these Financial instruments or the extent of the associated risks.
8. Information of the previous performance of the CFD does not guarantee its current and/or future performance as well as a performance of the underlying instrument. Use of historical data does not constitute safe forecast as to the corresponding future performance of the CFD and underlying instrument to which that information refers.
9. The Client may be called upon to deposit a substantial additional margin, at short notice, to maintain his/her investment. If the Client does not provide such additional funds within the time required, his/her investment position may be closed at a loss and he/she will be liable for any resulting deficit. With regards to transactions in CFDs, Company has the discretionary right to start closing positions starting form the one with biggest loss when margin decreases to approximately 10%, and automatically close all positions at market prices if margin level drops below 5%. Company will automatically close all positions at market price.
10. Transactions in CFDs are not undertaken on a recognised exchange. Rather they are undertaken via Company’ Trading Platform whereby execution is effected by Company or other financial institutions and, accordingly, CFDs may expose the Client to greater risks than regulated exchange transactions. The terms and conditions and trading rules are established solely by the counterparty which may be Company or some other financial institution to be disclosed to the Client. The Client may be obliged to close an open position of any given CFD during the opening hours of Company’ Trading Platform.
CFDs (“Contracts for Difference”) on BTS/USD, LTC/USD, ETH/USD
It is emphasized that Virtual Currencies are not regulated in the EU and therefore their price is instable and highly volatile and sharp movements in their price may occur, resulting to significant losses over a short period of time. Trading in BTS/USD, LTC/USD, and ETH/USD is not covered by MiFID because is not ready recognised and categorised as financial asset officially by the Cyprus Securities and Exchange Commission and thus falls outside the scope of MiFID regulated activities. Also, you are informed that clients have no rights to submit a complaint to the Cyprus Financial Ombudsman in case of a dispute with the Company, which relates with the trading in Virtual Currencies.
Trading in BTS/USD, LTC/USD, and ETH/USD does not entitle the investors to any protection under the Investors Compensation Fund. Virtual Currencies projection is complex and high risk and as such come with a high risk of losing all the invested capital in short period of time. Please be sure that you have the knowledge and expertise in the CFD Bitcoin, Litecoin, Ethereum derivative before you trade it, so as to ensure that you are fully aware and understand the specific characteristics and risks related to these products. If you are not fully informed, please take an expert advice before you set yourself in any related risk.
The provisions of the Commission’s Announcement dated on 18th of March 2014 have been taken into consideration by the Company for the purposes of offering investment services in relation to Bitcoin, Litcoin and Ethereum. In accordance with the Company’s assessment the following should be noted:
- Risk of lack of regulation
- there is no specific EU regulatory framework governing the trading in such products,
- trading in such products is not covered by MiFID and therefore falls outside the scope of the CIFs’ MiFID regulated activities,
- trading in such products does not entitle the investors to any protection under the Investors Compensation Fund,
- Clients have no rights to report to the Cyprus Financial Ombudsman in case of a dispute with the firm.
- Risk of losing the money on the trading platform:
The Bitcoins, Litcoin and Ethereum will be traded as all of the other financial instruments offered on the Company’s trading platform. Taking into consideration that the product will not been delivered and the trading is related with the difference in the price fluctuation, the risk of losing the money on the trading platform does not apply.
- Risk of stealing of the Bitcoins, Litcoin and Ethereum stored on the electronic wallet:
Sensitiveness and risks related with the hacking and other malware activities on Cryptocurrencies, do not apply in the offering of CFDs on Bitcoins, Litcoin and Ethereum by the Company since the price value of the virtual curencies is correlated with the value of the relevant CFD instead of the actual cash delivery of Bitcoin, Litcoin and Ethereum virtual currency
- Risks associated to the sudden movements in the price fluctuations:
The offering investment services in relation to Bitcoin, Litcoin and Ethereum will be provided to Retail and Professional Clients, classified as such in accordance with the Company’s Client Categorisation Policy. In accordance with the results of the assessment of appropriateness that is undertaken by each potential client, adequate risk warnings will be disseminated regarding the risks involved in the trading of complex products, including CFDs on Bitcoins, Litcoin and Ethereum. Additional risk warnings will be disseminated to clients regarding the lack of regulation over virtual currencies, instability and volatility of the price as well as that sharp movements in their price may occur.
For the purposes of mitigating the risks associated to the sudden movements in the price fluctuations of virtual currencies, the leverage available to clients interested in training of CFDs on virtual currencies is limited at the level 5:1, which is lower than the default leverage offered to the Company’s clients. Additionally, as per the provisions of Circular C168, the Company has ensured negative balance protection for its clients, factor that reducing the respective risk.
- Risks associated to the potential high degree of anonymity of Virtual Currencies:
The risks related with the money laundering and terrorism financing as a result of the anonymity of Litcoin and Ethereum, is considered as fully mitigated since no actual payments in any cryptocurrencies will be accepted by the Company for deposit or withdrawal purposes.
- Risks associated with the knowledge and experience of clients:
Taking into consideration that virtual currencies are not appropriate for all investors and therefore, investors should not trade in such products if they don’t have the necessary knowledge and expertise in this specific product. In addition, clients should always be fully aware and understand the specific characteristics and risks related to these products, in order for the Company to allow to them the trading in cryptocurrencies.
The Head of Reception and Transmission Department has the obligation to closely monitor the developments on Bitcoints, Litcoin and Ethereum and in general of Cryptocurrencies so as to ensure that timely updating of the respective policy, if deemed required, in collaboration with the Compliance Officer.
Other Additional Obligations
1. Before the Client begins to trade, he/she should obtain details of all commissions and other charges for which the Client will be liable, which may be found on Company’ website. Some charges may not be expressed in money terms but may, for example, be expressed as a dealing spread.
2. The Client takes the risk that his/her trades in CFDs may be or become subject to tax and/or any other duty, for example, because of any changes in legislation or changes to his/her personal circumstances. Company does not warrant that no tax and/or any other stamp duty will be payable. The Client should be responsible for any taxes and/or any other duty which may accrue in respect of his/her trades.