Risk Policy

 

Introduction

CoinfloorEX offers you the ability to trade Physically Delivered (“PD”) Futures. Trading our Products carries a high degree of risk. This warning provides you with information about key factors and risks you should take into account before trading with us. It is not a complete list of all the risks and does not explain how these apply to your individual circumstances. You should ensure you understand these risks before trading with us. If anything is unclear, please contact us. If you open an account with us, you must keep these risk factors in mind at all times and ensure you have sufficient financial resources to bear such risk when you trade with us. You should always monitor your positions carefully.
 

Our Products

Our products allow you to obtain direct and indirect exposure to an underlying asset, cryptocurrencies. This means you will own the underlying asset if you choose to trade PD or will never own the underlying asset, creating cash like settlement, if you close or roll the position near expiry but you will make gains or suffer losses as a result of price movements in the underlying asset to which you have the indirect exposure.
 
Trading our products carries a high degree of risk and will not be appropriate for everyone.
 

Your losses can exceed your investment

Every financial investment involves a degree of risk. The value of your investments may increase or decrease and you may get back less than your initial invested capital. With some of our products, your losses may exceed your initial deposit, in which case you could owe us additional money.
 

The use of leverage magnifies your losses and gains

Our products are generally traded using leverage. Trading using leverage allows you to trade without paying or depositing the full value of your position in advance. We take a form of security (or deposit) against any losses you may incur when you trade using leverage. This is known as Margin. Trading on leverage magnifies your gains and losses, so small price changes in the underlying asset can result in large losses or gains. 
 
Your losses can quickly exceed your deposits.
 

The effects of trading on margin

For each transaction we require you to deposit and maintain a sum of money in your account known as "Margin". Margin acts as a deposit against the full value of the transaction. This is what creates the leverage referred to above. For example, we might ask you to deposit margin of 20% of the full value of the trade you wish to enter into. Insufficient margin can lead to you owing us money if any of your open positions are closed. Margin protects us in case you are not able to pay any money you might owe us when transactions are closed out. We set the amount of margin required and can alter it for any reason. 
 
You have to keep a minimum amount of money in your account to keep a position open. This is known as the "Margin Requirement". You must maintain sufficient Margin in your Account at all times to meet the Margin Requirement.
 
If the market moves against you, you may be required to pay substantial additional funds at short notice to maintain your Margin Requirement. If you fail to maintain your Margin Requirement, we may close your open positions without prior notification. 
 
You will be responsible for any losses you incur as a result.
 

The nature of the contracts between you and us

Every futures trade you enter into using our services is a contract between you and a counterparty. CoinfloorEX does not act as the seller when you buy, and the buyer when you sell. Even though this is the case you cannot transfer your contracts to other providers such as other exchanges.
 
You must close all contracts through us.
 

We do not provide advice

We provide our services on an execution only basis. This means we do not provide investment or financial advice for any product. Where we provide factual information, market commentary, transaction procedure guidance or methods of managing risk, you should not construe these as advice. You are solely responsible for any decision to enter into a transaction with us. You are responsible for managing your own tax, regulatory, and legal affairs, including where relevant any filings, payments, or returns. 
 
We do not provide any tax, legal, or regulatory advice. If you require assistance with a tax, legal or regulatory matters regarding our Products, you should seek independent professional advice.
 

Our Products are not appropriate for everyone

Prior to opening an account, we are required to assess whether our products are appropriate for you. We may refuse to open an account for you on the basis that we do not consider our services to be appropriate for you. We would not expect our services to be appropriate for people who:
 
- do not understand the impact of and risks associated with trading on margin and in derivative products;
- do not have a high risk tolerance;
- cannot afford to lose the money they are trading with; or
- do not already have a diversified investment portfolio or savings.
 
We will warn you if we do not consider our service to be appropriate for you. In such circumstances we may still let you open an account, but you do so at your own risk like all of our customers.
 

Pricing

 We have a straight forward pricing policy for our products, which are on a basis points of Dollar or other Currency value traded and is available via our website. These charges may change from time to time so please check our website on a regular basis.
 

Past performance is not an indication of future performance 

Past performance is not an indication of future performance. The value of investments can go down as well as up.
 

Markets are volatile and prices can change rapidly

 Financial markets in general and these products in particular, are volatile and can move rapidly, particularly in response to news events. This will have a direct impact on your profits and losses. Knowing the volatility of an underlying market will help guide you as to where any stops should be placed. Volatility can often be hard to predict and come unexpectedly.
 

Market liquidity

Market conditions can change significantly in a very short period of time. Under certain trading conditions it may be difficult or impossible to exit a position. This may occur, for example, at times of rapid price movement if the price rises or falls in one trading session or if trading is suspended or restricted at any point.

If our futures market is abnormally wide, this can create more liquidation events or greater losses on liquidation?

As liquidation is a function of order book depth & automatic, an unexpected widening of bids and offers or loss of liquidity on the order book could potentially trigger auto liquidations even though the underlying market may not have moved significantly.

We have a sanity check system in place that references our own spot exchange and other external sources to prevent excessively unreasonable liquidations and fat finger error trades but liquidations can occur inside this price band. This band is currently set at 15% above or below the referenced spot prices, but could vary significantly with market conditions, such as during periods of excessive volatility.


Monitoring open positions

 Markets can move quickly and consequently you should monitor open positions closely. It is your responsibility to monitor all of your open positions at all times. Whilst any position is open it is prudent to have the ability to access your accounts quickly and easily.
 

Electronic communications

 We offer you the ability to deal by electronic means, via our trading platform online. However, no electronic communication is completely reliable or always available. There is a risk that your communications to us via our trading platform may be delayed or not reach their intended destination.
 
There is a risk that a catastrophic failure of our internal systems could result in the loss of data recording individual account balances. We mitigate this risk by the frequent backup of data, by maintaining backup systems and through contingency plans to minimise the possibility of system failure.
 

Your client money may be at risk if the bank fails

All cash that we hold belonging to you is held as client money in line with the FCA’s Client Money Rules and will be held in a segregated account with a EU bank. We will take reasonable care in the selection and continued use of such a bank but, we cannot ensure that you will not lose any money if the bank fails or defaults in any way.
 

Tax

You will be liable for all taxes, fees and assessments for any transaction. We do not provide tax advice and if you are in any doubt as to your tax affairs, you should seek independent professional advice.