KEY INFORMATION DOCUMENT- CFD on a Commodity
Purpose
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.
Product: CFDs on a Commodity
Product manufacturer: FP Asset Management Cyprus Ltd (AgeFX), authorised and regulated by the Cyprus Securities and
Exchange Commission (CySEC) with CIF licence number 317/17. Go thttps://www.agefx.io/ for more information.
This document was last updated on 15 December 2019.
RISK WARNING: You are about to purchase a product that is not simple and may be difficult to understand. This
product may not be suitable for all investors. Please ensure that you fully understand the risks involved.
What is this product?
Type
A contract for difference (“CFD”) is a popular form of derivative trading. The price of the CFD on a Commodity is derived from
the price of the respective underlying commodity. CFD trading allows a trader to speculate on rising or falling prices in an
underlying commodity. Even though you will never own the underlying asset, your return or loss depends on movements in the
price of the underlying and the size of your position. For any CFD two prices are quoted: (a) the higher price (‘Ask’), at which
the investor can buy (‘go long’) and (b) the lower price (‘Bid’), at which the investor can sell (‘go short’). The difference between
the two is the spread. The leverage embedded within CFDs has the potential to magnify your profits or losses. AgeFX offers
trading opportunities on a wide range of commodities such as Gold, Silver and Sugar.
CFD transactions with AgeFX are not undertaken on a recognized exchange/regulated market, rather they are undertaken over
the counter (OTC).
Objectives
The objective of the CFD is to allow an investor to gain exposure to the movement in the value of the underlying Commodity
(whether up or down), without the actual need to buy or sell the respective underlying Commodity. One of the key features of
trading CFDs is that the exposure is leveraged, since the CFD only requires a small proportion of the notional value of the
contract to be put down upfront as initial margin.
If you believe that the value of a Commodity is going to increase, you would buy a number of CFDs with the intention to later sell
them when they are at a higher value. The difference between the buy price and your sell price, minus any relevant costs (see
below for costs), equates to your profit. On the other hand, if you think that the price of a Commodity is going to decrease, you
would sell a number of CFDs with the intention to later buy it back at a lower value. However, if the Commodity moves in the
opposite direction and your position is closed, you would owe us the amount of any loss you have incurred (subject to our
negative balance protection).
CFDs on Commodities traded with AgeFX do not have a pre-defined maturity date and are therefore open-ended. There is no
recommended holding period and it is up to the discretion of each trader to determine the most appropriate holding period
based on their own individual strategy and objectives. Finally, trading on margin can increase any losses or gains you make.
Intended Retail Investor
Trading CFDs on Commodities is not appropriate for everyone. These products are most commonly intended for traders who
have knowledge and/or experience to understand the characteristics of CFDs and risks associated with trading on margin; want
to generally gain short term exposures to financial instruments/markets; are trading with money they can afford to lose; and
have a high risk tolerance.
Term
CFD positions generally have no fixed or suggested maturity date. It’s up to each individual trader to decide the appropriate time
to open and close his positions.
Nevertheless, failure to deposit additional funds in order to meet margin requirement as a result of negative price movement, may
result in the CFD position being auto-closed.
What are the risks and what I could get in return? Risk indicator
1
3
4
5
6
7
2
LOWER RISK
HIGHER RISK
There is no recommended or minimum holding period for this product. You must maintain sufficient margin in your
account to keep your positions open. Trading on margin means you could quickly lose your trading balance.
The summary risk indicator is a guide to the level of risk of this product compared to other products. It shows how likely it is that
the product will lose money because of movements in the markets. We have classified this product as 7 out of 7, which is the
highest risk class. This is because there is a chance that you could lose all of your trading balance.
Trading risks are magnified by leverage. Values may fluctuate significantly in times of high volatility or market/economic
uncertainty; such swings are even more significant if your positions are leveraged and may also adversely affect your position.
As a result, Margin calls may be made quickly or frequently, and in the event of default, your positions may be closed out. Trade
only after you have acknowledged and accepted the risks. You should carefully consider whether trading in leveraged products
is appropriate for you.
Be aware of currency risk. You may receive payments in a different currency; therefore the final return you will get depends on
the exchange rate between the two currencies. This risk is not considered in the indicator shown above.
Market conditions may mean that your CFD trade on a commodity is opened and closed at a less favourable price, which could
significantly impact how much you get back. We may close your open CFD contract if you do not maintain the minimum
margin that is required, or if you contravene market regulations. For more information on Margin we encourage you to review
our Margin Information.
Technical Risks. Since trading of the product depends on technology i.e. PC, mobile phone, internet etc., you are exposed to
electronic disruptions, leading to delays in the opening and closing of a transaction, for which AgeFX shall not be held liable.
This product does not include any protection from future market performance so you could lose some or all of your trading balance.
For more information on the Risks associated with trading the product, please see our Risk disclosure document.
Performance scenarios
Market developments in the future cannot be accurately predicted. The scenarios shown are only an indication of some
of the possible outcomes based on recent returns. Actual returns could be lower
The below scenarios illustrate potential profit and loss under different scenarios. You can compare them with the scenarios o f
other products. The scenarios presented are an estimate of future performance based on evidence from the past on how the
value of this investment varies. In any case, your profit or loss depends on how the market behaves and how long you hold the
CFD. The stress scenario shows what you might get back during extreme market circumstances, when the market is very
volatile.
The following assumptions have been used to create the scenarios found in table 1 below:
CFD on a Commodity (held intraday)
Gold Commodity opening price:
(P)
$1,300
Trade size (per CFD):
(TS)
1 LOT (100 Oz in the Gold
Commodity)
Margin %:
(M)
10%
Leverage:
(L)
1:10
Margin Requirement ($):
MR = P x TS x M
$13,000
Notional value of the trade ($):
TN = MR x L
$130,000
Table 1:
BUY/LON
G Closing
Price
Profit/Loss SELL/SHO RT
Closing
Price
Profit/Loss
Price (incl.
change
price (inc.
change
Performan
ce
spread)
Performan ce
spread)
Scenario
Scenario
Favourable
$1,339
3%
$3,900
Favourable
$1,261
-3%
$3,900
Moderate
$1,320
1.5%
$2,000
Moderate
$1,280
-1.5%
$2,000
Unfavoura ble
$1,261
-3%
$-3,900
Unfavoura ble
$1,339
3%
$-3,900
Stress
$1,222
-6%
$-7,800
Stress
$1,378
6%
$-7,800
The figures shown above indicate intraday trading and thus do not include the cost of positions held open overnight. If you have
been sold this product by someone else, or have a third party advising you about this product, these figures do not include any
cost that you pay to them. The figures do not take into consideration personal tax situation, which may affect how much you
get back.
What happens if AgeFX is unable to pay out?
If AgeFX or its liquidity provider is unable to meet its financial obligations to you, this could cause you to lose the value of any
position’s you have with AgeFX. However, in such cases, you may be eligible for Compensation under the Investors’
Compensation Fund (ICF), which covers eligible investments up to EUR 20,000 per person, per firm. If you wish you may get
more information on the ICF click here. AgeFX segregates your funds from its own money in accordance with the Cyprus
CySEC Client Asset rules. The indicator shown above does not consider this protection.
What are the costs for CFDs Commodity positions?
Before you trade CFDs on Commodities, you should familiarise yourself with all the below costs for which you will be liable and
which are capable of reducing your net profits or increase your losses. For more information on costs please view our General
Fees Document. The below table portrays an illustration of types of costs along with their meaning:
Spread
The difference between the buy price and the sell price is called the spread. This cost
is realised each time you open and close a trade.
One off
Any cash, realised profit and losses, adjustments, fees and charges that are
costs
denominated in a currency other than the base currency of your account, will be
Currency Conversion
converted to the base currency of your account and a currency conversion fee will
be charged to your account.
Daily holding
A fee is charged to your account for every night that your position is held. This
Ongoing
Cost/Swap/Rollover
means the longer you hold a position, the more it costs. On Wednesdays, Swap is
costs
charged 3 times. Swap can be viewed on the trading platform.
How long should I hold it and can I take money out early?
There is no recommended holding period. You can open and close a CFD position on a Commodity at any time during market
hours.
How can I complain?
The Company has established and maintains a Complaints Handling Procedure. If you wish to submit a complaint you can submit
the online form via the following link or send an email to complaints@agefx.io .
Other relevant information
The information contained in this information document should be read in conjunction with other legal documentation will in
particular the contractual information available at https://www.agefx.io/ under the legal tab.