KEY INFORMATION DOCUMENT- CFD on a Cryptocurrency
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 Cryptocurrency:
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 to https://www.agefx.io/ for more information.
This document was last updated on 25 October 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. A cryptocurrency is a virtual currency that is
not issued or backed by a central bank or government. The price of the CFD is derived from the price of specific
cryptocurrency exchanges and are traded on cryptocurrency exchanges. CFD trading allows a trader to speculate on
rising or falling prices in an underlying Cryptocurrency. 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. AgeFX offers trading
opportunities on a wide range of Cryptocurrencies. All Cryptocurrency trades involve one Cryptocurrency and one
Currency (e.g. Bitcoin/USD).The first currency of the pair (e.g. BIC) is called the base currency, while the second
currency (e.g. USD) is called the Quote currency. The price quoted on the platform, represents the price that one
Bitcoin is worth in US Dollars. 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.
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
Cryptocurrency (whether up or down), without the actual need to buy or sell the respective underlying Cryptocurrency.
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 Cryptocurrency 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 Cryptocurrency is going to decrease, you would sell a number of CFDs with the intention to later buy them back at a
lower value. However, if the Cryptocurrency 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 Cryptocurrencies 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 Cryptocurrencies 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 Cryptocurrency 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
7
2
6
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 Cryptocurrency 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 of 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 Cryptocurrency
(held ay)
intrad
Litecoin/USD pair opening price:
(P)
137
Trade size (per CFD):
(TS)
1 LOT (20 Units for LTC/EUR)
Margin %:
Leverage:
(M)
50%
(L)
1:2
Margin Requirement ($):
Notional value of the trade ($):
MR = P x TS x M
$1,370
TN = MR x L
$2,740
Table 1:
BUY/LONG
Closing
Price
Profit/Lo ss SELL/SHORT
Closing
Price
Profit/Lo
Performance
chang
Performance
price(in chang
ss
Scenario
Pri
e
Scenario
e
ce (inc.
c.
spread)
spread)
Favourabl e
153.44
12%
$328.80
Favour able
120.56
-12%
$328.80
Moder ate
142.48
4%
$109.60
Moder ate
131.52
-4%
$109.60
Unfavour able
130.15
-5%
$ -137
Unfavo urable
143.85
5%
$ -137
Stres
116.45
-15%
$ -411
Stres
157.55
15%
$ -411
s
s
The figures shown above indicate intraday trading; 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 on Cryptocurrency positions?
Before you trade CFDs on Cryptocurrencies, 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
costs
are denominated in a currency other than the base currency of your
Currency Conversion
account, will be converted to the base currency of your account and a
currency conversion fee will be charged to your account.
A fee is charged to your account for every night that your position is held.
Ongoing
Daily holding
This means the longer you hold a position, the more it costs. On
costs
Cost/Swap/Rollover
Wednesdays, Swap is 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 on a Cryptocurrency 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 and in
particular with the contractual information available at https://www.agefx.io/, under the legal tab.