KEY INFORMATION DOCUMENT- CFD on an Index
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 an Index
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. The price of the CFD on an Index is derived from the price
of the respective underlying Index. CFD trading allows a trader to speculate on rising or falling prices in an underlying Index. 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
indices such as FTSE 100, Dax, NASDAQ.
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 Index (whether
up or down), without the actual need to buy or sell the respective underlying Index. 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 an Index 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 belo w
for costs), equates to your profit. On the other hand, if you think that the price of an Index 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 Index 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 Indices 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 Indices 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 maturity date. It’s up to each individual trader to decide the appropriate time to open and c lose 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
2
3
4
5
6
7
LOWER RISK
HIGHER RISK
There is no recommended or minimum holding period for this product. You must maintain sufficient margin in your
ccount 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 an Index 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 an Index (held intraday)
S&P 500 Index opening price:
(P)
$2,682
Trade size (per CFD):
(TS)
1 LOT (100Units in the S&P500 Index)
Margin %:
(M)
5%
Leverage:
(L)
1:20
Margin Requirement ($):
MR = P x TS x M
$13,410
Notional value of the trade ($):
TN = MR x L
$268,200
Table 1:
BUY/LO
NG Closing
Price
Profit/Loss SELL/SH
ORT Closing
Price
Profit/Loss
Price
change
price (inc.
change
Performa
(incl.
Performa
nce
Scenari nce
Scenari
spr
spre
ead o
ad) o
Favourable
$2,735.64
2%
$5,364
Favourable
$2,628.36
-2%
$5,364
Moderate
$2,695.41
0.5%
$1,341
Moderat
$2,668.59
-0.5%
$1,341
e
Unfavoura
ble
$2,628.36
-2%
$-5,364
Unfavoura
ble
$2,735.64
2%
$-5,364
Stress
$2,574.72
-4%
$-10,728
Stress
$2,789.28
4%
$-10,728
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 Index positions?
Before you trade CFDs on an Index, 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
costs
Currency
Any cash, realised profit and losses, adjustments, fees and charges that are
Conversion
denominated in a currency other than the base currency of your account, will be
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 means the
Ongoing
Cost/Swap/Rollover
longer you hold a position, the more it costs. On Wednesdays, Swap is charged 3 times.
costs
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 an Index 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.