This notice is provided to you in compliance with Financial Conduct Authority requirements because you are proposing to undertake dealings in financial instruments in the form of spread bets or CFDs with a firm which is carrying on investment business. This notice cannot and does not disclose or explain all of the risks and other significant aspects involved in dealing in such products.
AxiCorp is prohibited under Financial Conduct Authority requirements from providing you with investment advice relating to investments or possible transactions in investments or from making investment recommendations of any kind. We can give you factual market information or information, in relation to a transaction about which you have enquired, as to transaction procedures, potential risks involved and how those risks may be minimised.
Engaging in spread betting or CFDs (in this notice referred to as a “Transaction”) carries a high risk to your capital. You should not engage in this form of investing unless you understand the nature of the Transaction you are entering into and the true extent of your exposure to the risk of loss. Your profit and loss will vary according to the extent of the fluctuations in the price of the underlying markets on which the trade is based.
For many members of the public, these Transactions are not suitable. You should, therefore, consider carefully whether they are suitable for you in the light of your circumstances and financial resources and investment objectives. In considering whether to engage in this form of investing, you should be aware of the following:
The high degree of “gearing” or “leverage” is a particular feature of this type of Transaction. This stems from the initial financial requirements applicable to such Transactions which generally involve a comparatively modest deposit or margin in terms of the overall market value of the Transaction involved, so that a relatively small movement in the underlying market can have a disproportionately dramatic effect on your Transaction. If the underlying market movement is in your favour, you may achieve a good profit, but an equally small adverse market movement can not only quickly result in the loss of your entire deposit, but may also expose you to a large additional loss over and above your initial deposit.
You may be called upon to deposit substantial additional margin, at short notice, to maintain your position. If you do not provide such additional funds within the time required, your position may be closed at a loss and you will be liable for any resulting deficit. You must understand that AxiCorp may be unable to close the position due to factors beyond its control and you will be liable for any loss suffered. You cannot and must not rely on AxiCorp to close a position.
The purpose of a spread bet or CFD Transaction is to secure a profit or avoid a loss by reference to fluctuations in the price of underlying property or an index (the “Underlying Market”). In the context of our activities, the Underlying Market may be a single security, a basket of securities, a securities Index, an exchange rate between two currencies, a treasury product, a bullion, a commodity or such other investment as we may from time to time agree in writing. It is an express term of each spread bet or CFD Transaction that neither you nor us:
- acquire any interest in or right to acquire or is obliged to sell, purchase, hold, deliver or receive the Underlying Market; and
- that the rights and obligations of each party under the spread bet or CFD Transaction are principally to make and receive such related payments.
Transactions with AxiCorp are not transacted on a recognised or designated investment exchange and, accordingly, they may expose you to greater risks than exchange transactions. The Transactions structure and rules will be established solely by AxiCorp pursuant to the Financial Conduct Authority Conduct of Business rules. For example, if you wish to close the position earlier than the time at which it would otherwise automatically expire, you will have to close it at AxiCorp’s quotation which may reflect a premium or discount to the Underlying Market. When the Underlying Market is closed, AxiCorp’s quotation can be influenced by the weight of other client’s buying or selling with AxiCorp. You will have to close any position with the same provider with whom it was originally entered into.
Where entering into such Transactions, AxiCorp must do so under a two-way client agreement (i.e. Terms and Conditions and documents incorporated by reference therein) pursuant to the Financial Conduct Authority Conduct of Business rules unless exempted from doing so. You should satisfy yourself that dealing is conducted throughout in strict conformity with that client agreement and report to the Financial Conduct Authority if you have reason to believe it is not.
Gapping (or Slippage) refers to an occurrence whereby the market moves past a Stop Loss level. This may be because the particular Underlying Market has become unusually volatile for a period of time. In such instances the Underlying Market may have stopped trading and may only recommence trading at a price below a Stop Loss level. Where this happens a Stop Loss may not be effective and the Position will be closed at the current AxiCorp Quote. Accordingly, where you have an open Position in a volatile market environment you must understand the potential impact of Gapping.
Foreign markets will involve different risks from UK markets. In some cases risks will be greater. The potential for profit or loss from transactions on foreign markets or in foreign currency denominated markets will be affected by fluctuations in foreign exchange rates.
Under certain trading conditions it may be difficult or impossible to liquidate a Position. This may occur, for example at times of rapid price movement if the price rises or falls in one trading session to such an extent that trading is restricted or suspended.
AxiCorp is required to hold your money in segregated trust accounts in accordance with the regulations of Financial Conduct Authority, but this may not afford complete protection. If you deposit collateral as security with AxiCorp, you should ascertain from AxiCorp how your collateral will be dealt with.
Your business with AxiCorp may be covered by the Financial Services Compensation Scheme (“FSCS” or the “Scheme”). Client money will be deposited into a client money bank account opened at an approved bank. In the event that AxiCorp were to become insolvent all client money held in the third party bank account would be protected. In the event that the third party bank was to become insolvent you may be entitled to compensation from the Scheme if the third party bank were unable to meet their obligations. This depends on the type of business you undertake, your status, and the circumstances of the claim. Most types of investment business are covered for up to £50,000 (which is the maximum level of compensation). Further information about compensation arrangements is available from the FSCS. You can contact the FSCS by writing to them at PO Box 300, Mitcheldean. GL17 1DY, or by emailing them at the email address provided on the Financial Services Compensation Scheme website at www.fscs.org.uk.
1st January 2017