Leverage and Margin. Our portfolios do not, under any circumstances, use leverage. In the process of executing its trades, the portfolio may technically use margin for a very brief period (on the order of seconds). This is because all trades – when switching from long to short, short to long, rebalancing, or going to cash -- are executed simultaneously at market open. While all of a particular days’ trades are being filled, the account will sometimes use its margin capacity. Account margin is not used under any other circumstances. Our passive portfolios are traded very infrequently, and only for the purpose of rebalancing them back to the initial portfolio target composition after their composition has drifted due to the price fluctuations of the underlying ETFs. This is triggered when the cumulative deviation of all ETFs in the portfolio from target composition is greater than 15%. This type of rebalancing we expect to happen once per year, on average. It can be more frequent in times of heightened volatility. For our active portfolios, we run our decision-making algorithms on a daily basis. During rising markets with low volatility, the portfolios can remain in the bullish positioning for several months, without trading. During rapidly falling markets, the portfolios can remain in the bearish positioning for several weeks at a time. During markets that are trading sideways or are transitioning, trading can sometimes be as frequent as once a day for several days at a time. On average, trading is expected to occur approximately 17 times per year, taking into account both the multi- year backtesting period studied to develop our signals, and their live trading periods. This discussion of trading frequency relates only to the MTUM ETF in the active risk-managed equities portfolios, and to the SVXY ETF in the active risk-managed derivatives portfolios. The other positions in these portfolios are maintained regardless of portfolio state, and therefore they only trade when rebalancing is required. Listed below are:
Leverage and Margin. 7.1. The Company offers to its Retail Clients leverage of 1:2-1:30, depending on the CFD underlying instrument, according to the leverage restrictions set by CySEC or any other level as those may be amended from time to time and are made available to you on the Company’s trading platform and website. Professional Clients and Eligible Counterparties are eligible for higher leverage upon their request.
7.2. The Cyprus Product Intervention Measures applicable to Retail Clients, introduced leverage limits on the opening of a position from 30:1 to 2:1, which vary according to the volatility of the Underlying Asset, and particularly:
7.2.1. 30:1 for major currency pairs;
7.2.2.20:1 for non-major currency pairs, gold and major indices; 7.
2.3.10:1 for commodities other than gold and non-major equity indices; 7.
2.4.5:1 for individual equities and other reference values; and
Leverage and Margin. 1. CFDs are leveraged products, meaning that you are required to pay only a certain fraction of the total value of the contract in order to enter and maintain a CFD (“Margin”). This means that with a small amount of money you are able to control a larger amount, giving you a higher market exposure. You should be always aware that just as the leverage may work in your favor, magnifying your gains, it may also work against you, in similarly magnifying your losses. Since the CFDs are leveraged instruments, by trading them you are exposed to the risk of losing substantially more than your initial investment amount.
2. There are two types of Margin or “Margin cover” applicable to your Account:
a. an “initial” margin, to enter into a CFD (the “Initial Margin”), which will typically be a percentage of the total value of the contract, to be determined by us;
b. a “maintenance” margin, meaning a margin to maintain the Margin cover in light of adjustments to the percentage of value of the security allowed as Margin cover or other trading platform adjustments not related to the price movements of the financial products (a “Maintenance Margin”).
3. Xxxxxxx must be held as long as a position is open, as further explained under Section 10. The minimum Margin will be set by us and can be changed at our sole discretion at any time according to the movement in the market, and represent a percentage of the total value of the CFD, and shall typically be between 0.25% and 50%, but may be as high as 100% of the CFD value. For example, if the value of a CFD is $220,000, the Margin might be $22,000, which represents 10% of the CFD value.
4. The Margin cover is usually provided from available funds in your trading account. This means that you must hold sufficient funds in your trading account before you can open a position. Owing to the volatility of the market, the amount of required Margin cover may change after a position has been opened, requiring a Maintenance Margins to be paid by you at that time. The Margin requirement is calculated to cover the maximum expected movement in the market at any time.
5. Please see Appendix 1 for trading examples and how the Margin requirements apply.
Leverage and Margin. This Leverage and Margin ratios are issued pursuant to, and in compliance with the requirements of ESMA relevant regulations and the Investment Services and Activities and Regulated Markets Law of the Republic of Cyprus as those amended and/or replaced from time to time. The Company’s obligations are the following: To set leverage levels that reflect the client’s knowledge and experience in trading in complex financial instruments like CFDs given that trading with leverage and margin is a key characteristic of trading in CFDs. Its duty to treat the client fairly by avoiding aggressive leverage practices. To have regard to the underlying performance fundamentals of the financial instrument on which the CFD is based, including historic volatility, depth of market [liquidity and trading volumes], market capitalization of the issuer and country of issuer of the underlying financial instrument, our ability to hedge market risk and the general political and economic environment. The Company will adjust and calibrate the above variables in determining the leverage levels it offers for asset classes or financial instruments. The client’s own risk management appetite and risk bearing capacity and to have in place policies, procedures, and practices to manage its (primarily) market risk emanating from such leverage and margin trading by its clients. To apply regulatory requirements and caps as set by the CySEC or any other regulator in any jurisdiction we offer our services to. The Client’s Obligations are the following: The Company shall rely on the information provided by the client regarding their knowledge, experience, financial situation, and investment objectives. The client acknowledges that the Company’s assessment of client’s use of its leverage ratios is performed based on the information and documents provided by the client, and that the client confirms the truthfulness, correctness, and completeness of such information. That the Company may rely upon such information and that the client is responsible for any damages or losses which may result from any inaccuracies.
