This notice provides you with information about the risks associated with the investment products in which you may invest through services provided by Axi. It is provided to you as a Retail Client and cannot and does not disclose or explain all of the risks and other significant aspects involved in dealing in such products.
CFDs, margined FX and spread bets are leveraged products which carry a high degree of risk to your capital.
You should not deal in these products unless you understand their nature and the extent of your exposure to risk, and you should be satisfied that the product is suitable for you in light of your personal circumstances and financial position. If you are in doubt, you should seek professional advice.
You should not invest money that you cannot afford to lose, however, you cannot lose more than the equity in your account.
In considering whether to engage in this form of investing, you should be aware of the following:
CFDs, margined FX and spread bets are leveraged products and traded on ‘margin’. This means that you can take a larger trade (‘position’) in the market without having to deposit the full contract value. This can lead to large losses as well as gains. All our products are traded on margin. Trading a leveraged product also means that a relatively small market movement can lead to a proportionately larger movement in the value of your investment, and this can work against you as well as for you. It is therefore important that you consider the size of your position as well as monitor your trades at all times.
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.
You must also understand that Axi 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 Axi to close a position.
CFDs, spread bets and margined FX are off exchange (‘over the counter’ or ‘OTC’) derivative transactions. This means you enter into trades directly with us and also that those positions can only be closed with us.
While some off exchange markets are highly liquid, transactions in OTC derivatives may involve greater risk than investing in on exchange derivatives because there is no exchange market on which to close out an open position. It may be impossible to liquidate an existing position, to assess the value of a position or to assess the exposure to risk. Bid prices and offer prices need not be quoted, and, even where they are, they will be established by dealers in these instruments and consequently it may be difficult to establish what is a fair price.
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 products, 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.
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 Axi quote. Accordingly, where you have an open position in a volatile market environment you must understand the potential impact of gapping.
Before you begin to trade, you should understand any commissions and other charges for which you will be liable. If any charges are not expressed in monetary terms (but, for example, as a percentage of contract value), you should make sure you understand what such charges are likely to mean in specific monetary terms.
Our products are not suited to the longer-term investor. If you hold a position over a long period of time, the associated costs (such as overnight fees) will increase, and it may be more beneficial for you to buy the underlying asset instead.
Foreign markets will involve different risks from UK markets. In some cases, risks will be greater, for example where those foreign markets have greater or more rapid market fluctuations or when those markets are less liquid. This can impair our ability to quote prices. In addition, the potential for profit or loss from transactions on foreign markets or foreign denominated contracts 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. Placing a stop loss order will not necessarily limit your losses to the intended amounts, because market conditions may make it impossible to execute such an order at the stipulated price.
Unless otherwise agreed in writing, Axi 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.
Your business with Axi 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 Axi 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 £85,000 (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.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
January 2025