BAB MARKETS(PTY) LTD (hereinafter called “We”, or the “Company”) is authorized by the Financial Sector Conduct Authority (FSCA) of South Africa with FSP license number 54530 and registered office at Norwich Place West 2nd Floor,Corner 5th and Norwich,Sandton,South Africa.
This Notice contains information about Contracts for Difference (CFDs) or any other financial
derivative product including some of the risks associated with trading with those Financial Instruments
and should be read together with the Terms of Business. It is not intended to mention or explain all
risks and other important aspects involved in dealing with Forex, CFDs or any other financial derivative
product nor does it disclose all risks, and it does not replace your own understanding and experience
of the above-mentioned products. It explains, in general terms, the nature of the risks associated with
trading in Forex, CFDs or any other financial derivative product in order to assist you in understanding
the nature and risks of this specific type of Financial Instrument being offered and, consequently, to
be in a position to take investment decisions on an informed basis.
However, we would like to warn you that this notice does not disclose all of the risks and other
significant aspects of trading in Forex, CFDs or any other financial derivative product. In light of the
risks, you should undertake such transactions only if you understand the nature of the financial
instruments into which you are entering and the extent of your exposure to risk. Trading in high risk
financial instruments like Forex, CFDs or any other financial derivative product may not be suitable for
everyone and you should carefully consider whether trading is appropriate for you in light of your
experience, objectives, financial resources and other relevant circumstances. If you are in any doubt
as to the suitability of any investment you should seek independent professional expert advice.
Please note that the value of your investments may rise or fall depending on market conditions and
that you may not always recoup your initial investment. In addition, past performance should not be
seen as an indication of future performance.
Trading leveraged products such as FX and CFDs may not be suitable for all investors as they carry a
high degree of risk to your capital. Please ensure that you fully understand the risks involved, taking
into account your investments objectives and level of experience before trading, and if necessary, seek
independent advice.
A CFD is an agreement to exchange the difference between the opening and closing value of a contract
at its close. Rather than buying or selling the underlying instrument on which your contract is based,
you simply place a trade with a CFD provider. The price of your CFD will then replicate the price of the
underlying asset (without actually owning the underlying product) giving you a profit (or a loss) as the
price of the underlying moves, so that the amount of any profit or loss made on a CFD will be equal to
the difference between the price of the underlying instrument when the CFD is opened and the price
of the underlying instrument when the CFD is closed, multiplied by the number of underlying
instruments to which the CFD relates.
The types of CFD include, but are not limited to Foreign Exchange CFDs, Futures CFDs, Option CFDs,
Share CFDs, Commodities CFDs, Cryptocurrencies CFDs and Stock Index CFDs.CFDs are a way of trading on the upward or downward price movements of traditional financial
markets without buying or selling the underlying asset directly. The potential losses associated with
the price movements can exceed the total value of the initial margin (and any additional margin funds)
the Client has deposited with the Company, and the Client may be obliged to close his positions at the
worst possible time.
When trading CFDs, the Client will be charged an interest rate which mirrors the financing rate of
actually borrowing the funds to invest.
This means that if the Client purchases a CFD, the Client will be required to pay financing costs (SWAP)
for the period during which the Client holds the position. However, the Client will not pay any financing
costs if he opens and closes a CFD position on the same day. This means that if the Client holds a long
position for a certain period of time, the financing costs might become substantial. As a seller of CFDs,
the Client will not receive any interest. Details of financing fees applied are available on the Company’s
website and/or provided to the client during the account opening process.
To open a CFD position, you need to deposit only a fraction of the full value of your trade, if you wish
to purchase 150,000 units of EURUSD at price 1.16650 with margin requirement 3.33% (which is equal
to 1:30 leverage) for that instrument. This requires you to place a margin of: 150,000 units / leverage
(30) = EUR 5,000 (Base Currency of traded pair – EURUSD).
It should be noted that the Company shall monitor the leverage applied to Client’s positions, at all
times. The Company reserves the right to decrease the leverage depending on the Client’s trade
volume.
Shares of common stock represent a fractional ownership interest in the issuer of that security.
Ownership of securities confers various rights that are not present with positions in CFDs. For
example, persons owning a share of common stock may be entitled to vote in matters affecting
various corporate actions. They also may be entitled to receive dividends and corporate disclosure,
such as annual and quarterly reports.
The purchaser of a CFD, by contrast, has only a contract for future settlement. The purchaser of the
CFD is not entitled to exercise any voting rights over the underlying security and is not entitled to
any dividends that may be paid by the issuer.
Moreover, the purchaser of a CFD does not receive the corporate disclosures that are received by
shareholders of the underlying security.
Owning the underlying security does not require an investor to meet any margin requirements in
contrast with CFDs leveraged trading.
◆ Forex, CFDs or any other financial derivative product are highly speculative and are suitable
only for those Customers who (a) understand and are willing to assume the economic, legal and other risks involved, and (b) are financially able to assume losses significantly in excess
of margin or deposits.
◆ The Client should unreservedly acknowledge and accept that, regardless of any information
which may be offered by the Company, the value of Forex, CFDs or any other financial
derivative product may fluctuate downwards or upwards and it is even probable that the
investment may become of no value. As with any high-risk financial product, you should not
risk any funds that you cannot afford to lose, such as your retirement savings, medical and
other emergency funds, funds set aside for purposes such as education or home ownership,
proceeds from student loans or mortgages, or funds required to meet your living expenses.
◆ The Client should unreservedly acknowledge and accept that he runs a great risk of incurring
losses and damages as a result of the dealing in Forex, CFDs or any other financial derivative
product and accepts and declares that he is willing to undertake this risk.
◆ The Client should take the risk that his trades in Forex, CFDs or any other financial derivative
product may be or become subject to tax and/or any other duty for example because of
changes in legislation or his personal circumstances. The Company does not warrant that no
tax and/or any other stamp duty will be payable. The Client should be responsible for any
taxes and/or any other duty which may accrue in respect of his trades.
◆ The high degree of “gearing” or “leverage” is a particular feature of Forex, CFDs or any other
financial derivative product meaning a relatively small movement in the underlying market
can have a disproportionately effect on the Client’s trade.
◆ If the market moves against the client’s position, the client may be called upon to deposit
substantial additional margin (funds), at short notice, to maintain his position. If the client
fails to comply with a request for additional funds within the time prescribed, his position
may be closed at a loss and he will be liable for any resulting deficit. You will be deemed to
have received a notice requiring the payment of such funds, even if you are not at home or
do not receive the messages we leave for you, if the notices are delivered to your nominated
contact points.
◆ A loss (which may or may not result in a margin call) may require the Client to immediately
provide additional funds to the Company to maintain the open positions. The Company may
also change its rates of initial margin and/or notional trading requirements at any time, which
may result in a change to the margin the Client is required to maintain.
◆ When trading Forex, CFDs or any other financial derivative product the Client will be charged
an interest rate which mirrors the financing rate of actually borrowing the funds to invest.
This means that if the Client purchases a Forex, CFDs or any other financial derivative product,
the Client will be required to pay financing costs (SWAP) for the period during which the Client
holds the position. However, the Client will not pay any financing costs if he opens and closes
Forex, CFDs or any other financial derivative product position on the same day. This means
that if the Client holds a long position for a certain period of time, the financing costs might
become substantial. As a seller of Forex, CFDs or any other financial derivative product, the
Client will not receive any interest. Details of financing fees applied are available on the
Company’s website and/or provided to the client during the account opening process.
◆ Forex, CFDs or any other financial derivative product are not suitable for ‘buy and forget’
trading or long-term positions. Each day the client maintains the position it costs money (if you are long), so there is a time when Forex, CFDs or any other financial derivative product
become too expensive.
◆ Transactions in Forex, CFDs or any other financial derivative product are not undertaken on
a recognized stock exchange or on a Multilateral Trading facility (MTF), rather they are
undertaken through the Company’s Trading Platform and, accordingly, they may expose the
client to greater risks than regulated stock exchange transactions. The Trading Platform does
not fall into the definition of a recognized stock exchange or of a Multilateral Trading facility
(MTF) because the Company is always the counterparty in every client transaction. The terms
and conditions and trading rules are established solely by the counterparty which in this case
is the Company. The Client is obliged to close an open position of any given Forex, CFDs or
any other financial derivative product during the opening hours of the Company’s Trading
Platform. The Client also has to close any position with the same counterparty with whom it
was originally entered into, thus the Company.
◆ The Company may be required to hold client’s money in an account that is segregated from
other clients and the Company’s money in compliance with current regulations, but this may
not afford complete protection. The Company aims to hold your money only in EEA regulated
financial institutions which employ and have Client Money rules similar to ours and which are
supervised by regulatory authorities of equivalent status to ours. In the unlikely event that
we may hold Client Money outside the EEA, the legal and regulatory regime applying to any
such financial institution will be different from that of the EEA and in the event of the
insolvency or any other analogous proceedings in relation to that financial institution, your
money may be treated differently from the treatment which would apply if the money was
held with a financial institution in an account in the EEA.
◆ The third party to whom we pass money may hold it in an omnibus account and it may not
be possible to separate it from our money, or the third party’s money depending on the third
party’s regulatory provisions. In the event of an insolvency or any other analogous
proceedings in relation to that regulated third party, we may only have an unsecured claim
against the regulated third party on behalf of you and our other Clients, and you may be
exposed to the risk that the money received by us from the regulated third party is insufficient
to satisfy the claims of you and all other Clients with claims in respect of the relevant account.
The Company accepts no responsibility for any funds not deposited directly into the
Company’s bank accounts, for losses (directly or as a result of) due to delays and/or failures
to deposit/remit funds through affiliated and/ or third parties.
◆ You have no rights or obligations in respect of the underlying instruments relating to your
Forex, CFDs or any other financial derivative product.
◆ Where the Forex, CFDs or any other financial derivative product is settled in a currency other
than your base currency, the value of your return may be affected by its conversion into the
base currency.
◆ Where the Company provides generic market recommendations, such generic
recommendations do not constitute a personal recommendation or investment advice and
have not considered any of your personal circumstances or your investment objectives, nor
is it an offer to buy or sell, or the solicitation of an offer to buy or sell. Each decision, by the
Client, to enter into a Forex,◆ CFDs or any other financial derivative product transaction with the Company and each
decision as to whether a transaction is appropriate or proper for the Client is an independent
decision by Client. The Company is not acting as an advisor. Client agrees that the Company
has no liability in connection with and is not responsible for any liabilities, claims, damages,
costs and expenses, including attorneys’ fees, incurred in connection with Client following
Company’s generic trading recommendations or taking or not taking any action based upon
any generic recommendation or information provided by the Company.
◆ There are no guarantees of profit nor of avoiding losses when trading Forex, CFDs or any
other financial derivative product. Client has received no such guarantees from the Company
or from any of its representatives. Client is aware of the risks inherent in trading Forex, CFDs
or any other financial derivative product and is financially able to bear such risks and
withstand any losses incurred.
◆ In case of any quoting error occur (including responses to Client requests, typing errors, etc),
the Company is not liable for any resulting errors in account balances and reserves the right
to make necessary corrections or adjustments to the relevant account.
◆ The Company requires the Client to pass through an appropriateness/suitability test during
the application process and warns the Client, if on the basis of information provided, the
trading on Forex, CFDs or any other financial derivative product is not appropriate based on
the Client’s profile.
◆ The client is obligated to keep passwords secret and ensure that third parties do not obtain
access to client’s online account. The client will be liable for trades executed by means of his
password even if such use may be wrongful.
◆ Before the Client begins to trade, he should obtain details of all commissions and other
charges for which the Client will be liable. If any charges are not expressed in money terms
(but for example as a dealing spread), it is the Client’s responsibility to request and obtain a
clear written explanation, including appropriate examples, to establish what such charges are
likely to mean in specific money terms.
◆ All relevant cost and charges will be provided by the Company or set out in the Company’s
website. Clients should be aware of such costs and charges that may influence the account
profitability of the Client.
◆ The Client declares and warrants that he/she has read, understood and accepts the following:
◆ Information of the previous performance of a Financial Instrument does not guarantee its
current and/or future performance. The use of historical data does not constitute a binding
or safe forecast as to the corresponding future performance of the Financial Instruments to
which the said information refers.
◆ Some Financial Instruments may not become immediately liquid as a result e.g. of reduced
demand and the Client may not be in a position to sell them or easily obtain information on
the value of these Financial Instruments or the extent of the associated risks.
◆ When a Financial Instrument is traded in a currency other than the currency of the Client’s
country of residence, any changes in the exchange rates may have a negative effect on its
value, price and performance.◆ A Financial Instrument on foreign markets may entail risks different to the usual risks of the
markets in the Client’s country of residence. In some cases, these risks may be greater. The
prospect of profit or loss from transactions on foreign markets is also affected by exchange
rate fluctuations.
◆ A derivative financial instrument (i.e. option, future, forward, swap, contract for difference)
may be a non-delivery spot transaction giving an opportunity to make profit on changes in
currency rates, commodity or indices.
◆ The value of the derivative financial instrument may be directly affected by the price of the
security or any other underlying asset which the object of the acquisition is.
◆ In the case of CFDs with underlying asset a virtual currency, there might be sudden changes
in prices of certain instruments which may result in significant loss over a short period of
time. In addition, CFDs on virtual currencies may be subject to large price fluctuations and in
some instances, due to the early stages of their lifecycle, they may lose entire value.
◆ The Client must not purchase a derivative financial instrument unless he is willing to
undertake the risks of losing entirely all the money which he has invested and also any
additional commissions and other expenses incurred.
◆ In case of a Force Majeure Event the Customer shall accept the risk of financial losses/
◆ The Client acknowledges and accepts that there may be other risks which are not contained
above.
3.1.Risk Disclosures provided to Clients’ or potential Clients of the Company specifically for the cryptocurrencies
The Company will provide the following risk disclosures to its Clients’ or potential Clients’ prior of
opening an account or start trading with the Company:
◆ Engaging in trading CFDs with underlying asset a virtual currency pair, and due to high volatile
nature of these pairs, you might be exposed to higher risks than trading the assets themselves
or trading other CFDs with other underlying assets.
◆ In the case of CFDs with underlying asset a virtual currency, there might be sudden changes
in prices of certain instruments which may result in significant loss over a short period of time.
In addition, CFDs on virtual currencies may be subject to large price fluctuations and in some
instances, due to the early stages of their lifecycle, they may lose entire value.
◆ In the case of CFDs with underlying asset a virtual currency, there might be sudden changes
in prices of certain instruments which may result in significant loss over a short period of time.
This can happen during economic event or market announcements or geopolitical events,
news, or even due to adverse media or fake news. Gaps can occur when markets open or close
or even during normal trading hours. If the market is closed when these factors occur, the
opening price of the underlying asset can be substantially different from the closing price,
giving you no opportunity to close your trade in-between. Pricing gaps can result in significant
losses.◆ Virtual currencies are traded on non-regulated decentralized digital exchanges. Accordingly
price formation and price movements of the virtual currencies depend solely on the internal
rules of the particular digital exchange, which may be subject to change at any point in time
and without notice. This often leads to a very high intra-day volatility in the prices of the virtual
currencies which may substantially higher compared to other financial instruments.
Therefore, by Trading CFDs in virtual currencies you accept a significantly higher risk of loss of
your invested capital which pay occur within a very short timeframe as a result of sudden
adverse price movements of the virtual currencies.
◆ You should know that the market liquidity related to virtual currencies comes from the digital
decentralized exchanges which the virtual currencies are traded on. Due to the non-regulated
nature of such exchanges, the market data and price feed information provided by such
exchanges may be subject to the internal rules and practices of such exchanges which may
significantly differ from the rules and practices observed by the regulated exchanges. In
particular, you should be aware that the pricing formation rules of the virtual currency
exchanges are not subject to any regulatory supervision and may be changed at the relevant
digital exchange’s discretion at any time. Likewise, such digital exchanges may introduce
trading suspensions or take other actions that may result in the suspension or cessation of
trading or the price and market data feed becoming unavailable to us. The above factors could
result in material adverse effect on your open positions, including the loss of all of your
invested capital. Where a temporary or permanent disruption to or cessation of trading occurs
on any digital exchange your positions in such Cryptocurrency will be priced at the last
available price for the relevant Cryptocurrency and you may be unable to close or liquidate
your position or withdraw any funds related to such position until the trading on the relevant
digital exchange resumes (if at all). You accept that where trading resumes again at either the
relevant initial digital exchange or on any successor exchange thereof, there may be significant
price differential (‘price gapping’) which may impact the value of your CFD positions in the
relevant Cryptocurrencies and result in significant profits or losses. Where trading does not
resume, all of your invested capital could potentially be lost.
◆ In the case of CFDs with underlying assets virtual currencies, due to leverage and volatility,
your positions and account status can change rapidly. It is your responsibility that at all times
you monitor your account, margin level and profit/loss, and act as needed to protect your
equity.
3.2.Volatility of price and limitation on the available market
◆ The prices of Forex, CFDs, or any other derivative product may fluctuate rapidly and over wide
ranges, none of which can be controlled by the Client or the Company. It is important for the
Client to understand that his profitability might be affected by these changes in conditions.
◆ Under specific market conditions (illiquidity, economic announcement, political events, at
times of rapid price movement, if the price rises or falls in one trading session to such an
extent that under the rules of the relevant exchange trading is suspended or restricted, etc) it
can be impossible to execute any type of Clients order at declared price. Under these
conditions the prices of Forex, CFDs, or any other derivative product may not maintain their
customary or anticipated relationships to the prices of the underlying asset. Therefore, placing
contingent orders, such as “stop-loss” or “stop-limit” orders, may not necessarily limit your losses to the intended amounts, since market conditions, which can become extraordinarily
volatile, may make it impossible to execute such orders. The Client should also be aware of
gaps and windows into the price of an instrument that occur sometimes at the opening or
closing of the market where the underlying instrument is traded, affecting Client’s
profitability.
◆ All Forex, CFDs, or any other derivative product involves risk, and there is no trading strategy
that can eliminate it. Strategies using combinations of positions, such as spreads, and
“straddle” positions may be as risky as taking simple long or short positions. Trading in Forex,
CFDs, Forex or any other derivative product requires knowledge of all relevant markets and
available types of orders.
◆ The prices of Forex, CFDs, or any other derivative product will be influenced by, amongst other
things, changing supply and demand relationships, governmental, agricultural, commercial
and trade programs and policies, national and international political and economic events and
the prevailing psychological characteristics of the relevant marketplace.
◆ Engaging in trading CFDs with underlying asset a virtual currency pair, and due to high volatile
nature of these pairs, you might be exposed to higher risks than trading the assets themselves
or trading other CFDs with other underlying assets.
3.3.Margin call
◆ Clients are required to deposit a Margin with the Company in order to open a position. The
Margin requirement will depend on the underlying instrument of the Forex, CFDs or any other
financial derivative product, the level of leverage chosen and the value of position to be
established.
◆ The Company will not notify the Client for any Margin Call to sustain a loss making position.
The Company has the discretionary right to start closing positions when Margin Level
decreases to about 50%, and automatically close all positions at market prices if Margin Level
drops below 20%. The Company guarantees that there will be no negative balance in the
account when trading Financial Instruments provided by the Company.
◆ The Company bears no responsibility for any loss that arises as a result of delayed or
unreceived communication sent to the Client by the Company.
◆ The Company bears no responsibility for any loss that arises as a result of unencrypted
information sent to the Client by the Company that has been accessed via unauthorized
means.
◆ The Company bears no responsibility for any unreceived or unread internal message sent to
the Client through the trading platform(s). In case a message is not received or read within
seven (7) calendar days the message gets automatically deleted.◆ The Client is solely responsible for the privacy of any information contained within the
communication received by the Company.
◆ The Client accepts that any loss that arises as a result of unauthorized access of a third party
to the client’s trading account is not the responsibility of the Company.
◆ Telephone conversations may be recorded, and you will accept such recordings as conclusive
and binding evidence of the instructions.
The classification of risks is based on general as well as on product-specific risks. We mentioned above
the product-specific risks for Forex, CFDs or any other financial derivative product. The general risks
of trading derivative products should also be taken into account.
This notice cannot and does not disclose or explain all of the risks and other significant aspects
involved in dealing in Financial Instruments and was designed to explain in general terms the nature
of the risks particular to dealing in the Financial Instruments provided by the Company and to help the
Customer to take investment decisions on an informed basis.
