Binance Capital Options is a leading Group of Companies offering financial and investment services and activities through its regulated entities. "Binance Capital Options" is a brand name and registered trademark owned and used by the BCO Group of Companies, which includes: Binance Capital Options LTD, a company with registration number HE 282265, authorized and regulated by the Cyprus Securities and Exchange Commission - CySEC (Licence number: 150/11), BCO Overseas Ltd which is authorized and regulated by the Vanuatu Financial Services Commission (License number 17933). Unless explicitly specified, the use of the word BCO on this Risk Disclosure includes all entities of the Group. This notice is provided to Clients in accordance with all applicable laws and regulations.
This Notice cannot and does not disclose or explain all the risks associated with the Company's services and products. It explains, in general terms, the nature of the risks particular to entering into transactions with financial instruments provided by the Company but it cannot explain all of the risks and how these risks relate to your personal circumstances. You should seek professional independent advice, if you consider this necessary.
Before deciding to trade and/or invest, you should carefully consider your objectives, level of experience, and risk appetite. You should not commence trading with the Company unless you declare that you have read, understood and accepted the following generic and instrument specific risks:
General Risks of Trading:
The Company does not warrant the initial capital of your portfolio or its value at any time or any money invested in any financial instrument. You should completely acknowledge and accept that you run a great risk of incurring losses and damages as a result of the purchase and/or sale of any financial instrument and accept and confirm that you are prepared to take on this risk.
You should completely acknowledge and accept that, regardless of any information which may be offered by the Company, the value of any investment in financial instruments may fluctuate downwards or upwards and it is even likely that the investment may become of no value. The fluctuations may result to whole or partial loss of your initial investment capital.
The Client recognizes and accepts that there may be other risks which are not covered in this section.
Specific Risks of Trading
Regulatory and Legal Risk
Potential changes in laws and regulations affecting the investment sector and/or a specific financial instrument, can have unforeseeable and material effects to your investment. Risk involved with regulatory or legal amendments and/or changes are unpredictable and may vary depending on the market.
Information of previous performance of a financial instrument does not guarantee its current and/or future performance. The use of historical data does not establish a binding or reliable prediction as to the corresponding future performance of the financial instruments to which the said information mentions and should only be considered as a historical overview of the financial instrument.
Movements in the price of underlying markets can be volatile and out of the Company's control and sphere of influence. Such volatile moves can have a direct impact on your profits and losses. Knowing the volatility of an underlying market will help guide you as to where any stops should be placed. It should be noted that volatility can be unexpected and unpredictable regardless of the instrument you are trading on. BCO shall not be liable to any person for any losses, damages, costs or expenses (including, but not limited to, loss of profits, loss of use, direct, indirect, incidental or consequential damages) occurring because trades cannot be executed due to market conditions.
Need to Monitor Positions
Because of the effect of leverage and the speed at which profits or losses can be incurred, it is important that you monitor your positions closely. It is always your responsibility to monitor your trades and transactions.
No Guarantee of Profit
Trading with BCO does not guarantee profit nor loss avoidance. You willingly acknowledge that no such guarantees were made by the Company or from any of its representatives, agents, affiliates, employees and you are aware of the risks involved.
Liquidity of Instruments
Some financial instruments may not become instantly liquid as a result of reduced demand, for example, where you may not be able to sell them or easily obtain data on the price of these financial instruments or the degree of the related risks.
Foreign Market Risks
A financial instrument on foreign markets may involve risks unlike the usual risks of the markets in your country of residence. In some circumstances, these risks may be larger. The outlook of profit or loss from transactions on foreign markets is also influenced by exchange rate fluctuations.
Internet Trading Risks
There are risks associated with utilizing an Internet-based deal execution trading system including, but not limited to, the failure of hardware, software, and Internet connection. Since BCO does not control signal power, its reception or routing via Internet, configuration of your equipment or reliability of its connection, the Company cannot be responsible for communication failures, distortions or delays when trading via the Internet.
You should take the risk that your trades in financial instruments may be or become conditional on tax and/or any other duty, for example, due to alterations in legislation or your personal conditions. The Company does not guarantee that there will be no outstanding tax and/or any other stamp duty incurred. You should be accountable for any taxes and/or any other duty which may accumulate in respect of your trades. BCO does not provide tax advice, and if you are in doubt as to your tax obligations, you should seek independent advice before trading.
You should consider the risk of the insolvency or default of any other brokers involved with your transaction which may lead to your positions being liquidated or closed out without your consent. In certain circumstances, you may not get back the actual assets that you have invested and you may have to accept any available payments in cash.
Fees and Costs
The Company's fees and charges are set out in the Company's website here under the "Trading Costs" section. Please check the Company's website at all times of all costs and charges that apply to you, because such costs and charges will affect your profitability.
Any opinions, news, research, analyses, prices, or other information contained on this website or produced by BCO are provided as general market commentary, and do not constitute investment advice or investment recommendation. BCO shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information provided. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information.
Risks associated with CFDs and FX
What is a Derivative Financial Instrument?
A derivative financial instrument (i.e. option, future, forward, swap, contract for difference) price is dependent upon or derived from the price fluctuations of another underlying asset. A derivative financial instrument may be a non-delivery spot transaction giving an opportunity to make profit on changes in currency rates, commodity, stock market indices or share prices called the fundamental instrument.
You must not purchase a derivative financial instrument unless you prepared to accept the risks of completely losing all the money which you have invested and similarly of any extra commissions and other charges incurred.
What does CFD stand for? How is traded?
A CFD stands for Contract for Difference which is traded over-the-counter("OTC") and falls under the derivative asset class and enables you to settle for the difference between the initial and ending price of an asset by without the underlying asset. When trading CFDs, you generally trade on margin, which means you only have to deposit a small percentage of the overall value of your position. The difference between the deposited value and the overall value of your position is know as "Leverage". Any CFD positions with "Leverage" can greatly be impacted negatively or positively even by small movements in the market.
If there is market movement against you, there is a great possibility that you may sustain a loss greater than the funds deposited in the specific position. You are responsible for all losses on your account up to the total amount deposited.
How can Leverage affect your investment capital?
Leverage is a widely used feature of CFD and FX contracts and it can affect you either negatively or positively. Any investments traded with Leverage can be significantly riskier than investing in the underlying asset and you should consider whether you can tolerate the such risks. The potential risk or benefit stems from the margining system associated with Leverage which involves a small deposit in comparison to the actual size of the transaction. The margining system can have disproportionate and unpredictable effects to your investment capital as it can abruptly affect you either positively.
Suitability of Contracts of Difference for investors
CFDs are considered to be a short-term investment and are not suited for long term investments. If you want to hold a position for too long you should consider investing in the underlying asset. If you hold a CFD open over a long period of time, there is an increased possibility of sudden market movements causing a dramatic shift in the price of an underlying asset. At all times during which you have open positions, you must ensure that your account meets the Company's margin requirements in order to sustain your positions. You should be informed that in cases that the price moves against you or if the Company's margin requirements have changed, you may be requested to provide us with significant additional funds to meet your margin requirement, at short notice, to maintain your open positions or close your positions.
During the account opening form, the Company makes an assessment of whether the financial instruments and/or products and/or services you chose to trade are appropriate for you. The Company shall be entitled to rely on the information provided by you when assessing the products and services you choose to trade with the Company. If you decide to continue and open an account with us, you are confirming that you are aware of and understand the risks.
As such, the Company shall be entitled to assume that a Professional Client has the necessary experience and knowledge in order to understand the risks involved in relation to those particular investment services or transactions, or types of transaction or product, for which the Client is classified as a Professional Client.
Fluctuations in the Market
It is important that you comprehend the risks associated with trading, as fluctuations in the price of the underlying market will influence the profitability of the trade. Slippage occurs when the market moves suddenly in any direction and is the difference between the expected price of a trade, and the price at which the trade was actually executed. The price is then said to have 'slipped' when the market has 'gapped' from one level to another. This applies in the event of either advantageous or disadvantageous price movements and can result in either losses (negative slippage) or gains (positive slippage).
Risks Related to Trading CFDs in Cryptocurrencies
You should be aware that for the purposes of Directive 2014/65/EU ("MiFID II") Cryptocurrencies are not a recognized Financial Instrument. On the contrary, CFDs with Cryptocurrencies as the underlying asset are considered a financial instrument which is regulated and monitored by CySEC as per Circular C268.
Cryptocurrencies as an underlying asset are traded on non-regulated decentralized digital exchanges and usually their value is affected by parameters which are outside the scope of influence of regulatory bodies and are based on internal rules of the particular digital exchange they are traded on. For this reason, the value of cryptocurrencies is highly volatile and can dramatically increase or decrease within a day. When trading CFDs on Cryptocurrencies you should consider the risks involved and that there are numerous parameters which can fluctuate the price of Cryptocurrencies and CFDs of Cryptocurrencies.
BCO derives its market and pricing data on Cryptocurrency CFDs from the digital decentralized exchanges they are trade on. You should consider before trading that due to the non-regulated nature of these exchanges, BCO will receive market and price feeds in accordance to the internal rules and practices of these exchanges which are not regulatorily supervised and potentially might be altered by the digital exchange's discretion from time to time. The above can result to adverse effect on the open positions you have with the Company on Cryptocurrency CFDs which could potentially lead to partial or whole loss of your investment capital.
You should consider before trading CFDs on Cryptocurrencies whether you can tolerate the significantly higher risk of loss to your investment capital which may occur over a short time frame resulting from sudden adverse price movements of Cryptocurrencies.
Risks associated with Cash Equities
Before you trade Single Stocks consider that, due to the positions not being leveraged, your deposited margin is at a lower risk compared to CFDs on Stocks since fluctuations to the value of the underlying asset have a smaller impact to your investment capital. Notwithstanding the above, your investment capital is still at risk since factors such as market volatility, regulatory changes or during periods that companies publish quarterly or yearly reports, the value of the stocks owned might increase or decrease dramatically resulting to partial or whole loss of your investment.
Stocks are bought and sold on stock exchanges worldwide hence their value can fluctuate based on factors which sometimes cannot be identified or addressed. Before trading, you acknowledge that the value of stocks is outside the sphere of influence of BCO and that due to the complexity of their evaluation, BCO will not be able to stipulate specific reasons as to how your investment value was affected. Moreover, you should be extra cautious when trading stocks relating to companies in emerging markets, smaller sized companies or startups since there is an increased risk of losing your invested capital and/or it might be harder to buy or sell stocks in such markets.
Additionally, when holding Single Stocks, you are entitled to a dividend payment on a per share basis if such dividends are declared by the Company which you hold stocks. There are however jurisdiction-specific cases that, your profit might be influenced by applicable tax regulations. In cases were tax is due and BCO has the obligation to withhold such tax from your investment, the applicable tax will be withheld accordingly, and the overall profit derived from your investment might be influenced.
Notwithstanding the above, you should carefully consider your investment objectives, level of experience and risk tolerance before trading Single Stocks. You should fully comprehend and acknowledge the risks and obligations involved with such investment. Your single stock investment might have a positive or negative impact to your investment capital regardless of any past performance of a stock which is not indicative or does guarantee future results.
Risks associated with Portfolio Management (Copy Trading)
BCO offers Portfolio Management and Copy Trading features. In making a decision to follow a specific advisor and/or a particular strategy, you must consider your entire financial situation including financial commitments and you understand that copy trading is highly speculative and you could sustain losses and damages of your whole invested capital. You agree to bear complete responsibility for your choice of strategy and/or advisor and acknowledge that BCO has not and will not make any specific recommendations to you upon which you are entitled to rely. The risks associated with Copy Trading are, include but are not limited to, automated trading execution whereby the opening and closing of trades will happen in your account without your manual intervention.
Copy trading features are provided by the Company solely for informational purposes. BCO and its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by comments or statements by BCO advisors. You are solely and exclusively responsible of the risk of your investment decisions and any reliance on information which is available on the Company's website or as a result of the use of the copy trading features do not impose any liability with respect to the completeness and correctness of the content presented to the Company whatsoever.
Any past performance of our advisors, strategies and any other information with respect to the copy trading features which might be displayed on the Company's website and/or a third party's and/or affiliate's website are not indicative of future results and should not be considered as a guarantee of future performance. In addition, any information and/or other aspect related to the copy trading features provided via the Company's website should not be construed as investment, tax or other financial related advice of any kind. You should not consider any such content and/or aspect to be professional financial and/or investment advice whatsoever. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. If you choose to engage in such activities and/or transactions related to the copy trading facility of the Company, then such decision and any consequential result of this transaction remains your sole and exclusively responsibility. BCO, its affiliates, agents, directors, officers, employees or advisors do not provide investment advice directly, indirectly, implicitly or in any other way You should not make any investment decision without conducting your own independent research and without determining whether any investment, strategy or other service is suitable for your based on your personal investment objectives and financial situation.
Past Performance should be considered as hypothetical performance results. The actual percentage gains/losses experienced by advisors vary depending on many factors, including but not limited to deposits, withdrawals, conditions/settings of the account, market behavior and the actual performance of the advisor. In any case, no representation or guarantee is being made that any account will or is likely to achieve profits or losses like the past performance of a strategy.
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE DISPLAYED. THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK OF ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL WHICH CAN ADVERSELY AFFECT TRADING RESULTS.