Note: It is important to read the General Terms and Conditions and associated risk disclosures from CGS-CIMB Securities (Singapore) Pte. Ltd. before deciding whether to trade in CX as this Risk Warning only highlights the common risks and does not cover all the risks of trading in CX. It complements the General Terms and Conditions and associated risk disclosures furnished by the firm. Cryptocurrencies and their derivatives are not suitable for most retail investors as they tend to have little or no intrinsic value, are difficult to value and exhibit high volatility. You should carefully consider whether trading in CX is appropriate for you in the light of your experience, objectives, financial resources and other relevant circumstances. You should not trade in CX if you do not understand the product or are not comfortable with the accompanying risks.
The following are risks arising from CX’s exposure to the underlying cryptocurrencies which you should be aware of :
1.Cryptocurrency is a digital representation of value, but it does not have legal tender status. Cryptocurrencies are sometimes exchanged for other currencies such as USD, EUR, and JPY, but they are not generally backed or supported by any government or central bank. Their values are completely derived by market forces of supply and demand, and they are more volatile than traditional currencies.
2.The value of cryptocurrency is dependent on the continued availability and willingness of market participants, which may result in the potential for permanent and total loss of value of a particular cryptocurrency should the market for that cryptocurrency disappear.
3.Underlying cryptocurrency markets and cryptocurrency derivatives markets are not regulated by the Monetary Authority of Singapore (MAS) and are not subject to requirements usually associated with a regulated licensed financial product, including, but not limited to, market integrity and price transparency rules, registration and/or licensing requirements, audit, market surveillance and trade reporting requirements, anti-money laundering and anti-fraud rules, disaster recover or cybersecurity requirements, and market manipulation rules. As a result, cryptocurrency markets may be particularly susceptible to manipulation and fraud, which increases the risk of trading in CX.
4.The risks of trading CX are mainly related to its high price volatility. They are high-risk and speculative, unexpected changes in market sentiment can lead to sharp and sudden moves in price. It is not uncommon for the value of cryptocurrencies to quickly drop by hundreds, if not thousands of dollars.
5.CX is traded on a leveraged margin basis, similar to leveraged FX trading. Before trading, you should be aware that trading in CX allows you to take a larger position than you would otherwise be able to base on your funds in your account. As such, a relatively small adverse market condition in the underlying cryptocurrencies market against your CX positions could result in you losing all or more money than you have in your account.