Leverage-Richtlinie

This policy is property of Skilling Ltd. The reproduction in whole or in part in any way including the reproduction in summary form, the reissue in a different manner and any changes in the original manual or any translated version (V.03) is strictly forbidden and is only allowed with the prior written consent of Skilling Ltd. This Policy was last updated as of November 2019.

Authorized and regulated by the Cyprus Securities and Exchange Commission under CIF license number 357/18.

Skilling Ltd (hereafter the “Company”, “we,'' “our”) shall endeavour to provide over-the-counter (“OTC”) contracts for differences (“CFDs”) to our clients (hereinafter referred to as the “ Client”, “ you”, “ your”) in compliance with the applicable laws and regulations. You hereby acknowledge, understand and agree to the below.

Legal and Regulatory Framework

This Policy is issued pursuant to, and in compliance with the requirements of EU Directive 2014/65/EU on Markets in Financial Instruments (“MiFID II”), EU Regulations on Markets in Financial Instruments (“MiFIR II”) and the Investment Services and Activities and Regulated Markets Law of the Republic of Cyprus Law that transposed MiFID II into Cyprus legislation.

Furthermore, this Policy complies with the Circulars issued by CySEC pursuant to the Guidelines, and/or the Questions and Answers Document of the European Securities and Markets Authority (“ESMA”) with respect to the provision of CFDs and other speculative products to retail investors under MiFID. 

Scope

Treating Customers fairly is vital to our corporate culture, ethos and attitude. The Company has a duty to act honestly, fairly, professionally and in the best interest of our Clients when dealing with them. Subject to the conditions outlined in this Policy, the default leverage for retail clients is set at the 30:1 to 2:1 which the asset class and the  underlying financial instrument of the CFD.

The Company should use the leverage to the best interest of the Client. As such, the Company’s use of leverage should be as follows:

1. Capital Base and Financial Strength of the Company

The Company shall always comply with the Capital Requirements regulatory framework and the leverage ratios allowed to its Clients shall not inhibit in any way the Company from complying with the minimum capital requirements as set in the relevant regulatory framework.

2. Risk appetite and risk management of the Company

The Company shall follow the risk management policies and procedures which identify the risks relating to the Company’s activities, processes and systems when it will be setting the percentage of the leverage ratio allowed to its Clients. The Company shall ensure that the leverage ratios allowed to Clients are always in line with the Company’s risk appetite and risk management policy.

3. Asset class and instrument characteristics

In order to reflect the varying risk and volatility in different asset classes and instruments, the Company has divided the financial instruments it offers into the categories mentioned on the Client's dashboard, with the corresponding maximum leverage ratios that can be provided to Clients, after taking into consideration all the factors mentioned in this Policy.  

4. Clients’ financial knowledge and experience

The Company considers the Clients’ knowledge and experience prior to allowing a Client to use leverage. More specifically all retail clients receive the default leverage limit which is 30:1 (unless the maximum allowed leverage for a particular financial instrument is lower than 30:1 as indicated on the Client's dashboard). In case a Client wishes to obtain a higher level of leverage, the Client should submit a request to the Company. 

If the Client fails, or is not seen as suitable, in the Appropriateness and Financial knowledge test, the Client will be requested to start with our Academy and/or a demo account before start trading with real money.

5. Negative Balance Protection

The Company has established a negative balance protection policy which in the event that a negative balance occurs in the clients’ trading account due to stop out and/ or extremely volatile market conditions, then a relevant adjustment to cover the full negative amount will be made.   

6. Margin Close Out

The Company will apply margin close-out protection to retail client accounts that hold open CFD position. A margin of up to 50% (equivalent to 200% of the Client’s ‘Usage’) is required at which the Company will automatically close one or more positions at market prices where stop out level is reached. Furthermore, by applying the close-out rule at 50% margin call (equivalent to 200% of the Client’s ‘Usage’), limits the risk of any substantial loss by a retail client when the sum of funds in the trading CFD account and the unrealised net profits of all open CFDs connected to the Client's account falls to less than half of the total initial margin protection (protection) for all those open trades on CFDs.

The Margin close out is calculated and as shown in the trading platform: margin used/account balance = 200% stop out (equivalent, account balance/margin used = 50% stop out).

 7. Initial Margin Protection

Initial margin protection will be applied to retail client accounts that hold CFDs position. The leverage limit will protect retail client by requiring them to pay a minimum initial margin in order to trade CFDs and limits the risk exposure of the amount of money to be invested by the Client. Initial margin protection may reduce the probability of Client losses compared to those that would be expected if the Client were to trade CFD at higher leverage.

 8. Restriction on Incentives

Restriction on the incentives offered to trade CFDs. The retail client should not be provided with any direct or/ indirect payment, monetary or excluded non-monetary benefit(s) in relation to the marketing, distribution or sale of CFDs, other than the profits recognised on any CFDs provided by the Company. Such marketing features and sales techniques referred to above when offering CFDs to Clients include bonuses, especially clients depositing money on the account or on executing a certain volume of trades. 

9. Client categorization and Leverage Use

I. Retail clients 

A. Experienced retail clients are clients that score high marks in our appropriateness test, demonstrating satisfactory knowledge and experience when trading in complex financial instruments like CFDs. Any clients who are considered as experienced based on their results in the appropriateness test, by default maximum leverage of 30:1 to 2:1 depending on the asset class and the  underlying financial instrument of the CFD will be given. Experienced retail clients have the choice to change the leverage ratios they trade subject to the caps that we may apply based on our internal principles of risk appetite and tolerance, as well as the maximum allowed leverage for the respective financial instrument category as shown in the below table under point 9 (II).  

Where, when a client requests a higher leverage, the default maximum leverage of 30:1 to 2:1 depending on the asset class and the  underlying financial instrument of the CFD may be increased provided that such an increase is justified based on the profile of the client, and fulfil the conditions with the applicable laws.

It should be noted that, Experienced retail client can request higher leverage through subsequently submitting a written request for client reclassification to Elective professional (from retail), and he/she must satisfy the requirements of the applicable Regulation.

B. No experience retail clients are clients who fail the appropriateness test (or scored low points). The Company recommend that such clients are directed towards educational tools, webinars or demo trading platforms with the aim of improving the client’s knowledge and experience to trade CFDs or other speculative products. The Company will also provide an explicit risk warning to the clients with no experience or acknowledge, and obtain consent that the investment service or product was assessed by us as being inappropriate for the client. 

We will maintain records of clients who requested to proceed with the with the trading on Real account despite having failed the assessment and having read the given risk warning as well as whether we accepted the client's request to proceed with the trading on Real account under the above circumstances. 

Where the Company chooses to grant the retail client with Real account despite the given risk warning, the leverage shall remain limited to as low as level based on the below table or/ the Company’s internal risk management policies. 

II. Leverage Settings 

Following the formal adoption of product intervention and measures on CFDs by the European Securities and Markets Authority (ESMA) on the 1st of June 2018, the Company shall ensure that all retail clients that demonstrate the appropriate knowledge and experience during the onboarding process shall have the following maximum leverage settings on their account as follows:

 

Retail Clients

Elective Professional Clients

Asset Class

New Maximum Leverage

Initial Margin Requirement

New Maximum Leverage

Initial Margin Requirement

Major FX Pairs

1:30

3.33%

1:200

0.5% 

Non-major FX Pairs

1:20

5%

1:100

1% 

Gold

1:20

5% 

1:100

1% 

Major Indices

1:20

5% 

1:200

0.5% 

Non-major Indices

1:10

10% 

1:50

2% 

Commodities

1:10

10%

1:30

3.33% 

Stocks

1:5

20% 

1:10

10% 

Cryptocurrencies

1:2

50% 

1:2

50% 

The Commission (“CySEC”) requires the implementation of the lower leverage for retail clients of maximum 30:1 to 2:1 which vary according to the asset class and the  underlying financial instrument of the CFD as a result of the ESMA Decision 2018/796. The Company reserves the right to apply lower leverage as a result of corporate events, political events and in general extreme market conditions which have significant impact on the client’s open positions, and with or without notice to you, in order to address likely market and financial instrument volatility.  Where possible we will give you at least two (2) days’ notice of such change so as to enable you to take the action you consider appropriate. 

III. Dynamic leverage

We may use a dynamic leverage model for “Elective Professional Clients”, mainly on FX, Indices and Commodities which automatically adapts to the clients trading CFD positions. For instance, the USD volume per instrument of a client increases the maximum leverage decreases accordingly as per the below table.

This model is applied per trading instrument, thus where a client has positions open across multiple instruments the leverage will be calculated separately on each symbol.

FX Dynamic Leverage

Open USD Volume

Maximum Leverage*

0-10,000,000

200:1

10,000,000-15,000,000

100:1

15,000,000-20,000,000

50:1

Indices Dynamic Leverage

Open USD Volume

Maximum Leverage*

0-5,000,000

200:1

5,000,000-10,000,000

100:1

10,000,000-15,000,000

50:1

Commodities Dynamic Leverage

Open USD Volume

Maximum Leverage*

0-5,000,000

100:1

5,000,000-10,000,000

50:1

10,000,000-15,000,000

30:1

*For more information regarding the maximum leverages per symbol, please visit the section ‘Instruments and Account Information’, on our website, here

10. Changing the Default Leverage

  1. It is Company policy that retail clients are subject to trade with the maximum leverage of 30:1 to 2:1 depending on the underlying asset of the CFD, to comply with the applicable laws.
  2. Where an experienced retail clients wants to trade with a higher leverage than maximum ratio outlined in the above table, such request must be submitted in a written form. 
  3. It may be required for us to re-categorise you as a ‘elective professional client’, but only in respect of the services or transactions for which it could be treated as a professional client to enable you trade with a higher leverage; and
  4. The Company provides a higher leverage 200:1 according to the asset classes and the underlying financial instrument (except for CFDs on stocks, 10:1 and CFDs on cryptocurrencies 2:1 respectively) to retail clients who elect to be treated as Elective professional clients. The Company approves such application in accordance with the Company’s Client Categorisation Policy and leverage may be adjusted as determined by the Business Terms and if so, agreed between the Company and the professional client.  More information shall be provided to the Elective professional client as soon as the application has been approved by the Company’ s Compliance department.   
  5. When a client requests to change the leverage, the Company will not impose any costs and charges to implement the changes.

11. Retail Client Important Notice 

The Company shall limit the leverage of Retail clients (also known as ‘new traders’) to a maximum of  30:1 to 2:1 depending on the underlying asset of the CFD  in accordance to the conditions of the applicable laws. Trading with a very high leverage ratio is one of the most common errors committed by new traders. 

 Therefore, until the client becomes more experienced, the Company recommends to the client to trade with a lower leverage ratio. The information gathered regarding the Company’s clients are used in a manner which is in the client’s best interests. 

Please note that certain jurisdictions may apply a cap on leverage ratios regardless of the client categorization or the appropriateness test score. However, in the light inter alia of the cross-border nature when providing investment activities, European Securities and Markets Authority (“ESMA”) has set-out measures on provision of CFDs to ensure a  common level of investor protection throughout the European Union (EU), in order to comply with the provisions of Article 40 of Regulation (EU) No 600/2014 (MiFIR II).  

You are kindly advised to read carefully read our Client Categorisation Policy and Business Terms to understand your obligations.

12. Policy Review

12.1. The Company reserves the right to review and/or amend this Policy at its sole discretion, whenever it deems fit or appropriate by law, and the revised Policy will be uploaded on the Company’s Website. 

12.2. Your continued use of our services, following any notification of such amendments, constitutes your acknowledgement and consent to such amendments to this Policy and your agreement to be bound by the terms of such amendments.

 

 

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