Risk Warning

Spread Co Limited is authorised and regulated by The Financial Conduct Authority (“FCA”), register number 446677. This notice is provided to you in compliance with FCA requirements because you are proposing to undertake dealings in Contracts for Differences (CFDs) and/or Spread Bets. This notice cannot and does not disclose or explain all of the risks and other significant aspects involved in dealing in CFDs and Spread Betting.

CFDs and Spread Bets are complex instruments and come with a high risk of losing money rapidly due to leverage.

We are required by law to notify you about the percentage of Retail Clients who have lost money trading CFDs and Spread Bets with us during the last 12 months. This disclosure will be made available to you on our website: www.spreadco.com.

You should consider whether you understand how CFDs and Spread Bets work and whether you can afford to take the high risk of losing your money.

You should not engage in CFD and/or Spread Bet trading unless you understand the nature of the transaction you are entering into and the true extent of your exposure to the risk of loss. Your profit or loss will vary according to the extent of the fluctuations in the price of the “underlying markets”.

For many members of the public, these transactions are not suitable; you should, therefore, consider carefully whether they are suitable for you in the light of your circumstances and financial resources. In considering whether to engage in this form of trading, you should be aware of the following:

  1. The high degree of “gearing” or “leverage” is a particular feature of this type of transaction. This stems from the margining system applicable to such trades which generally involves a comparatively modest deposit or margin in terms of the overall contract value, so that a relatively small movement in the underlying market can have a disproportionately dramatic effect on your trade. If the underlying market movement is in your favour, you may achieve a good profit, but an equally small adverse market movement can very quickly result in a substantial loss. If you are a Retail Client trading CFDs and/or Spread Bets then you will be provided with automatic negative balance protection, meaning that you will not lose more than the amount of funds in your Account.
  2. Financial markets are volatile and prices can rise and fall quickly. This is particularly the case where price changes are driven by current news or events. Rapid price movements in underlying markets will have a direct impact on the profit or loss you make. You should monitor your open positions regularly and where appropriate make use of stop loss facilities. It is possible that underlying markets may shift from one level to a lower one whilst the market is closed. This will mean that when the market reopens it will do so at a lower price and there will be no opportunity for you to close your open positions before the market reopens.
  3. Past performance is not a reliable indicator of future performance. The value of your positions can go down as well as up.
  4. Foreign markets will involve different risks from UK markets. In some cases the risks will be greater. The potential for profit or loss from transactions on foreign markets or in foreign currency denominated markets may be affected by fluctuations in foreign exchange rates.
  5. You may be called upon to deposit substantial additional margin, at short notice, to maintain your trade. If you do not provide such additional funds within the time required, your trade may be closed at a loss. Unless you have been classified as a Retail Client, you will be liable for any resulting deficit.
  6. CFD and Spread Bet transactions will not be undertaken on a recognised or designated investment exchange. During normal market hours and outside normal market hours, Spread Co will execute CFD and Spread Bet Orders and Trades at Spread Co’s price. Spread Co acts as a “market maker” in these CFDs and Spread Bets in and out of market hours (see Spread Co’s Terms of Business for market hours). Closing trades will be traded at the price dictated by the spread quoted at the time of closing, irrespective of the spread at the time of the opening trade, which may be larger or smaller. No guarantee is given as to the spread at the time of closing. All CFD and Spread Bet trades opened with Spread Co must be closed with Spread Co and cannot be closed with any other entity.
  7. When entering into such transactions, Spread Co must do so under a two-way customer agreement (i.e. Spread Co Terms of Business) pursuant to the FCA Conduct of Business rules unless exempted from doing so. You should satisfy yourself that dealing is conducted throughout in strict conformity with that customer agreement and report to the FCA if you have reason to believe it is not.
  8. Prior to placing trades, you should ensure that you understand all charges for which you will be liable.
  9. CFDs and Spread Bets are higher risk investments than ordinary share dealing, as gearing can lead to significant losses, which can be unlimited if you have not been classified as a Retail Client. However, to limit potential losses and bring peace of mind, clients trading through Spread Co have access to both a simple stop loss facility and, where Spread Co offers this, a guaranteed stop loss facility. Both simple and guaranteed stop loss facilities are only available at the absolute discretion of Spread Co. For further detail in relation to stop losses please refer to Spread Co’s Dealing System. A stop loss order allows you to set a price which if breached will automatically trigger a sell order (for long positions) or buy order (for short positions) to close your current position. This facility is available at Spread Co’s discretion when placing the deal either through the Dealing System or over the telephone.
  10. With a simple stop loss, if the share or index breaches your stop loss, then your order will be executed when Spread Co is reasonably able to do so. This may mean the order is executed at less than your stop loss price in the case of a long position or more than the stop loss price in the case of a short position. However you can use a guaranteed stop loss on selected Referenced Investments where Spread Co offers this. As it suggests, this is a stop loss order that is guaranteed to be executed at the price you specify, even if the price of the underlying Referenced Investment makes a sudden movement and never actually trades at the price that you specified, your position will still be closed at your chosen price. This may not be the case with a simple stop loss. The guaranteed stop loss facility may be available through Spread Co’s online Dealing System or via telephone on such Referenced Investments as Spread Co determines in its discretion. You may also be required to pay a small premium for the guaranteed stop loss facility when placing the deal but many would consider this a small price to pay when compared to the cost of an unpredictable loss. It is important to remember that Spread Co allows you to trade certain CFDs and Spread Bets outside of normal market hours. For instance the FTSE 100 Index CFD can be traded between 9am and 5.30pm when the normal market hours are 8am until 4.30pm. The prices quoted for Index CFDs and Spread Bets are Spread Co’s prices and are based on market movements. Outside normal market hours the prices are based on the interpretation of how the market may move if it were open. This means simple stop losses and guaranteed stop losses could be triggered outside of normal market hours based on movements in the price for similar correlated markets. For specific information about the Spread Co trading hours for each instrument, please refer to the Dealing System.
  11. 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. Where market conditions are highly volatile, Spread Co may not be able to close your positions. Where this is the case, Retail Clients will benefit from our Negative Balance Protection, which means your losses will never exceed the cash balance in your account.
  12. Spread Co does not provide advice and is prohibited under its FCA permissions from providing you with investment advice relating to investments or possible transactions in investments or from making investment recommendations of any kind. This prohibition is subject to an exception where advice given amounts to the giving of factual market information or information, in relation to a transaction about which you have enquired, as to transaction procedures, potential risks involved and how those risks may be minimised.
  13. Spread Co is required to hold your money in segregated accounts in accordance with the regulations of FCA, but this may not afford complete protection.
  14. Spread Co’s insolvency or default may lead to positions being liquidated or closed out without your consent. In certain circumstances, you may not get back the actual assets which you lodged as collateral and you may have to accept any available payment in cash.
  15. If you have reason to believe that Spread Co is not acting in accordance with representations that it has made to you, the terms of your customer agreement or the rules of the FCA, you should report it to the Financial Conduct Authority Consumer Helpline, 12 Endeavour Square, London, E20 1JN telephone number 020 7066 1000. Spread Co is covered by the Financial Services Compensation Scheme. In the unlikely event that Spread Co was to face liquidation and cannot meet its obligations, Retail Clients may be entitled to compensation from the scheme. Further information about compensation arrangements and limits is available from the Financial Services Compensation Scheme.