Leveraged Trading Terms & Conditions

Last updated: 9 October 2024

Leveraged trading is a process where you trade on “margin”, that is, buy investments (in this case cryptocurrency) using borrowed funds or sell investments using borrowed assets. If you use our leveraged trading service, you will need to provide a percentage of the trade as margin (your contribution) and we will advance to you the balance of the trade and will take security over the full amount of the trade. You can select different leverage ratios (2x to 5x), and the amount you can borrow will depend on the leverage ratio you choose.

Examples:

1. If you contribute $10,000 to buy cryptocurrency using our leveraged trading service and select a 2x leverage ratio, you can buy $20,000 of cryptocurrency where we advance you $10,000 for the trade and take security over the $20,000 of cryptocurrency you buy.
2. If you contribute $10,000 to buy cryptocurrency using our leveraged trading service and select a 5x leverage ratio, you can buy $50,000 of cryptocurrency where we advance you $40,000 for the trade and take security over the $50,000 of cryptocurrency you buy.

When you open a leveraged trade (which we call a ‘leveraged position’), your contributed margin is locked and you cannot buy, sell or transfer the assets in your account that we take as security for the leveraged trade until your leveraged position is closed or you return the loan. The security is either the assets you buy with the leveraged trade, or the assets you acquire as the result of making a sale using a leveraged trade. If the value of your security falls too far, we may make a “margin call”, that is, notify you that your margin percentage has fallen and your position is in danger of reaching the mandatory liquidation level, or being closed out by us. Once you receive a margin call, you can top up your position with additional collateral (which we will also lock), take action to close your position, or do nothing and run the risk of your position reaching mandatory liquidation or being closed by us. Leveraged trading is a sophisticated trading strategy, which can magnify your gains and losses. The higher the leverage ratio of each position, the more your gains and losses will be magnified. if you are not familiar with leveraged trading. If you are not familiar with leveraged trading please ensure you read our explanation of the leveraged trading service here.

Leveraged trading is subject to a range of risks. Please read the risk section below which outlines some of the risks that may be relevant to leveraged trading for cryptocurrency but is not intended to be an exhaustive list of all relevant risks. You should consider all the risks that may be relevant to leveraged trading for cryptocurrency and assess whether those risks are acceptable to you having regard to your financial circumstances and risk tolerance. If you are unsure, you should consider obtaining financial, tax or professional advice.

These terms and conditions will apply when you use our leveraged trading service.

Margin

To create a new position using leveraged trading, you must provide collateral to us in either fiat or cryptocurrency. Collateral is the percentage of the leveraged position that you contribute to the leveraged trade as security against the assets we advance you, and we take security against the full amount of the leveraged trade. The collateral must be held in your account and it will be allocated to a leveraged position (see below for more details). The amount of collateral you need to contribute will depend on the leverage ratio you select. Your account will specify what leverage ratios are available to you and the amount of collateral you need to contribute for a particular leverage ratio.

Collateral Contribution Methodology

When creating a new position using leveraged trading, we will automatically reserve your collateral from your account. The asset we automatically reserve changes depending on whether you elect to open a leveraged buy or leveraged sell position.

When contributing additional collateral to one or more of your positions, you can choose to reserve either cryptocurrency or fiat to increase your margin percentage. Please note that when you choose to contribute cryptocurrency as collateral, the cryptocurrency you reserve must be the same cryptocurrency as your current open leveraged position. This also applies to fiat, when you choose to contribute fiat as collateral, the fiat you contribute must be the same fiat as your current open leveraged position.

Collateral Contribution: Opening New Positions

Leveraged Buy

If you are opening a leveraged buy, we will first use fiat in your account for your collateral contribution. If sufficient fiat is not available on your account to open the leveraged position, we will then use cryptocurrency for the remainder of your collateral contribution; or use cryptocurrency for your entire collateral contribution if your fiat balance is zero.

Examples (ignoring any fees)

Example 1: You elect to open a new leveraged position to buy $30,000 of Bitcoin and select the 2x leverage ratio, and you only have a fiat balance of $15,000 in your account.

We will automatically reserve the fiat $15,000 (50% of $30,000) and then provide you fiat $15,000 and will then take security over the $30,000 of Bitcoin purchased when you open the leveraged position. The $30,000 of Bitcoin will be locked in your account until your leveraged position is closed.

Example 2: You elect to open a new leveraged position to buy $30,000 of Bitcoin and select the 3x leverage ratio, and you have a fiat balance of $5,000 in your account and $10,000 worth of Bitcoin on your account.

We will automatically reserve collateral in fiat of $5,000 and $5,000 worth of Bitcoin ($5,000 + $5,000 being 33.3% of $30,000) and then we will provide you fiat $20,000 and will then take security over the $30,000 of Bitcoin purchased when you open the leveraged position. The $30,000 of Bitcoin will be locked in your account until your leveraged position is closed.

Note: In this scenario, you cannot elect to use the $10,000 of Bitcoin as collateral when opening your position, we automatically use all available fiat first before using cryptocurrency as your collateral contribution for leveraged buys.

Example 3: You elect to open a new leveraged position to buy $30,000 of Bitcoin and select the 5x leverage ratio, and you have no available fiat balance in your account and $50,000 worth of Bitcoin in your account.

We will automatically reserve $6,000 worth of Bitcoin (20% of $30,000) and then we will provide you fiat $24,000 and will then take security over the $30,000 of Bitcoin used to open the leveraged position. The $30,000 of Bitcoin will be locked in your account until your leveraged position is closed.

Leveraged Sell

If you are opening a leveraged sell, we will first use cryptocurrency in your account for your collateral contribution. If sufficient cryptocurrency is not available on your account to open the leveraged position, we will then use fiat for the remainder of your leveraged contribution or use fiat for your entire leveraged contribution if your cryptocurrency balance is zero.

Examples (ignoring any fees)

Example 1: You elect to open a new leveraged position to sell 1 Bitcoin and select the 4x leverage ratio, and you have 2 Bitcoin on your account only.

We will automatically reserve 0.25 Bitcoin (25% of 1 Bitcoin) then provide you 0.75 Bitcoin and will then take security over the fiat sale proceeds of the Bitcoin sold when you open the leveraged position. The fiat sale proceeds will be locked in your account until your leveraged position is closed.

Example 2: You elect to open a new leveraged position to sell 1 Bitcoin and select the 2x leverage ratio, and you have 0.25 Bitcoin on your account and fiat of $50,000 on your account.

We will automatically reserve 0.25 Bitcoin and fiat to the value of 0.25 Bitcoin (0.25 Bitcoin + fiat value of 0.25 Bitcoin being 50% of 1 Bitcoin), and then we provide you 0.5 Bitcoin as a loan and will then take security over the fiat sale proceeds of the Bitcoin sold when you open the leveraged position. The fiat sale proceeds will be locked in your account until your leveraged position is closed.

Note: In this scenario, you cannot elect to use the $50,000 fiat as collateral when opening your position, we automatically use all available Bitcoin first before using fiat as your collateral contribution.

Example 3: You elect to open a new leveraged position to sell 1 Bitcoin and select the 5x leverage ratio, and you have no Bitcoin on your account and fiat $50,000 on your account.

We will automatically reserve fiat to the value of 0.2 Bitcoin (20% of 1 Bitcoin) and then we will provide you 0.8 Bitcoin and will then take security over the fiat sale proceeds of the Bitcoin sold when you open the leveraged position. The fiat sale proceeds will be locked in your account until your leveraged position is closed.

Additional Collateral: Existing Positions

When you contribute collateral to your account, you must elect which leveraged position your collateral is to be applied to. We calculate the margin percentage of each leveraged position separately. We do not offset multiple leveraged positions on your account against one another.

So, while you can have multiple leveraged positions open at any one time, you must contribute collateral for each leveraged position individually and ensure each position has sufficient collateral contributed at all times.

When contributing additional collateral to one or more of your positions, you can choose to reserve either cryptocurrency or fiat to increase your margin percentage.

If you contribute fiat, your total margin value will be increased by the value of fiat you have elected to contribute. There is no fee to contribute additional fiat margin to your positions.

You may also contribute cryptocurrency to increase the value of your contributed margin. For a leveraged buy, your contributed cryptocurrency will increase your margin value by the fiat equivalent of the contributed cryptocurrency. For a leveraged sell, your contributed cryptocurrency will increase the total cryptocurrency reserved as margin against your position and increase your margin.

There is no fee to contribute additional cryptocurrency margin to your positions.

Please note that when you choose to contribute cryptocurrency as collateral, the cryptocurrency you contribute must be the same cryptocurrency as your current open leveraged position.

For example: If you have a leveraged position in Ethereum, the only cryptocurrency you can contribute as collateral is Ethereum. You will not be able to use Bitcoin, for example, as collateral for an Ethereum position.

Market Value of Collateral

You can contribute collateral to your account in fiat (AUD only) or cryptocurrency. All collateral must be in single fiat currency. E.g. if your leveraged position was in AUD, then your margin percentage will be calculated in AUD.

For cryptocurrency collateral contributions, the cryptocurrency valuation is based on the amount of fiat currency that would be generated if your cryptocurrency were to be sold using a market sell order at the time of the margin calculation. The valuation gives consideration to the current bids on the market and the available depth. Your cryptocurrency is not valued using the last traded price because this price is not necessarily an accurate representation of the value of your cryptocurrency should it need to be sold immediately to meet a margin call or mandatory liquidation.

Managing Your Positions: Closing Positions

You can at any time, elect to close any leveraged position you have open. To close your position, you navigate to the Position Details screen of your account and select the “Close Position” option. There are two ways you can close your position:

1. Close at the current market price;
   1. Closing at the current market price creates a market buy (for leveraged sell positions) or a market sell (for leveraged buy positions). This option uses the market buy/market sell proceeds to return the full outstanding loan balance to us on the open position.
   2. Any remaining funds after the loan has been fully returned to us will be credited to your account or
2. Close by returning the outstanding loan amount (including any accumulated fees)
   1. You opt to provide sufficient fiat (for leveraged buy positions) or sufficient cryptocurrency (for leveraged sell positions) from your account to fully return the outstanding loan for the open position
   2. You will then retain all of the fiat (for leveraged sell positions) and cryptocurrency (for leveraged buy positions) that you received when opening your leveraged position
   3. Note: This option is only available to you if you have sufficient fiat or cryptocurrency (as appropriate) available on your account

Margin Percentage Calculation Methodology

When you hold either a buy or sell leveraged position, we regularly calculate your margin percentage. This is important because if the margin percentage for a leveraged position falls below the required percentage, we make a “margin call” – that is, we ask you to make a contribution to your account for the leveraged position.

The margin percentage is calculated as your:

The margin percentage is calculated as the percentage of collateral remaining against your open position value. The required percentage for a leveraged position will vary depending on the leverage ratio selected for the position. If we make a margin call, you will need to contribute additional collateral to your account to act as security for the leveraged position. Any additional contributions you make to your account for the leveraged position will be locked, If your margin percentage falls further, mandatory liquidation may be triggered. Refer below for more detail.

It is your sole responsibility and obligation to ensure your collateral for each leveraged position is above the required margin percentage to avoid margin calls and mandatory liquidation.

If you have multiple leveraged positions, each of your positions will have a separate margin percentage. We will not offset unrealised profits and unrealised losses across multiple leveraged positions. For both buy and sell positions, as the market price of the cryptocurrency fluctuates, your unrealised profit and loss will change. Unrealised profits are added to your collateral value and unrealised losses are subtracted from your collateral value.

Example 1: If your collateral was $10,000 and you selected 2x leverage ratio to buy $20,000 of Bitcoin, and the value of Bitcoin goes down, then your margin percentage will be less than 50%. Alternatively, if the value of Bitcoin goes up, then your margin percentage will be more than 50%.

Example 2: If your collateral was $10,000 and you selected 5x leverage ratio to buy $50,000 of Bitcoin, and the value of Bitcoin goes down, then your margin percentage will be less than 20%. Alternatively, if the value of Bitcoin goes up, then your margin percentage will be more than 20%.

All fees associated with opening and maintaining your open positions are subtracted from your collateral and will impact your margin percentage.

In calculating your margin percentage, we do not consider the value of any cryptocurrency or fiat in your account that is not contributed as collateral to a specific leveraged position. This is because these assets can be moved in and out of your account and collateral must be contributed to and reserved against your leveraged position(s).

It is your sole responsibility and obligation to contribute collateral to each leveraged position you hold and to ensure each position has sufficient collateral to avoid margin calls and mandatory liquidation.

Margin Calls and Mandatory Liquidation

Independent Reserve continually monitors the value of your leveraged positions and your margin percentage. If your margin percentage falls, you may be subject to either a margin call or mandatory liquidation. If any of your open leveraged positions reach the margin call or mandatory liquidation levels, then the leveraged position will be subject to the below conditions:

Margin call: Is reached when your margin percentage falls to or below 15% and is approaching the mandatory liquidation level, if action is not taken by you. A margin call indicates that your leveraged position has lost a majority of the contributed collateral from unrealised losses due to market movements and/or fees paid by you in relation to your open leveraged position. At margin call level, an email notification is sent to you and a warning is also displayed under the Leveraged Trading tab in the position history table after you log in.

When your leveraged position falls below 15% but has not fallen below the mandatory liquidation level (10%), that is when your leveraged position is considered to be in margin call. When your position is in margin call, you are approaching the mandatory liquidation level and should consider contributing additional collateral against the leveraged position to move your margin percentage above the 15% margin call threshold, or, close your leveraged position. Independent Reserve may elect to close your position to protect against further losses of your leveraged position at any time in its absolute discretion.

If your position is at or below the margin call level, you have the option to:

1. Move additional fiat from your account to contribute additional collateral to your leveraged position. This increases the value of collateral you have against the leveraged position and increases your margin percentage;
2. Move cryptocurrency from your account to contribute additional collateral to your leveraged position. This increases the value of collateral you have against the leveraged position and increases your margin percentage;
3. Close the leveraged position and any remaining collateral will be returned to your account;
4. Opt to return the full value of your outstanding loan to us, effectively closing your position and retaining the assets received when opening the position; or
5. Do nothing and risk the position being subject to additional losses and/or mandatory liquidation by us.

In extreme market conditions, it may not be possible for us to notify you of a margin call prior to your leveraged position reaching the mandatory liquidation level. We will notify you of a margin call on a best endeavours basis by email. It is your sole responsibility and obligation to continually monitor your leveraged positions and your margin percentages for those positions at all times. While we will endeavour to provide you with timely notifications, we provide this service for your convenience only and we are not liable for any loss or damage (including any consequential loss, indirect loss, loss of profit or economic loss) that you incur as a result of failing to receive or receiving a delayed a margin call notification.

The higher the leverage ratio of a leveraged position, the greater the change in margin percentage relative to the change in market price.

Mandatory liquidation: Is reached when your margin percentage falls below 10%.This margin percentage level is where we will close your leveraged position to prevent further losses. When your margin percentage falls below 10%, we will place a market buy (if your leveraged position was a sell) or market sell (if your leveraged position was a buy) of sufficient cryptocurrency to return your leveraged position to above mandatory liquidation levels, approximately 12.50%, margin at the time the order is placed.

If due to the current market price or market conditions, we are unable to execute a market buy or market sell to return your margin percentage above 12.50%, then we will fully close your leveraged position. All market orders placed to liquidate your leveraged position are subject to the current market depth and the prevailing market conditions. You acknowledge and agree upon liquidation of your leveraged position that your losses may not be limited to the value of the remaining collateral for your leveraged position. Standard trade commission fees apply to all liquidation trades executed by us.

Please note: Even if we execute a market buy or market sell to increase your margin percentage to approximately 12.50%, this is not a guarantee that additional actions will not be taken by us on your open leveraged position or that market conditions will not further deteriorate your margin percentage resulting in additional mandatory liquidation events occurring. In times of extreme market volatility, there may be multiple mandatory liquidations in quick succession.

Any remaining collateral for your leveraged position following the mandatory liquidation will be returned to your account. In extreme market conditions, closing of your leveraged position may result in losses greater than the total collateral contributed against the leveraged position. You are liable for any losses arising from your use of the leveraged trading facility including any losses incurred as a result of mandatory liquidation.

Your liability in respect of leveraged positions is not limited to the amount, if any, of any collateral provided. You are responsible and liable for paying us any deficit owing to us after a leveraged position is closed. If you fail to pay any deficit, we may:

• deduct the amount of the deficit from the fiat balance in your account; or
• sell any cryptocurrencies in your account and apply the sale proceeds to discharge the deficit in your account.

If there are insufficient assets in your account to fully discharge the amount of a deficit, you understand and agree that you are immediately required to deposit fiat currency or cryptocurrency to the value of the deficit in order to discharge your obligations to us. We may lock your account and prevent you from making any further trades until you have fully discharged any deficit you owe us.

Timing of Additional Collateral Contributions

We will only include additional contributions of collateral against a specific leveraged position you hold after you have allocated the fiat or cryptocurrency to a specific leveraged position. Any fiat or cryptocurrency held on your Independent Reserve trading account will not automatically be considered as collateral or security for any leveraged positions. It is your responsibility to maintain the margin percentage of all of your open leveraged positions at all times.

If you choose to contribute additional collateral from your trading account to one of your leveraged positions, you acknowledge that there may be a minor delay between when you elect to contribute the collateral and when that collateral contribution is allocated to your leveraged position. In limited circumstances and times of extreme market movements, the leveraged position you are contributing additional collateral towards may reach the mandatory liquidation level before the contribution is allocated to your leveraged position due to the timing delay. We are not liable for any loss or damage (including consequential loss, indirect loss, loss of profit or economic loss) that you incur as a result of any timing delay between when you contribute additional collateral and when the additional collateral is allocated to a leveraged position.

If you choose to deposit additional fiat from your bank account to us to contribute additional collateral or to service a margin call, you acknowledge that the fiat transferred to us is subject to the normal processing times for fiat deposits. Fiat deposits are only available to transfer to your leveraged positions once they are cleared in your trading account. Fiat deposits being credited to your trading account are subject to normal processing times and are subject to delays from time to time. We are not liable for any loss or damage (including consequential loss, indirect loss, loss of profit or economic loss) that you incur as a result of any delay in you being able to contribute additional collateral to your leveraged positions as a result of any perceived or actual delay in processing a new fiat deposit.

If you choose to deposit additional cryptocurrency from your external wallet to us to contribute additional collateral or to service a margin call, you acknowledge that the cryptocurrency transferred to us is subject to the normal processing times for cryptocurrency deposits. Cryptocurrency deposits are only available to transfer to your leveraged positions once they are cleared in your trading account. Cryptocurrency deposits being credited to your trading account are subject to normal processing times and are subject to delays from time to time. We are not liable for any loss or damage (including consequential loss, indirect loss, loss of profit or economic loss) that you incur as a result of any delay in you being able to contribute additional collateral to your leveraged positions as a result of any perceived or actual delay in processing a new cryptocurrency deposit.

Fees

In addition to the normal trade commission fees, there are leveraged trading fees that apply to open leveraged positions. All fees for leveraged trading will be applied in AUD regardless of whether you have borrowed fiat (buy position) or cryptocurrency (sell position) to create your leveraged position. Even though your leveraged position may not be at the margin call or mandatory liquidation levels, you must always ensure there is sufficient collateral contributed against the leveraged position to cover all fees. You must always have available collateral contributed against all leveraged positions to cover the rollover fees or you risk us closing your leveraged position(s).

The fees for leveraged trading are:

Position open fee:
This fee is applied to the value we advance you for your leveraged position and it is charged at the time you create your new leveraged position.

Example: You elect to open a new leveraged position to leverage buy $30,000 of Bitcoin and select the 2x leverage ratio, and you use fiat of $15,000 for your collateral contribution and we provide you fiat $15,000. The position open fee is calculated using $15,000 as this is the value of fiat we have advanced to you.

Position close fee:
This fee is applied to the value we advance you for your leveraged position at the time it was created and it does not take into consideration the unrealised profits/losses on the position. It is charged at the time you fully close your open position..

Example: You have an open 3x leverage buy for $30,000 of Bitcoin; and you have an unrealised gain of $5,000, meaning your total position value is now $35,000. The position open fee is calculated using $20,000 as this is the value we advanced you.

Interest fee:
This fee is applied to the loan/borrowed value of your leveraged position while the position has an outstanding loan amount. The fee is charged only on the outstanding loan amount and is rounded down to the nearest cent. It is charged at the time you fully close your open position.

Mandatory liquidation fee:
This fee is applied to the value of the outstanding loan amount of your leveraged position at the time it is closed by us. This fee is applied only when your position is automatically liquidated or partially liquidated when your position margin falls below mandatory liquidation level. This fee is not charged when you close your position yourself or using triggers.

Fees are accrued against the profit/loss of your position:
All fees are calculated and accrued against the profit/loss of your position while it is open. They are charged against the position when the position is partially or fully closed.

Limits

If you have sufficient fiat or cryptocurrency in your account to create a new leveraged position, you can create a new leveraged position up to your applicable leveraged position limit. Different leveraged position limits apply to each fiat and cryptocurrency. Note: all limits apply to the size of the initial position, not the current value of your open position.

For example: Using 2x leverage buy, we advance you $1,000 to buy Bitcoin and you contribute $1,000 as collateral, your Bitcoin limit will be used. If the price of Bitcoin then goes up 10% and your leveraged position is showing an unrealised gain of $200. Your leveraged position is using only AUD$2,000 of your Bitcoin leveraged position limit, not AUD$2,200. This is because your limit does not change in response to unrealised profits and losses on your leveraged positions.

If you try to open a new leveraged position that will take you over your single cryptocurrency leveraged position limit, you will receive an error message advising of this.

There may be times when you have sufficient fiat or cryptocurrency in your account to open a new leveraged position and you have not reached your single cryptocurrency leveraged position limit, but you are unable to create any new open leveraged position. This is because we maintain a global leveraged position limit that is applied across all customers. This limit is in place to ensure the integrity and stability of the markets we offer to our customers.

If you try to open a new leveraged position after we have reached the global leveraged position limit, you will receive an error message advising of this.

We are not liable for any loss or damage (including consequential loss, indirect loss, loss of profit or economic loss) that you may incur as a result of not being able to create a new leveraged position due to any of the leveraged position limits being reached.

Close Out Rights

We may (in our absolute discretion) close out one or more of your open leveraged positions at the prevailing market price without further notice to you in the following circumstances:

• if the value of all of your open leveraged positions represents a substantial net unrealised loss to you and that continued trading, or failure to close one or more of your open leveraged positions, will or is likely to materially prejudice your account balance;
• if you fall below the mandatory liquidation level;
• if you fail to meet a margin call;
• to ensure that we do not exceed our global leveraged trading limit; or
• in an exceptional event.

For this purpose, an exceptional event includes:

• the suspension or closure of any exchange;
• extreme market conditions;
• an event that disrupts market conditions;
• excessive changes to the price, supply or demand of any cryptocurrency;
• technical failures that impact trading;
• any act or regulation made by a government, regulator or authority that prevents us operating an orderly exchange;
• the imposition of any limits or restrictions on our exchange by a government, regulator or authority;
• lack of liquidity; or
• the failure of any service provider or platform that supports our leveraged trading service.

In extreme market conditions, the lack of liquidity may result in your position being closed below the current market price. Any residual funds, cryptocurrency and collateral will be returned to your trading account. Importantly, your liability in respect of leveraged positions is not limited to the amount, if any, of any collateral provided. You are responsible and liable for paying us any deficit owing to us after a leveraged position is closed.

Calculating Unrealised Profit and Loss

Excluding fees, the unrealised profit and loss of your open leveraged position is calculated as the difference between the current market value of your leveraged position and the value of the leveraged position at the time you opened the leveraged position.

Fees are always deducted from your unrealised profit and loss.

A leveraged buy position is where you borrow fiat to open a buy trade.
A leveraged sell position is where you borrow crypto to open a sell trade.
Leveraged Buy Position: (Leverage Value x Market Price) minus (Leverage Value x Position Opening Price) where the Leverage Value is a multiple of the collateral contributed. For example, if the collateral contributed is 50% based on the margin percentage, the Leverage Value is x2. The below examples are exclusive of any fees.

Example 1: You take a 5x leveraged buy position on 5 Bitcoin at $12,000 per Bitcoin.
The current price of Bitcoin has moved up and is now $12,350:
Your unrealised profit = (5 x $12,350) minus (5 x $12,000)
Your unrealised profit = $61,750 minus $60,000
Your unrealised profit = $1,750

Example 2: You take a 2x leveraged buy position on Bitcoin at $12,000 per Bitcoin.
The current price of Bitcoin has moved down and is now $11,500:
Your unrealised loss = (2 x $11,500) minus (2 x $12,000)
Your unrealised loss = $23,000 minus $24,000
Your unrealised loss = -$1,000

Leveraged Sell Position: (Leverage Value x Position Opening Price) minus (Leverage Value x Market Price) where the Leverage Value is a multiple of the collateral contributed. For example, if the collateral contributed is 50% based on the margin percentage, the Leverage Value is x2.

Example 3: You take a 4x leveraged sell position on Bitcoin at $15,000 per Bitcoin.
The current price of Bitcoin has moved down and is now $12,200:
Your unrealised profit = (4 x $15,000) minus (4 x $12,200)
Your unrealised profit = $60,000 minus $48,800
Your unrealised profit = $11,200

Example 4: You take a 3x leveraged sell position on Bitcoin at $15,000 per Bitcoin.
The current price of Bitcoin has moved up and is now $15,100:
Your unrealised loss = (3 x $15,000) minus (3 x $15,100)
Your unrealised loss = $45,000 minus $45,300
Your unrealised loss = -$300

Changes to These Terms

We may (in our absolute discretion) change the margin percentage, margin call level, mandatory liquidation level, leveraged trading limits or any other terms that apply to our leveraged trading service and the change may apply to new leveraged positions as well as open leveraged positions. We will endeavour to provide you with as much notice as possible before implementing a change. However, we may provide very short notice of a change, or no notice at all, where an exceptional event occurs. For this purpose, an exceptional event includes:

• the suspension or closure of any exchange;
• extreme market conditions;
• an event that disrupts market conditions;
• excessive changes to the price, supply or demand of any cryptocurrency;
• technical failures that impact trading;
• any act or regulation made by a government, regulator or authority that prevents us operating an orderly exchange;
• the imposition of any limits or restrictions on our exchange by a government, regulator or authority;
• lack of liquidity; or
• the failure of any service provider or platform that supports our leveraged trading service.

We will notify you of any changes via your account and whether it only applies to new leveraged positions or if it will apply to any open leveraged positions. If we change any of the leveraged trading terms, this may impact your open leveraged positions, any unrealised gains or losses and leveraged trading limits. It is important that you regularly check your account to monitor your open leveraged positions and are aware of any changes to our leveraged trading service that may impact your positions.

Leveraged Trading Risk Disclosure Statement

NO ADVICE

We do not provide any form of advice to our customers in relation to our products or services. We may sometimes provide factual information and market commentary to you directly or via our website; and information about procedures, market conventions and guidance on how you can protect yourself against the potential risks involved in trading cryptocurrencies. This information should not be construed as advice and any decision you make to use our products or services is made by you based on your own research, inquiries and assessments.

We also do not provide advice regarding your personal tax affairs, regulatory filings, disclosures or legal matters that may arise as a result of you using our products and services. It is your responsibility to ensure you comply with applicable laws and regulations. If you are unsure, you should seek independent tax, financial or professional advice.

For more information about risks, please refer to clause 2.6 of our Terms and Conditions.

NOT FINANCIAL PRODUCTS

All the cryptocurrencies we make available for leveraged trading are not financial products and are unregulated. As these products are unregulated, we are not required to hold an Australian financial services licence and you will not have the benefit of any of the protections that apply to financial products under the Corporations Act 2001 (Cth).

INFORMATION AND SUITABILITY TEST

Before we permit you to use Leveraged Trading, we require you to read and understand this Risk Disclosure Statement, the Leveraged Trading terms and conditions and to pass a suitability test to ensure you have been provided with the appropriate information to make a decision as to whether leveraged trading products are suitable for you. The suitability test is a tool that you can use to make a self-assessment as to whether leveraged trading is suitable for you and it is your sole responsibility to understand the risks involved with the leveraged trading product. By providing you with access to the suitability test, we are not providing you with any opinion or recommendation about whether leveraged trading is suitable for you.

VOLATILITY

The trading or holding of cryptocurrencies involves significant risk. Prices can and do fluctuate on any given day. Due to such price fluctuations, you may rapidly increase or lose value in your assets at any given moment. Cryptocurrency is subject to large swings in value and may even become worthless. There is an inherent risk that losses will occur as a result of buying, selling or trading any products we offer.

LEVERAGE

Using the Leveraged Trading product carries a high degree of risk because the leverage means that a relatively small movement in underlying prices of cryptocurrency can lead to a proportionately larger movement in the value of your leveraged position. This can work against you as well as for you. There is a high risk of losing (and making) money quickly using leverage. The higher the leverage ratio you select, the greater impact any market movements may have on your leveraged position. Trading using 5x leverage carries a significantly higher degree of risk than trading using 2x leverage.

NON-GUARANTEED STOP ORDERS and LIQUIDATIONS

Due to market conditions (please refer to the "General Trading Risks" section for more details) the use of Stop Loss orders will not guarantee that your losses (or profits) are capped at that level. Extreme volatility and 'gapping' may mean that after the stop trigger is reached, the price achieved from the set limits may not be possible and your losses (profits) may continue.

Similarly, if your leveraged position reaches a point where mandatory liquidation is triggered, we cannot guarantee that your leveraged position will be closed at the mandatory liquidation level. Prevailing market conditions at the time of the liquidation may mean that your leveraged position is closed below the mandatory liquidation level. In extreme circumstances, when closing your leveraged position, you may end up in an overall loss position and will be required to provide additional collateral to make up the loss amount on your position.

NEED TO MONITOR YOUR POSITIONS

It is imperative that you monitor all of your leveraged positions closely. It is your sole responsibility and obligation to monitor all your leveraged positions. While you have any open leveraged positions, you should regularly access your trading account to actively monitor all your leveraged positions. Due to the speed that margin levels can change with higher leverage ratios, you should consider carefully how equipped you are to monitor markets and react while having higher leverage ratio positions open.

GENERAL TRADING RISKS

It is important that you understand the risks associated with trading in cryptocurrencies because fluctuations in the price of cryptocurrencies can and do affect the value of your leveraged positions. Please refer to clause 2.6 of our Terms and Conditions for more details of the risks associated with cryptocurrencies.

VALUES CAN BOTH DECREASE AND INCREASE

The value of your leveraged positions can go down as well as up and, in extreme circumstances, you may end up with less than you originally invested. The higher the leverage ratio you select, the greater impact any market movements may have on your leveraged position.

VOLATILITY

Movements in the price of cryptocurrency markets can be volatile and unpredictable. This volatility will have a direct impact on the profit and loss of your leveraged trading positions. You should be familiar with the volatility of the market and assign an appropriate Stop Loss and Take Profit order level and assign collateral to maintain your leveraged position

GAPPING

Gapping in one or more markets is a sudden shift in the price of an underlying market from one level to another. Gapping in cryptocurrency markets is generally experienced more frequently than with traditional financial markets (such as ASX-listed shares). Cryptocurrencies trade 24 hours a day and a gapping event can happen at any time.

When a market gaps, it can have a large impact on the value of your leveraged positions and can cause unexpected losses, where for example: The market gaps past your Stop Loss or Stop Loss trigger causing your position to be closed at a greater loss than if the Stop Loss was executed at the price or PnL Value you assigned. It is for this reason that all Stop Loss and Take Profit triggers are offered on a best endeavours basis and we cannot guarantee that your position will be closed at the Stop Loss price or PnL level. You are liable for any losses beyond a set Stop Loss order (and are entitled to keep profits). Stop Loss or Take Profit orders will not always protect you against the risk of gapping.

MARKET LIQUIDITY

We operate an open order book exchange and, as a result, we cannot guarantee liquidity at any price level for any cryptocurrencies. Market conditions can change significantly in a very short period of time. If you attempt to close a leveraged position, you may not be able to do so at or close to the last traded price if there is a lack of liquidity. Under certain trading conditions, it may be difficult or impossible to close your leveraged position.

REGULATORY AND LEGAL RISK

In Australia, cryptocurrency exchanges are only subject to anti-money laundering and terrorism financing requirements, unless the exchange offers trades in cryptocurrencies that are regulated financial products There is a risk that a change in laws and regulations will materially impact the products we offer. A change in laws or regulations made by the government or a regulatory body can increase the costs of offering our services, require additional disclosures to our customers, reduce the attractiveness of our products and, in some extreme cases, mean we need to withdraw the product from the market.

To commence Leveraged Trading:

1. You acknowledge that you have read and understood the Leveraged Trading Education page on our website; and acknowledge that you fully understand the risks associated with the leveraged trading service.
2. You successfully pass the Leveraged Trading Suitability Test.
3. You acknowledge that you are solely responsible and liable for any trading activity on your Independent Reserve account and will not enter into positions that are above your financial abilities.
4. You acknowledge that higher leverage ratios carry significantly higher risk of loss than lower leverage ratios and we have provided detailed warnings about the risks involved with higher leverage ratio trading.
5. You are not a citizen or resident of the United States of America (USA).
6. You are solely responsible and liable for knowing and maintaining all of the leveraged positions in your Independent Reserve account; even if the positions are presented incorrectly on any of Independent Reserve's systems.
7. You agree to maintain sufficient collateral in your Independent Reserve account as required under the Leveraged Calculation Methodology.
   1. Failure to maintain sufficient collateral in your account can result in the liquidation of buy and sell leveraged positions you hold in your Independent Reserve account.
8. You agree that Independent Reserve cannot guarantee that a stop loss will limit your losses to the value of your collateral.
   1. If your positions have been closed due to your stop loss and you do not have sufficient fiat or cryptocurrency assets in your Independent Reserve account to cover the balance outstanding you are still responsible for making payment for any shortfall.
9. During system maintenance, you agree that you are solely responsible and liable for managing all of your leveraged positions. Independent Reserve will provide you with advance notice of any upcoming maintenance.
   1. You acknowledge that markets may move during maintenance and that you may sustain losses greater than your deposited collateral if the price moves against you while Independent Reserve is undergoing system maintenance.
10. You agree that you, the account holder, are making all trading decisions and placing all orders on your Independent Reserve account; and you are fully responsible for all activities undertaken on your account.
11. Independent Reserve does not take any responsibility for any loss or damage incurred as a result of your use of any leveraged trading services or your failure to understand the risks involved with leveraged trading.