Notes on Lightning Futures and Risk
When performing trades on bitFlyer Futures, please thoroughly read both this document and the document outlining Risks of Using Virtual Currency.
- With Lightning Futures, you may experience losses due to fluctuations in price of this virtual currency etc which is an underlying asset of the transaction.
- Although it is possible to earn large profits through Lightning Futures transactions, it is also possible to lose amounts in excess of your deposited margin. Please ensure that you have familiarized yourself with the mechanisms and risks of trading and only engage in trading at your own risk, upon determining that it is appropriate considering your own resources, trading experience, and trading goals.
Please refer to the Fees and Taxes page for more information on Lightning Futures transaction fees.
In order to make trades on bitFlyer, you must deposit a margin as noted in the Lightning Futures Trading Rules page. It should be noted that the value of trades may exceed the margin you deposited, so your losses may exceed your margin.
3. Risks of Lightning Futures Trading
(1) Risk of Price Fluctuation
In Lightning Futures trading, losses may occur due to fluctuation in prices of digital currencies that are underlying assets of trade products. Furthermore, the transaction amount can be larger than the amount of margin deposited by a customer, and losses may exceed the total margin deposited. Note that unexpected or specific events, including but not limited to changes to the balance of supply/demand; changing price of commodities, fiat currency, or other markets; natural disasters; wars; change to laws, regulations, statutes, and the government; and changes to virtual currency may cause drastic price fluctuations that cause the order to fail to fulfill or transact as intended. Please note that prices may in some cases reach zero.
(2) Liquidity Risk
Note that market changes or trading volume may cause a customer to be unable to close open positions or open new positions, and such changes may also result in transactions at undesirable rates. Where an order is delayed, either on the buy or sell side, it may take some time for the order to complete, or it may fail to fulfill.
(3) Risk of Sell Out If we determine that your margin maintenance rate has dropped below the standard we set, we may cancel all outstanding open positions based upon our Margin Call Rules and Sell Out Rules, regardless of your intent. Furthermore, if your margin maintenance rate drops below the standard we set, all of the outstanding positions in your Lightning Futures account will be automatically counter-traded and settled (Sell Out Order). Even in the event of a loss cut, it is possible that the amount lost due to a dramatic and rapid change in the market will cause losses to exceed the margin deposit.
Profit and loss (valuation), required margin, etc. are combined across Lightning FX/Futures markets (positions on different markets do not offset each other.) If you hold a position on multiple markets, please be aware of the risks associated with sell outs due to precipitous market price fluctuations on a given sheet.
∗ Please see the Lightning Futures Trading Rules page for more information on the Sell Out Rules.
(4) Credit Risk
If our company's operational or asset situation worsens, you may be subject to losses in your Lightning Futures trades.
We manage the margins received from customers separately from our own funds.
(5) Swap Point Risk
Regardless of fluctuations in the price of the virtual currency etc which is an underlying asset of the transaction, rolling over short positions or long positions of the product will result in payment of swap points.
bitFlyer determines the swap points daily based upon interest rates.
Depending upon changes in interest rates or changes in the price of the virtual currency etc which is an underlying asset of the transaction, swap points may change, and you may not be able to receive the swap points you hoped for.
∗ Please see the Lightning Futures Trading Rules page for more information about swap points.
∗ For the purposes of Lightning Futures trading, a roll over is defined as a position that is reverse traded on the same day carried over to the following business day. If a a position is not settled with a counter-trade by the maturity date, the position will automatically be settled at the settlement price (SQ) determined on the maturity date.
(6) Risk of Use of Electronic Trading Systems
Please carefully read Section 6: System Risks in the "Risks of Using Virtual Currency" document.
(7) Other Risk
- The spread between the buying price and selling price may widen due to sudden market fluctuations, and you may not be able to make the trade you intend.
- Trading may be limited for reasons that are unavoidable, including natural disaster, political upheaval, strikes, or sudden disruption or closure of Virtual Currency markets. It is possible for customers to incur unexpected losses as a result.
- If in the future the taxation and legal system surrounding Lightning Futures trading changes, it may result in adverse trading conditions.
Management of assets received from customers
- The company manages the margin deposits that we collect from you for Lightning Futures transactions separately from the Company’s own funds.
Crypto assets used as a margin deposit are clearly discernible from crypto assets that are owned by the Company in accordance with the Payment Services Act. The Company manages crypto asset data in a way that immediately identifies which crypto assets belong to customers. The Company manages all customers’ crypto assets in cold wallets. Some crypto assets are also managed using multisig.
4. Explanation of Important Matters
(1) It is possible to suffer significant losses through Lightning Futures transactions due to fluctuations in the price of Bitcoin. It is also possible to suffer losses due to changes in our company's management or financial conditions or changes in external evaluation. Such damages may exceed the value of the margin.
(2) bitFlyer trading system
For more information on the bitFlyer trading methods, margins, etc., please carefully read the Lightning Futures Trading Rules page.
(3) Outline of contracts related to Lightning Futures
Lightning Futures transactions at our company are subject to the following:
- In principle, we provide customers with a place to match orders. In some cases, the Company acts as a party in buy/sell transactions.
The Company makes no warranties to registered users as to the completion of virtual currency trades.
- Management of margin for Lightning Futures trading
(4) Please refer to the Fees and Taxes page for an outline of taxation related to Lightning Futures trading
(5) Outline of business and methods our company engages in related to Lightning Futures trading
Lightning Futures trading is subject to the following:
- In order to trade on Lightning Futures, you must read and consent to the "Notes on Lightning Futures" (this document), create a bitFlyer account, and upgrade the account class to a class that can use Lightning Futures. Funds and positions related to Lightning Futures trades are all processed through the Lightning Futures account.
- To trade on Lightning Futures, you must first deposit the margin that we specify.
- Place Lightning Futures orders within the order times we specify.
- In order to place an order, you must specify the necessary items, including "order type," "asset pair," "new or settlement," order quantity (units of asset)," "order price," etc. If you do not specify these items, you may not be able to place your order.
- We electronically provide you with a transaction report. Be sure to check the content of the transaction report and immediately contact our customer support directly in the unlikely event that it contains an error.
- Lightning Futures trades are only accepted over the Internet. Even in the event of a system failure, in principle we do not accept telephone orders. There is a spread between the selling price and the buying price that customers ask. The spread changes with market conditions and is not constant.
- For transaction rules in addition to those above, please see the Lightning Futures Trading Rules page.