Risk Disclosure

Trek Labs Europe Ltd. dba Backpack EU

RISK DISCLOSURE POLICY

1. Introduction

Backpack EU is a brand name owned and operated by Trek Labs Europe Ltd (formerly FTX EU and FTX EU Ltd, respectively) (hereinafter referred to as the “Company,” “Backpack EU,” “us,” or “we”), a company incorporated in Cyprus with registration number HE 335683 and authorised by the Cyprus Securities and Exchange Commission (“CySEC”) under license no. 273/15, with registered address at Aiolou & Panagioti Diomidous 9, Katholiki, 3020 Limassol, Cyprus.

This risk disclosure document provides a general overview of the main financial products offered by the Company and their associated risks and is provided to you (our Client or prospective Client) in compliance with the Provision of Investment Services, the Exercise of Investment Activities, the Operation of Regulated Markets and Other Related Matters Law87(I)/2017,Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC, as subsequently amended from time to time which is applicable to the Company.

All Clients and prospective Clients should read carefully the following risk disclosure before applying to the Company for a Client Account and before they begin to trade with the Company. However, it is noted that this document cannot and does not disclose or explain all of the risks and other significant aspects which the Client should take into account in relation to a particular investment in Financial Instrument (FI). It is intended to give the Client information on and a warning of the risks associated with FIs so that the

Client is reasonably able to understand the nature and risks of the services and of the specific types of Financial Instruments being offered and, consequently, to take investment decisions on an informed basis.

This Risk Disclosure forms part of the Client’s agreement with the Company and therefore by entering into an agreement with the Company you also agree to the terms of this Risk Disclosure, as set out in this document.

2. Acknowledgement

Clients are ultimately responsible for all of the losses suffered in their account. As a consequence, Clients should be prepared to lose all funds which they deposited. Clients are also responsible for losses that exceed their profits and deposits. Clients should never fund their trading activities with retirement savings, loans, mortgages, emergency funds, funds set aside for purposes such as education or home ownership, or funds required for current income or present or future medical expenses. Derivative Financial Instruments are complex products and are not suitable for all investors. Prior to trading, you are responsible to acknowledge and understand the risk associated with Derivative Financial Instruments and in the event, you do not understand them you should seek advice from a professional and independent financial advisor.

3. Risk warning

You fully understand and agree that the company cannot guarantee the initial capital that has been invested in Instruments or the value of your portfolio. In addition, regardless of any information that has been offered to you by the company, the value of any investment Instruments may fluctuate downwards or upwards and there is always a possibility that the entire investment will not carry any value.

You are fully aware that trading carries a high level of risk and more specifically the possibility of losing all of your invested funds. Therefore, trading may not be suitable for you. You should not engage in any investment directly or indirectly in Financial Instruments unless you know and understand the risks involved for each one of the Financial Instruments offered by the Company.

Prior to applying for and opening an account with the Company you should consider carefully whether investing in a specific Financial Instrument is suitable for you in the light of your personal circumstances and financial resources. In addition, as a client you should not invest money that you cannot afford to lose. Prior to trading, you are responsible to acknowledge and understand the risk associated with it. In the event, you do not understand them, you should seek advice from a professional and independent financial advisor. We do not offer investment advice.

You understand that trading in derivatives does not lead to ownership of the underlying instrument. Derivatives are complex products and are not suitable for all investors. Before trading, you should ensure that you fully understand the risks and costs involved. You should have extensive experience of trading in volatile markets as well as sufficient time to manage your investment on an active basis. If necessary, seek independent advice.

Trading derivatives can be utilized for the management of investment risk, some of these products are unsuitable and not appropriate for many clients as they carry a high degree of risk.

You acknowledge and accept the following:

  • You fully understand and agree that the Company cannot guarantee the initial capital that has been invested in Financial instruments or the value of your portfolio. In addition, regardless of any information that has been offered to you by the Company, the value of any investment in Financial Instruments may fluctuate downwards or upwards and there is always a possibility that the entire investment will not carry any value.

  • Information of the previous performance of an Instrument does not necessarily guarantee its current and/or future performance. The use of historical data does not constitute a binding or safe forecast as to the corresponding future performance of the Instrument to which the said information refers.

  • Some Instruments may not become immediately liquid as a result, for example, of reduced demand and the Client may not be in a position to sell them or easily obtain information on the value of these Instruments or the extent of the associated risks.

  • When an Instrument is traded in a currency other than the currency of the Client's country of residence, any changes in the exchange rate may have a negative effect on its value, price and performance.

  • An Instrument on foreign markets may entail risks different to the usual risks of the markets in the Client's country of residence. In some cases, these risks may be greater. The prospect of profit or loss from transactions on foreign markets is also affected by exchange rate fluctuations.

  • A Derivative Instrument (i.e. option, future, forward, swap, contract for difference) may be a non-delivery spot transaction giving an opportunity to make profit on changes in the underlying asset (currency rates, commodity, stock market indices or share prices) though you do not own the underlying asset.

  • The value of the derivative Instrument may be directly affected by the price of the security or any other underlying asset which is the object of the transaction.

  • The Client must not purchase a derivative Instrument unless he is willing to undertake the risks of losing entirely all the money which he has invested and also any additional commission and other expenses incurred.

  • The value of the Instrument may decrease and the client may receive less money than originally invested or the value of the Instruments may present high fluctuations.

  • The Client acknowledges and accepts that irrespective of what type of order they place with the Company under certain circumstances including but not limited the ones mentioned on our Order Execution Policy found on the Company’s Website may not be possible to be executed at all and any stop loss orders or orders with similar effect might not be able to reduce the Client losses and even though the Client placed a stop loss or a similar type of order they still run the risk of losing their entire investment.

  • The Company is not responsible for any trading failure and not liable for any damage, cost or expenses the Client incurs caused directly or indirectly by malfunction and / or disruption and /or failure of its trading platform and website. The Company does not accept any liability if such events occurred.

  • The Company has no responsibility in relation to your access to the Company’s website, and/or the Company’s trading platform if the internet is subject to events which may affect such access, including but not limited to internet disconnection, public electricity network failures, interruptions or transmission blackouts, or software and hardware failures. The Company shall not be responsible for any damages or losses resulting from such events which are beyond its control or for any other losses, costs, liabilities or expenses which may result from your inability to access the Company’s website and/ or trading platform or delay or failure in sending orders or transactions.

  • The Client acknowledges and accepts that there may be other risks which are not contained above.

4. Instruments related to virtual Currencies

Virtual Currencies' values can widely fluctuate (high volatility) and may result in significant gain or loss over a short period of time. This applies to a derivative instrument with Virtual Currencies as underlying in the same manner. These products are not appropriate for all investors and you should not trade it, if you don't have the necessary knowledge and expertise, moreover be fully aware and understand the specific characteristics and risks of these products. Due to the high risks involved in the trading of CFDs on virtual currencies you are faced with a high risk of losing all of your invested capital. Furthermore, trading in such products you are not entitled to any protection under the Investors Compensation Fund and, in case of a dispute with the Company, you have no right to report to the Cyprus Financial Ombudsman.

5. Knowledge of our Trading Platform

Clients must be knowledgeable in the use and functionality of the trading platform provided by the Company or by any third-party provider, in order to correctly interpret account information and to be able to place orders correctly. Clients are responsible for all orders placed in their account. If a Client does not have complete understanding of the way the platforms operates, they should not trade before obtaining the required knowledge. Clients who are relatively new to electronic trading are urged to strictly limit both the number of trades they do and the size of their trades to reduce the risk of losses during the learning process.

The trading platform uses “One Click” functionality, the meaning of it is immediate execution of the order submitted. Therefore, the Client will have no opportunity to review the order after clicking "buy", "sell", "up", "down". The order will be a market order without the ability to be cancelled or modified.

You are strongly urged to try trading with a demo account before real trading. You agree to one click trading and accept the risk of this immediate execute feature.

6. Overnight positions & Swap charges

Holding positions overnight on Financial Instruments, may result in considerable losses. Prices of the next day can be significantly different from the previous day's prices. Also, trading in Financial

Instruments can unexpectedly be halted during trading hours for a variety of reasons and prices can vary dramatically at the re-opening of trading with no interim capabilities of trading during such time periods. Such price changes may significantly change the result of stop-loss orders and as a result such orders might not always be able to protect you and you are still having a significant risk of losing your entire invested capital.

If a Client holds any positions overnight then an applicable swap charge will apply. The swap charges are clearly stated on the trading platform and are accepted by the Client during the account registration process as they are described in the Company's terms and conditions.

The swap rate is mainly dependent on the level of interest rates as well as the Company's fee for having an open position overnight. The Company has the discretion to change the level of the swap rate on each Financial Instrument at any given time and the Client acknowledges that they can be informed about the current swap rates by checking these in the trading platform. The Client further acknowledges that they are responsible for reviewing the contracts specifications located on the trading platform for being updated on the level of swap value prior to placing any order with the Company.

7. Underlining Market Volatility

Derivatives are instruments that allow the client to trade on price movements in underlying markets/instruments. Even though the Company offers its own prices (as obtained by its Liquidity

Provider) at which the client trades, the Company’s prices are derived based on the underlying instruments/markets.

It is important for the client to understand that the fluctuation of the underlying instrument will affect the client’s profitability. The client should also be aware of “gapping” where such events can result in a significant profit or loss on the client’s account. “Gapping” can occur when the underlying instrument/market is open and when it is closed.

8. IT Risks

Trading Instruments that are derivatives of digital assets (such as Virtual Currencies) are exposed to native IT risks associated with digital assets. Those IT risks can be: hacks, bugs, exploits, misuse etc. All of these risks may result in a total loss of the value of the underlying and therefore also for the derivative Instrument.

9. Risk of Redemption in kind

The Company custodies any digital asset in its own name and on its own behalf. If a client redeems a position in kind (to the extent possible), the underlying will be delivered to the self-custodial wallet as specified by the client outside the trading platform. Not every underlying may be compatible with every wallet. It is your responsibility to check compatibility before requesting any redemption in kind as well as the accuracy of any data provided to us. Wrong data, type-os etc. may result in a total loss of funds. We do not assume any responsibility for wrong data or incompatible wallets provided by the client.

10. Costs and Charges

All relevant costs and charges will be provided by the Company.Clients should be aware of such costs and charges that may influence the account profitability of the client. Prior to the commencement of trading activities the Client should obtain details of all commissions and all related charges regarding which the Client will be liable.

11. Funding Rates

Perpetuals contain an hourly funding rate, this means that you either have to pay the funding rate

(which equals an ongoing cost component for you) or that you will be credited the funding rate.

The funding rate is calculated by the following formula: position size * time-weighted average price of ((future – index) / index) / 24.

12. Taxes

The Client should take the risk that his trades in Instruments may be or become subject to tax and/or any other duty, for example, because of changes in the legislation or their personal circumstances. The Company does not warrant that no tax and/or any other stamp duty will be payable. The Client should be responsible for any taxes and/or any other before the Client begins to trade, he should obtain details of all commissions and other charges for which the Client will be liable. If any charges are not expressed in money terms but for example, as a dealing spread, the

Client should obtain a clear written explanation, including appropriate examples, to establish what such charges are likely to mean in specific money terms.

13. Basic Investment Risks

13.1 Credit Risk

Credit risk is the risk arising from the counterparty’s inability or unwillingness to meet its contractual obligations normally due to a default and it is highly connected to settlement risk. This may result in a loss of the principal amount, investment opportunity, and market gains.

13.2 Liquidity Risk

Liquidity refers to the ability of market participants to buy or sell their Financial Instruments at a specific time. Risk of low or no liquidity can result in a loss of an investment opportunity to buy or sell instruments at competitive prices.

13.3 Volatility Risk

Some Derivative Financial Instruments are traded within wide intraday ranges with volatile price movements. Therefore, the Client must carefully consider that there is a high risk of losses as well as profits. The price of Derivative Financial Instruments is derived from the price of the underlying asset in which the Derivative Financial Instruments refer to. Derivative Financial Instruments and related underlying assets can be highly volatile. The prices of Derivative Financial Instruments and the underlying asset may fluctuate rapidly and over wide ranges and may reflect unforeseeable events or changes in conditions, none of which can be controlled by the Client or the Company.

Under certain market conditions it may be impossible for a Client’s order to be executed at declared prices leading to losses. The prices of Derivative Financial Instruments and the underlying asset will be influenced by, amongst other things, changing supply and demand relationships, governmental, agricultural, commercial and trade programs and policies, national and international political and economic events and the prevailing psychological characteristics of the relevant marketplace.

13.4 Market Risk

Market risk is referred to investment losses due to adverse movement in the financial market prices. Interest rate risk, currency risk and instrument price risk are the main market risk types.

Particularly:

13.4.1 Interest rate risk

Changes in interest rates may cause contrary effects to the value of an investment. Interest rate Derivative Financial Instruments have values that are linked to the movements of interest rates.

These may include interest rate future, options, swaps.

13.4.2 Currency risk

Currency risk is a form of risk that arises from the change in the price of one currency against another. Whenever investors or companies hold assets or operate in different currencies, they face currency risk if their positions are not hedged. Currency risk arises also from Financial

Instruments traded in currencies different than the investor’s reporting currency.

13.4.3 Price risk

Financial Instruments prices may undergo sharp price fluctuations due to general market conditions such as changes in economic or political conditions or specific conditions related to the issuer. Price fluctuations, the frequency and duration of which can be unpredictable, may cause the risk of loss.

13.5 Political risk

A number of factors such as national conflicts, racial and national tensions create political instability in a country. Any perceived, actual or expected disruptions or changes in government policies of a country, by elections or otherwise, can have a major impact on the value of instruments linked to those countries. Political risk can drag down investment returns or even restrict the potential to withdraw or transfer capital from an investment. A country under international attention or sanctions for its actions or practices against money laundering, terrorist financing or for its acts against ethnic, social, or economic matters may cause uncertainty in respect of the securities or assets of an issuer directly related to that country. Such securities may be subject to confiscation, blocking, or restrictions on any transactions. Political risk is higher when investing in Emerging Markets.

13.6 Inflation risk

Inflation risk is the possibility that the value of an asset or income will decrease as inflation shrinks the purchasing power of a currency where the said income or asset are denominated. Inflation causes cash to decrease in value at some rate and does so irrespective of whether the cash is invested or not. Clients must therefore assess the real value of their assets in terms of the real return they would expect from an investment.

Leverage Risk

Before the Client opens a trade on Derivative Financial Instruments, they are required to maintain a margin. Margin is usually a relatively modest proportion of the overall contract value. This means that the client will be trading using "leverage" . The "leverage" is often obtainable when trading in

Derivative Financial Instruments. This means a relatively small market movement can lead to a proportionately much larger movement in the value of the Client's position and this can work either against the Client or for the Client. The greater the leverage, the greater the risk

At all times during which the Client opens trades, he must maintain enough equity, consider all running profits and losses, for meeting the margin requirements. If the prices move against the

Client then the Client must deposit funds to avoid any margin calls otherwise the Company will be entitled to close one or more or all the Clients' trades regardless of whether the Client agrees with the Company's decision to close their positions.

13.7 Timing Risk

If you do not have enough time to monitor your investment on a regular basis, you should not trade derivatives or in complex Derivative Financial Instruments. These products are not suitable for 'buy and hold' trading. They can require constant monitoring over a short period of time.

Even maintaining your investment overnight exposes you to greater risk and additional costs. The volatility of the market together with the extra leverage on your investment can result in rapid changes to your overall investment position. Immediate action may be required to manage your risk exposure or to post additional margin.

13.8 General Risks Associated with Derivative Financial Instruments

A Derivative is a Financial Instrument, the value of which is derived from an underlying asset’s value. Derivatives are used for hedging investment risks or for arbitrage purposes. The Client should carefully assess all risks from such transactions. All Derivatives are subject to the main risk types as described above, in particular Market risk, Credit risk, Volatility risk and any specific risks related with the underlying assets.

Whilst Derivative Financial Instruments can be utilised for the management of investment risk, some investments are unsuitable for many investors. Different instruments involve different levels of exposure to risk, and in deciding whether to trade in such instruments the Client should be aware that Derivatives transactions involve risks, including but not limited to the following:

  • Market Risk: Market risk is the risk of loss arising from adverse changes in the value of a Derivative Financial Instrument as a result of movements in the underlying market rate.

  • Credit Risk: Credit risk is the risk that a counterparty may fail to meet its contractual payment obligations through insolvency or default. For Derivatives, the amount at risk is not the face value of the transaction but the positive fair value or replacement value of the transaction.

  • Liquidity Risk: Liquidity risk is the risk of losses attributable to a lack of liquidity (i.e., very few market participants) in a particular market. This is usually indicated by wide bid/offer spreads and very few transactions being done in a particular product or market. The risk is that changes in the underlying market price may be infrequent but very large, and that an open position in the market is not able to be effectively hedged.

  • Pricing Risk: For complex Derivative transactions, pricing is completed using various assumptions and mathematical models. Pricing risk is the risk that these models do not accurately reflect conditions

  • Operational Risk: Operational risk is a wide-ranging area of risk. It can cover risks such as, but not limited to, the following:

    • transactional details are not accurately input into the trading platform;

    • computer systems break down;

    • computer files are lost;

    • experienced staff leave the organisation;

    • documentation relating to a transaction is incorrect; and

    • relying on a third party for the performance of any operational functions which are critical for the provision of continuous and satisfactory service to clients.

14. Specific Products and their Related Risks

14.1 Perpetual Futures

Perpetual Futures are a type of derivative financial instrument that allows traders to speculate on the price movement of an underlying asset without an expiry date. Receivables in connection with

Perpetual Futures are settled in cash. Unlike traditional futures contracts, which have a set maturity date, perpetual futures remain open indefinitely, provided that required margin is maintained. These contracts typically use a funding mechanism, whereby periodic payments are exchanged between long and short position holders based on the difference between the perpetual contract price and the reference index price of the underlying asset.

The reference price of the underlying asset is generally determined by the market price as reflected on major reference exchanges or aggregated from multiple liquidity providers, depending on the pricing methodology implemented. This price is influenced by several factors, including supply and demand dynamics, macroeconomic events, market sentiment, regulatory developments, and overall liquidity conditions. Additionally, external events such as geopolitical risks, technological advancements, and sudden market disruptions may cause significant price fluctuations.

By entering into a perpetual futures contract, the investor acknowledges and agrees that they are engaging in a legally binding agreement with the counterparty, subject to the applicable terms and conditions.

Due to the nature of perpetual futures, they are subject to high volatility, leverage, and liquidation risks. Investors should be aware that trading in perpetual futures may result in significant losses, including the loss of their entire invested capital.

15. Client Categorizations

In order to comply with the Markets in Instruments Directive (MiFID) of the European Union, the Company must classify the prospective client as Retail Client, Professional Client or Eligible

Counterparty when considering the application for opening an account, based on the information provided to the Company.

16. Loss of Funds

Trading Is Considered Risky and Speculative. Clients are ultimately responsible for all of the losses suffered in their account. As a consequence, Clients should be prepared to lose all funds which they deposited. Clients are also responsible for losses that exceed their profits and deposits. Clients should never fund their trading activities with retirement savings, loans, mortgages, emergency funds, funds set aside for purposes such as education or home ownership, or funds required for current income or present or future medical expenses.

17. Competition and sophistication

Trading requires in-depth knowledge of the financial markets, trading techniques and strategies.

In attempting to profit from Trading, Traders compete with Professional traders, market-makers, etc. and therefore, a high level of investment and trading experience is necessary. No guarantees are offered or represented by the Company regarding the returns that can be expected from Trading.

18. One Click Order

The meaning of it is immediate execution, you will have no opportunity to review the order after clicking “buy”, “sell”, “up”, “down” if chosen accordingly. You are strongly urged to try trading with a demo account before real trading. You agree to one click trading and accept the risk of this immediate execute feature. As default setting, you will have to confirm any order after review.

19. Recommendations

Recommendations on the website or in our third-party partners or via email are not personal and are not investment advice. There is no guarantee for profit or for expected investment results due to those recommendations. The client is knowledgeable and accepts that he/she is using his own judgment for each transaction that he is making and not relying on any recommendation.

20. ONLINE TRADING RISKS

Clients that use our services are trading via the internet. The Company is not responsible for any failure and not liable for any damage, cost or expenses caused directly or indirectly by malfunction and / or disruption and / or failure and / or transmission, computer and / or internet system and / or trading system.

Risk Warning: Our products are traded on margin and carry a high level of risk and it is possible to lose all of your capital. You should consider whether you understand how Financial

Instruments work and whether you can afford to take the high risk of losing money. Please read carefully this Risk Disclosure document, together with the Client Agreement (“Terms of Service”) and Privacy Policy available on our website in the Legal Documents list.

Disclaimer: The content on our website does not constitute financial or investment advice. Be advised that past performance is not an indication of future performance. Any information provided by the Company either through a website or any other means, is of a general nature and does not take into consideration your personal circumstances, investment experience or financial situation.

PreviousCookie PolicyNextMoney Laundering Prevention Policy

Last updated