What is a loss limit, and how is it applied to a Ndax user’s account?

As part of our commitment to regulatory compliance and ensuring a safe trading environment, we are implementing certain investor protection measures in connection with the Pre-registration Undertaking (PRU) dated March 23, 2023, that Ndax Canada Inc. (Ndax, we, us, or our) entered into in favor of the Alberta Securities Commission and the other members of the Canadian Securities Administrators. One of these measures is the loss limit feature that is applied to a user’s account. In this article, we will explore what a loss limit is, how it will be applied, and what impact it will have on you.

The loss limit is a predefined threshold that triggers notifications when the value of your portfolio has reached a pre-determined percentage of unrealized losses. It serves as a safeguard and an early warning system to ensure that your investment holdings remain in line with your investment objectives and risk tolerance. By implementing the loss limit, we aim to provide you with adequate information that you can utilize to protect your financial well-being and to prevent excessive losses that are outside of your risk tolerance.

The loss limit feature is essential for several reasons:

• Security: The loss limit acts as an early warning system and a protective measure, helping you to stay up to date on the level of unrealized losses in your account to encourage you to use that information to mitigate potential losses and safeguard your investments. It triggers an email notification that gives you the necessary information, allowing you to act before substantial losses occur.
• Risk Management: By setting a predefined loss threshold, we encourage you to assess your risk tolerance and evaluate your trading strategies. This enables you to make informed decisions and adjust your portfolio holdings accordingly.
• Informed Decision-Making: When your account reaches the loss limit, we will provide you with an in-app or email notification. These notifications prompt you to review your portfolio holdings and will encourage you to consider making adjustments to ensure that your investment holdings are aligned with your financial goals and risk tolerance.

When your account reaches the loss limit, we will notify you through email and in-app notification on the Ndax platform. These notifications will serve as a reminder to review your portfolio and adjust the holdings in your account (If you see such change is necessary at the time based on your individual circumstances, risk tolerance, financial position, and your outlook on the market).

It is important to note that the loss limit notifications are designed to empower you, rather than imposing automatic actions on your account. We believe in the importance of your involvement and decision-making in managing your investments. 

Upon receiving a loss limit notification, we recommend the following steps:

• Review Your Portfolio: Take the opportunity to evaluate your current portfolio holding and assess the unrealized losses incurred in your account. This evaluation will help you understand the overall performance and determine if any adjustments to your holdings are required.
• Consider Risk Management Strategies: Reassess your risk tolerance and evaluate whether adjustments, such as diversification or rebalancing, are necessary to align your portfolio with your overall investment objectives, risk tolerance, and your financial goals.

• Place a sell order for all or certain cryptocurrency holdings.
• Place a loss limit order – a loss limit order will be triggered when the price of the cryptocurrency reaches the limit that you have put in place. To learn more about loss limit orders, please visit here. 
• Updating your information - If you believe that your risk tolerance, your knowledge, or your financial position has changed, please have your profile updated to reflect that.
• You can choose to continue holding the crypto assets in your portfolio, but it is important to keep in mind that the value of your portfolio can depreciate further, and you assume the potential risks of losing your investment.

Notwithstanding the information above, please note that Ndax does not provide recommendations or advice with respect to your account or the trading of crypto assets on the Ndax platform. You are responsible for all investment decisions, and Ndax does not have the ability to trade on your behalf or rebalance your portfolio automatically based on the loss limits triggered. We will not liquidate any holding in your account and will not apply any restriction or take any other action regarding your account and portfolio holdings. Please review your holdings every time the loss limit notification is received and ensure that actions are taken if justified at the time.

The loss limit feature on the Ndax platform plays a crucial role in maintaining the security and integrity of your trading experience. By setting predefined loss limit thresholds and providing timely notifications, we empower you to make informed decisions and manage your investments effectively.

Remember, the loss limit notifications are designed to assist you in taking appropriate actions, but the ultimate control over your portfolio remains in your hands.

If you have any questions or concerns about the PRU or any other aspect of the Ndax platform, including the loss limit on your account, our dedicated customer support team is available to assist you.

Please note that Ndax Canada Inc. has submitted an application for registration under securities legislation in Canada, but is not currently registered, and is operating under the provisions of a pre-registration undertaking (PRU) dated March 23, 2023, entered into favor of the Alberta Securities Commission and the other members of the Canadian Securities Administrators. There can be no assurance that Ndax will be registered and if it fails to become registered in any province or territory in Canada, it will promptly cease carrying on registrable activity in such province or territory.