Derivatives suitability test FAQ

What does the derivatives suitability test include?

The derivatives suitability test encompasses a risk profile assessment, a knowledge assessment, and a review of financial proof. Your eligibility for derivative products will be determined based on a comprehensive evaluation of your test results and submitted documentation.

What's a derivatives knowledge assessment and why is it important?

A derivatives knowledge assessment is a comprehensive evaluation designed to check your suitability or appropriateness for engaging in derivatives trading activities. The assessment encompasses an analysis of multiple factors, including but not limited to the individual's financial standing, investment acumen, risk tolerance, investment objectives, and prior trading experience.

Why do I have to do a knowledge assessment?

Dervivatives can be a complex product that requires a certain level of expertise to understand and trade effectively. Local regulations specify that users are required to complete a knowledge assessment to evaluate whether you have the financial means, risk tolerance, and understanding of derivatives to engage in trading responsibly.

How do I qualify to trade derivatives?

Derivative trading is restricted to qualified investors, individuals, or entities meeting predefined criteria stipulated by local regulatory authorities. To gain access to our advanced trading products, you'll need to meet the following prerequisites:

• Maintain a minimum holding of AED 500,000, which must remain liquid for a reasonable duration.

• Successfully complete a risk assessment to help understand your approach to different types of risks.

• Successfully complete the knowledge assessment, with a minimum score of 80% to qualify.

How's being a qualified investor different from being a retail investor?

A qualified investor is someone who meets the necessary criteria to trade derivatives. In contrast, a retail investor who doesn't meet these qualifications isn't eligible to take part in derivative transactions.

What derivatives products can I access?

OKX Middle East Fintech FZE offers crypto derivatives, such as futures, options and perpetuals to qualified investors, along with the ability to trade certain derivatives with margin. The list of products available to qualified clients is subject to change. Please refer to our Terms of Service and website for details of current products and services.

Is the derivatives knowledge assessment a one-time requirement, and what are the consequences of failing it?

The frequency of the derivatives suitability test depends on regulatory requirements and institutional policies. It might be required as a one-time prerequisite for certain investors, or it might need to be periodically retaken to ensure continued understanding of derivatives and their risks. You'll have the opportunity to retake the test if needed.

Are there any consequences for providing false information on a derivatives suitability test?

Providing inaccurate information on a derivatives suitability test can result in significant repercussions, including legal and financial penalties. These actions may be considered fraud or misrepresentation, potentially leading to legal liabilities. Depending on local laws and the seriousness of the inaccuracies, individuals may even face criminal charges.The purpose of the suitability test is to protect you by verifying your comprehension of the risks in derivatives trading and your financial capability to manage potential losses. Supplying false information undermines the integrity of the suitability assessment and may subject you to risks beyond your readiness to handle.

What documentation do I need to submit after the knowledge assessment?

After successful completion of the knowledge assessment, you'll need to submit the following supporting documentation for our review:

• Bank statements that illustrate at least AED 500,000 has remained, and will remain liquid for a reasonable period of time.

• Bank statements that are dated within the last 3 months.
  

What happens if my application is rejected?

If we determine that the documentation you submit is insufficient to demonstrate that you fall under one of the categories of qualified investor, we will notify you that your application has been rejected. You should only attempt to reapply if your circumstances have changed materially, and you believe that you now qualify as a qualified client within the meaning of VARA's Investor Classification.