Crowdfunding Q&A

Q1:  Where do I learn about investing?

A1:  Please go to our crowdfunding page.  Click on the link to the right...

Q2:  When do you anticipate launching the exchange?

A2:  We hope to launch in about nine to 12 months after funding.  This timeline depends in large part on obtaining regulatory licenses from the CFTC in a timely manner.

Q3:  What are the investment terms?

A3:  All terms are on the FINRA-registered crowdfunding portal at Netcapital.com.  Click the link to the right for more...

   RealBOT Q&A

Q1:  How do I place trades on RealBOT?

A1:  Traders may open accounts directly with the exchange.  In addition, the exchange welcomes customers with accounts at futures commission merchants (i.e., traditional, and online brokers).  Please contact your futures commission merchant to ask if it will be ready for day-one launch.

Q2:  I recently heard about a trader with $77k in his account who lost $9m in one day trading crude oil futures.  What prevents such a scenario from happening on RealBOT?

A2:  Traders cannot lose more than posted collateral.  If this trader had posted, say, $10k, on RealBOT, that amount would have been his maximum loss potential.  Even if the trader had gone “all in” and risked his entire account of $77k, that amount would have been his maximum loss potential.  It would not have been possible on RealBOT to risk, and subsequently lose, $9m in an account with only $77k.

Q3:  How can the exchange match prices, quantities, AND margin amounts?  Suppose the trader wants to go long one contract at a price of 100 and risk $1,000 while another trader desires to go short one contract at a price of 100 but risk $5,000?

A3:  In this example, while traders match on quantity and price, they do not match on margin.  Marker makers are expected to take the other side of each trade and manage any potentially mismatched margin risk.

Q4:  The current exchanges work well (from a trading perspective), so why switch?

A4:  No current exchange has realized volatility futures; no exchange has delayed-strike daily options; no exchange has limited-risk futures.  Only RealBOT will allow the trader to obtain such novel risk profiles.

   RealClear Q&A

Q1:  Does RealClear already have clearing members connected?

A1:  Clearing members normally act as guarantors.  Guarantors are not needed at RealClear because all instruments on the exchange are fully collateralized.

Q2:  How does RealClear protect trader assets?

A2:  The expectation is for all assets to be held in one account at U.S. Bank.  Assets are invested in short-term U.S. government money market assets only (i.e., Treasury Bills).

Q3:  The current exchanges work well (from a clearing perspective), so why switch?

A3:  RealClear can guarantee that winning positions will be paid in all cases no matter how much the price moves (current futures exchanges cannot make this claim).  Clearing on RealBOT happens instantly (current futures have an overnight clearing cycle).  Our clearing process eliminates the potential of a large derivatives-induced contagion that could cause defaults to cascade out of control.

   RealVol Q&A

Q1:  Where do I find RealVol indices?

A1:  The data can be found on Bloomberg (type RVOL <Go>) and on Quandl.
https://www.quandl.com/publishers/VOLX, or click the link to the right...

Q2:  Where do I find RealVol rankings?

A2:  https://www.realvol.com/WeeklyVolatilityReport.shtml, or click to the right...

Q3:  Where do I find details about RealVol?

A3:  The video and brochure are on the main page of our website:  https://www.demandderivatives.com

The dedicated RealVol website, with a lot of detailed information, can be found here:  https://www.realvol.com/index.shtml

   RealDay Q&A

Q1:  Where do I find out more about RealDay options?

A1:  The video and brochure are on the main page of our website:  https://www.demandderivatives.com

   RealGlobe Q&A

Q1:  When will information on RealGlobe be available?

A1:  For competitive reasons, we do not expect to release information on RealGlobe until near to launch of the product.

   RealLimit Q&A

Q1:  How does the exchange limit risk if there is a large (or gap) move in the underlying asset?

A1:  The novel design of RealLimit instruments confines risk to posted collateral.  The risk is truncated on the downside as is the opportunity on the upside.  This feature keeps risk and reward in balance.  For example, if the both the long and the short sides of the trade post $3,000 margin, the maximum gain or loss for either side is $3,000.  It makes no difference if the market moves, say, $3,000, $6,000, or $90,000.  One side will gain the maximum and the other side will lose the maximum.  Of course, if the move is less than $3,000, the RealLimit contract will function similarly to a standard futures contract.

Q2:  In the previous example, doesn’t it seem rather limiting that the most the trader can make is $3,000?

A2:  If the trader believes the potential profit is greater than $3,000, then the trader should post the appropriately higher amount of margin in the account.

Q3:  Suppose the trader agrees to $3,000 limits on each side. Why not just trade an option spread with strikes $3,000 apart?

A3:  The RealLimit concept is neither an option nor an option-like profile.  RealLimit futures have a linear exposure profile.  The contract can move to any price that standard futures can move to except that the trader’s profit or loss cannot move more than the posted margin each day.  This is why RealLimit futures are liquidated each day — so that the trader can adjust margin for the next day, and the “center” of the range can be reset.

Q4:  Liquidating RealLimit futures each day sounds like it would be very costly to maintain a position for a longer time, no?

A4:  It is true that all open positions are liquidated at the settlement each day.  However, there is a mechanism whereby the trader can be placed back into the same trade for the following day, and at the same settlement price, with no fees and no bid/ask spread (also called “slippage”).  This is accomplished through the Perfect Execution at Settlement (PEAS) process.

Q5:  Why is there no fee for PEAS?

A5:  Fees are waived if the trader wishes to reenter the same RealLimit futures position for the following day, provided that the original RealLimit position was held to settlement, the contract size is entered for the same amount, and the direction is the same (however, the trader is able to change the margin amount).  Note:  there is an extra PEAS fee if the trader is not continuing with the exact same position from day to day.