First Global Credit’s service allows traders and investors to fund a margin account with bitcoins and to then open leveraged positions in a selection of instruments that include international company stocks, several global stock market indexes and ETFs. Their service does not, currently, offer any Bitcoin-related instruments, such as the Bitcoin price – which the company plans to add in the near future.
Today’s announcement sees the first of five major service launches planned for 2014-2015, and First Global Credit plans to add additional investment options (such as the Bitcoin-based instruments mentioned previously) over the next few months. Gavin Smith, CEO of First Global Credit (FGC) explains the company’s placement in the investing service market:
“The mainstream investment community discriminates against holders of digital currencies because of fear and a lack of knowledge. Because we provide a way for clients to invest in world-wide stock markets without the need to first exchange Bitcoins for Fiat currencies, we are helping to establish a capital market which will have a stabilizing effect on the digital currencies themselves.”
“We follow a Direct Market Access (DMA) hedging strategy where no client’s trade is filled until a hedge has been automatically placed in the underlying market,” says Smith. This is one of many strategies that makes it possible for First Global Credit to prosper regardless of volatility. The trade management strategies we use have proven extremely profitable even in illiquid or volatile markets and we are going to replicate that success in the alt currency markets.”
Traders can create a paper trading account with a verifiable email address that allows them to trade with faux bitcoins to familiarize themselves with the service and test strategies.
For their Live account service, the company requires that users go through standard KYC disclosure. This includes:
These personal details are held at First Global Client Services in Nevis, UK. FGC’s Marcie Terman explains that there is a legal requirement for FGC to maintain client records in the Nevis jurisdiction.
FGC says that they have implemented multiple security levels on their website:
1) All trading and deposit functions are carried out using SSL authenticated security.
2) All withdrawals of bitcoins are transacted using two-factor authentication via the client’s registered mobile number.
3) All client funds are held in offline wallets.
4) Any withdrawals from the offline wallets are approved by at least one director of the company with two director approvals required for withdrawals of larger amounts.
5) There is continual monitoring of all wallets for unauthorized account activity.
FGC says that no minimum transaction size applies. There is also no minimum commission fee. Maximum single trade size is 25,000 bitcoins.
Active Trading accounts allow leveraging of 5:1 on initial positions, that are extended to 8:1 if the value of a trader’s bitcoin collateral falls.
To avoid any detail from being lost to interpretation, here is director Marcie Terman’s reply to my question whether their offering allows users to hold both long and short positions (i.e. a hedged position) in the same account:
“There are two services that will ultimately be available; an Investment Service for people who take a long term view and an Active Trading Service suitable for shorter time frame trading. You can only take a long position on the Investment Service. But if a trader anticipated that their position might be at short term risk due to market conditions, you could hedge that position using the Active Trading Service, which allows for both long and short positions. This would also have the benefit of reduced cost for placing the hedge.”
Marcie Terman, First Global’s Business Development Director goes on to explain the company’s motivation for the service offering:
“There are many people that have been holding onto Bitcoin waiting for them to achieve their potential but with nowhere to invest them. Our goal is to combine the benefits of digital currencies and mainstream markets, giving our clients investment options but without the endless layers of fees and obscure charges levied by traditional banks, mutual funds and unit trusts.”
First Global Credit is an international business corporation registered in Charlestown on the Caribbean island of Nevis. Technical Operations are run from offices in the UK, with Trading and Risk controlled in Geneva, Switzerland.
Does FGC’s service offer value to bitcoin holders? Would YOU use it? Feel free to comment below.
Images from Shutterstock.