What are loss notifications?
Loss notifications are automatic notices sent to all clients when the Canadian Dollar (CAD) value of their portfolio decreases by a given amount. The amount at which a client will receive a loss notification is based on the unrealized loss of portfolio value that a client states they are comfortable incurring. As a condition of our regulatory approval, Coinsquare has an obligation to inform clients when they are approaching their limit for losses and when they subsequently breach that limit.
What do I need to do if I receive a loss notification?
There is no action required when a client receives a loss notification email. The loss notifications are simply to inform the client of the unrealized losses in their portfolio. Every client is responsible for their own investing decisions. The loss notifications simply provide information that the client may consider when evaluating any action that they deem appropriate.
How do loss notifications work?
All clients are required to fill out a trading questionnaire, which we use to determine the loss thresholds at which loss notifications are sent. Based on the client’s responses, they are assigned a threshold of either 25%, 50%, or 75% of unrealized portfolio value loss. Losses are determined by comparing the current market value of your portfolio to its book value, which is the total amount spent to buy all the assets in the portfolio.
We are obligated to inform clients when they are approaching their limit as well as when their limit is hit. Therefore, you’ll see a warning notification when you are within 10% of the threshold (e.g. if your threshold is 50%, a warning notification is sent when your portfolio is down 40% from its book value).