In a previous post we have described how Fig Investments’ structured notes are 100% backed and fully transparent.
Related to our transparency piece, our customers frequently ask us the following question:
Where does my money go after buying a note?
TL;DR:
Fig Investments uses traditional banking rails + tried and true processes to deliver our innovative Bitcoin-linked principal hedged notes.
But let’s dive deeper.
Let’s explore the journey of a dollar that goes into a Fig Investments note and see how we safeguard customer’s funds.
Step 1: Funding Account
After KYC and passing our compliance, customers can fund their accounts via wire transfer.
After the wire is received, we match the wire with the customer account and customer can see their account credited with the funds usually 24-48 Canadian business hours.
🔒 How do we Safeguard Customer Funds?
Strict segregation of customer vs company capital - customer wires point to a specially designated bank account that is distinctively separated from company working capital accounts
Our banking and trading partners are onshore and regulated financial institutions in 🇨🇦
No offshore banking arrangements
Step 2: Buying a Note
After account is funded, customers can check their accounts online. When they are ready, they can buy a structured note directly on Fig’s platform by placing a trade.
Upon receiving the wire, all customer funds will immediately be transferred to our onshore custodian for safekeeping. Our custodian also handles fixed income trading and custody.
After a trade is placed, our trading desk has 30 minutes to either:
Fulfill and book the order, if the price is better than what customer sees on screen, or
Kill the order, if the price moves against the customer. No fees or cost and the cash balance of the account is updated thereafter.
🔒 How do we Safeguard Customer Funds?
A One-Time-Pin (OTP) is sent to the customer's email to confirm every order placement
All orders are fulfilled with dual manual checks before booking the note on customer account
All orders are executed as either 'fill' or 'kill', ensuring no unexpected costs or additional fees arising.
Step 3: Settlement
After note is booked, then we will register the following two securities on our books:
A US Treasury Bill Instrument - custodied at a qualified custodian.
A long-only OTC Bitcoin or Ether option contract with a counterparty such as B2C2
To reduce custody and security risk, we do not trade or custody spot assets in cryptocurrencies like Bitcoin and Ether.
🔒 How do we Safeguard Customer Funds?
No proprietary trading - we do not trade instruments held on behalf of customers outside of our regulated activities
Dual approval before execution of any trade
Document procedures to ensure robust calculation of index returns in the event of market disruption that prohibits the calculation of Bitcoin index returns
Daily reconciliation of books and trading records
Quarterly reporting to our principal regulator, Alberta Securities Commission, which includes our company’s working capital, AUM, and company’s financial health
We do not trade or hedge with spot Bitcoin and Ether or other crypto currency assets - significantly reduce custody and operational risks
Step 4: Payment and Withdrawals
At maturity, all USD maturity proceeds from US T-bill and option contracts are consolidated from our custodians and counterparties into our customer segregated bank account. The payout from a note is based on a customer’s booked term sheet.
Then the payment is delivered to the customer via bank wire after confirmations
🔒 How do we Safeguard Customer Funds?
We maintain regulatory capital to cover the note principal in the event of unlikely losses resulting from operational issues
We use traditional financial rails for fund flow and settlement which has well documented processes and risks
Wire transfers ensure fast, secure processing of payments and withdrawals.
All of this is wrapped behind our beautiful UI, easy-to-use work flow, and exchange-like interface.
For more information:
Website: https://fig.investments
Documentation: Click Here ↗️
Email: gm@fig.investments
Disclaimer: The information provided in this blog post is for educational and informational purposes only and is not intended as financial advice. The content is not meant to provide, and should not be relied upon for investment, accounting, legal, or tax advice. You should consult your own financial, legal, tax, or other professional advisors before engaging in any transaction. The views expressed on this blog are the author's own and do not necessarily reflect the views of any financial institutions or other entities. Investing in financial markets involves risks, and there is always the potential of losing money when you invest in securities. Past performance is not indicative of future results.