FAQs | CFD FAQs

A Contract for Difference (CFD) is an agreement between two parties to settle, in cash, the difference between the opening and closing prices of a particular instrument. As a result, CFDs simulate the price performance of various financial instruments, without the need for the trader to physically own the assets, and do not involve settlement of the physical financial instrument.

CFDs are priced almost identically to their underlying instruments (e.g. a share, index or currency).

When buying a CFD contract, you do not actually own the underlying asset. However, you are entitled to some of the benefits, such as dividends, rights issues etc, as if you were an owner of the underlying asset. The only difference is that you will not receive any voting rights on equities.

When you are holding a "long" position on an individual equity, you will receive a credit adjustment in your trading account if a dividend is issued on the physical equity. The adjustment is equivalent to 90% of the dividend payment due on the underlying equities. On the other hand, if you are holding a "short" trade on an individual equity, there will be a debit adjustment which is equivalent to 100% of the dividend. Other corporation actions such as bonuses and stock splits will also be adjusted according to the underlying equities.

Spread Co does not charge commissions on trades. All the trading charges are incorporated within the spreads. Additional charges are made when you hold a position open overnight. This is a financing charge to hold the position open.

Please refer to our market information sheet for details.

A margin call occurs when there are insufficient funds in your account to cover your open positions with the necessary margin. This happens if your "Equity"/ "Account Valuation" falls below the "Margin" requirement.

You will be emailed every four hours to inform you that you are on margin call. However please note, margin call emails are not sent out of market hours.

If you are on a margin call, you must top up your account with sufficient funds to keep the position open, or close your open positions to reduce your margin requirement.

If you don't top up your account, one or more of your positions will be closed in order to bring the margin level in your account up to the required level for the remaining open positions.

No. CFDs are cash settled.

Liquidation is the forced closure or reduction of your open positions. Liquidation occurs when your resources fall significantly below the level required to maintain your margin requirements.

Your trading account is subjected to a liquidation process if your account valuation falls below a percentage of the margin requirement (liquidation level) which is required to support your open positions.

The open positions with the largest margin requirement will be liquidated first.

No you will not be charged extra if you get liquidated. You will be subjected to the normal cost of trading CFDs which is spreads in this case.

The liquidation process will stop only when your account equity is more than the margin requirement on your remaining positions.

The minimum account maintenance balance is US$200.

'Account maintenance balance' is the minimum required amount to hold an open position. This does not mean that you have to have a minimum of $200 in your account at all times, but only when you have open positions.

Yes, your open positions are marked-to-market with real time bid/offer prices.

For single positions accounts, each trade can be treated as an individual open position. When buy and sell trades in a single instrument are created, all positions are kept open and will not be netted off until the client manually closes such open positions or nets them off. This allows you to have a long term position in a product but take an opposing short term position in the opposite direction if you want to, should you spot a short term trading opportunity.

Consolidated account open positions are automatically netted off against each other. Therefore profit/loss will be realised when an opposite trade to an open position is executed. This is suitable for clients who trade a single instrument frequently.

Matching is only available if you have a single positions account. The fundamental purpose of single position accounts is to allow position holder to manually select the open positions he wants to take profits/losses on as opposed to the trading platform automatically matching corresponding open positions in the same instrument. The act of manually selecting trades to close off against each other is called matching.

Matching is only available if you have a single positions account. When you match your positions, you would have officially ´closed´ a position. After the end of day process, your unmatched profit/loss will be added or deducted from your cash balance.

Matching is only available if you have a single positions account. You can match your positions by clicking on "Detail" and then "Match Positions" in the "Open Positions" panel in SATURN Trader.

"Cash" is your brought forward cash balance +/- realised P&L.

"Open P&L" is the real time value of the profit/loss on open positions.

"Unmatched P&L" is only applicable to single position accounts and it is the accumulated marked-to-market profit/loss for unmatched open positions. These unmatched open positions are marked against the previous day´s closing prices.

For consolidated accounts, "Equity"/ "Account valuation" is "Cash" +/- "Open P&L".

For single position accounts, "Equity"/ "Account valuation" is "Cash" +/- "Open P&L" +/- "Unmatched P&L".

"Resources" are the free funds available for entering into additional trades. It is the difference between "Equity"/ "Account Valuation" and "Margin".

The ‘Open’ price is the average price that you entered into the position.

Example of “Open” price calculation on a consolidated CFD account

Customer A did 3 USDJPY trades on Day 1:

• Trade 1: Buy 200,000 USDJPY @ 110.50
• Trade 2: Buy 100,000 USDJPY @ 110.40
• Trade 3: Sell 100,000 USDJPY @ 110.60

As your positions are closed on a FIFO basis, Trade 3 would close out 100,000 USDJPY of Trade 1, therefore the “Open” price would be 110.45 [(100,000 x 110.50) + (100,000 x 110.40)]/200,000.

‘Day Open’ price is the previous day’s close price for positions held overnight, and the trade price for positions opened on the current business day. It is the price used to calculate the P&L you are making on the current business day.

Example of “Day Open” price calculation on a consolidated CFD account

Customer A did 3 USDJPY trades on Day 1 and market closed at 110.70:

• Trade 1: Buy 200,000 USDJPY @ 110.50
• Trade 2: Buy 100,000 USDJPY @ 110.40
• Trade 3: Sell 100,000 USDJPY @ 110.60

As your positions are closed on a FIFO basis, Trade 3 would close out 100,000 USDJPY of Trade 1, therefore the “Day Open” price would be 110.45 [(100,000 x 110.50) + (100,000 x 110.40)]/200,000.

On Day 2, Customer A will see the open position of USDJPY being rolled over, with the "Day Open" price indicated as 110.70.

"P&L Day" displays the real-time unrealised profit/loss of your open trades based on the "Open" price (The difference between "Current" price and "Open" price multiplied by "Quantity"). The profits or losses are expressed in your account currency.

"P&L Total" displays the real-time unrealised profit/loss of your open trades based on the "Open" price (The difference between "Current" price and "Open" price multiplied by "Quantity"). The profits or losses are expressed in your account currency.