What is CFD? How to set it up and what to note?

What is CFD?

CFD is an over-the-counter (OTC) leveraged product traded on an off-exchange basis.

Allows you to speculate on future price movements of the underlying asset, without actually owning the underlying asset. It is a tradable contract between you and Phillip (also known as a CFD Provider)
- Long (buy first and sell later) Positions
- Short (sell first and buy later) Positions
leveraged products – less cash upfront. Risk of any gain or loss in trading CFD trading can be amplified.

How to start?

Add on CFD facility by going under Acct Mgt, CFD tab
2. You will need to move funds into CFD pocket to be able to trade in CFD. (refer to part on mode of payment below)
You will need to pass CAR/CKA to trade CFD. Pls complete the assessment under Ac Mgt, Stocks, CAR/CKA. A self declaration form. If you have done 6 trades in CFD over last 3 years, it is an auto-pass.
Pls go to Ac Mgt, RFS & RDS to acknowledge risk fact sheet for CFD
Matters on US trades
Note: "There will be NO auto-conversion should there be margin deficit in any of the currency ledgers. If there is margin deficit in the respective ledger, you should submit conversion request to avoid incurring margin debit interest. Only for MYR Ledger, we will force convert to offset any deficit."

1. Add on CFD facility by going under Acct Mgt, CFD tab

2. You will need to move funds into CFD pocket to be able to trade in CFD. (refer to part on mode of payment below)

https://www.poems.com.sg/payment/

3. You will need to pass CAR/CKA to trade CFD.

Pls complete the assessment under Ac Mgt, Stocks, CAR/CKA. A self declaration form. If you have done 6 trades in CFD over last 3 years, it is an auto-pass. Take online quiz if didn’t pass and email to me at ellaintmn@phillip.com.sg for update.

Refer to this link for more information on why need to complete this CAR & CKA form. Why trades be rejected? https://www.et-investment.info/post/why-my-trade-was-rejected

4. Pls go to Ac Mgt, RFS & RDS to acknowledge risk fact sheet for CFD

5. Trading US market? Refer to this link on how to get US live prices for free.

US market trades setup https://www.et-investment.info/post/us-market-trading-cfd-related-things-to-note

Comparison between Equities CFD & DMA CFD

Impact of Corporate Actions

Dividends - adjustment will apply to Equities CFD on the ex-dividend date of its underlying shares.
Bonus , Stock Splits, and Reverse Splits Quantity and price adjustment will apply to Equities CFD to reflect the market equivalent.
Rights Customers who have held long positions on Equity CFDs, whose underlying shares are undergoing a renounceable rights issue, pass the ex-dividend date will be eligible for the rights. Short positions will have to be liquidated one day before ex-dividend date. The rights will be credited into clients’ CFD accounts as a CFD position at a traded price of zero and at the similar margin requirement as the underlying share. Clients must liquidate ALL the rights before the last trading day otherwise, the rights will expire worthless. Note: This arrangement may subject to change and depending on each case.

Cost of CFD positions

1) Commission

2) Financing

FC = Market Value X Finance rate / 365

more more details: https://www.phillipcfd.com/pricing/#1463566458306-7df04a73-9532

Margin Requirements

Margin requirement is the amount of money that is required in order to place a CFD trade or maintain a CFD position.

Eg. Margin requirement is 10%. Enter a trade worth $10k. To trade you need $1k to start.

Margin Call

up to 2 business days (up till 3pm on the 2nd day) to fulfill the margin call.
However, you will only have till 3pm on the day itself to fulfill this margin call if your account’s Equity Balance is less than 5% of the market value of your portfolio.

Margin call calculations are done at 5 am on the same day. All Profit or Loss and Portfolio Market Values are marked-to-market using the previous day’s closing price.

Settlement Currencies

All CFDs will be settled in the respective traded currencies. There will NOT BE ANY AUTO CONVERSION from traded currencies to SGD and vice versa.

Note: "There will be NO auto-conversion should there be margin deficit in any of the currency ledgers. If there is margin deficit in the respective ledger, you should submit conversion request to avoid incurring margin debit interest. Only for MYR Ledger, we will force convert to offset any deficit."

Margin Deficit Interest

Common mode of payments:

Here are the options for making payments for your trades:

Paynow (most used method) as payment be in ac within 15mins. For PayNow - Our UEN no is 197501035Z. Indicate your 7 digit trading ac number under the reference, eg. "1234567' or “1234567CFD”.
Electronic Payment for Shares (EPS) > Investment services > Lump Sum
Internet Bill Payment > Transfer > Lump Sum > Reference code is your trading ac number
eNETS more details in the link https://www.poems.com.sg/payment/
Withdrawal funds internally from other POEMS ac pocket to to CFD.