21. Can I trade using CFD without the 5-times leverage facilities?
Yes. The 5-times leverage is only offered as a built-in feature. If you have deposited $10,000 into your CFD account, you have the freedom to trade up to a maximum of $50,000.
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22. What is the margin requirement in CFD trading?
At all time, you should keep a maintenace margin in their Phillip CFD account. The amount will be equal to 20% market value of your portfolio positions, and market portfolio value is marked-to-market using the day's Last Done Price.
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23. Explain the Mark-to-Market practice.
It is the adjustment of the book value or collateral value of the underlying security to reflect the current market value. Profits or losses are then credited /debited into/from the client's account.
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24. Under what circumstances will I receive a margin call?
The Equity Balance should be more than or equal to the maintenance margin which is 20% of the Market Value of your CFD portfolio.
Equity Balance < 20% of Portfolio Market Value |
Any shortfall will trigger a margin call, and client would have up to 2 business days from the date of notice to top up the margin deficit. It will be a force-selling call if Equity Balance drops below 5% of the Portfolio Market Value. Client must make good the shortfall on the same day before 3 pm.
Example:
Client deposit $3,000.
Beginning of Day 1: Buy (Long) 2 lots of Share A (STI Component Stock)
@ $7.00 = $14,000.
Client with Margin Call on the 3rd day and Force Selling Call on the 4th day.
| |
End of Day 1 |
End of Day 2 |
End of Day 3 |
End of Day 4 |
End Closing Price |
$7.00 |
$7.50 |
$6.80 |
$5.80 |
Ledger Balance |
$3,000.00 |
$2,970.04 |
$2,970.04 |
$2,970.04 |
Less: Commission
(incl 7% GST) |
($29.96) |
$0.00 |
$0.00 |
$0.00 |
Ledger Balance C/F |
$2,970.04 |
$2,970.04 |
$2,970.04 |
$2,970.04 |
Less: Finance Charges |
($2.15) |
($4.30) |
($6.44) |
($8.59) |
Unrealized Profit/(Loss) |
$0.00 |
$1,000.00 |
($400.00) |
($2,400.00) |
Equity Balance |
$2,967.89 |
$3,965.74 |
$2563.60 |
$561.45 |
Maintenance Margin |
$2,800.00 |
$3,000.00 |
$2720.00 |
$2,320.00 |
Force Sell Margin |
$700.00 |
$750.00 |
$680 |
$580 |
Margin Excess/Deficit |
$167.89 |
$965.74 |
($156.40) |
($1758.55) |
Margin Call |
No |
No |
Yes |
Force Sell |
End of Day 1 & 2: Equity Balance > MM; No Margin Call
End Day 3: Equity Balance< MM; Margin Call
End of Day 4: Equity Balance < Force Selling Margin; Force Sell Day
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25. When will I receive a margin call?
When Equity Balance < 20% Portfolio Market Value, client will receive a reminder call by your Trading Representatives on the first day and a final call on the second day.
When Equity Balance < 5% Portfolio Market Value, client will receive a final call by your Trading Representatives in the morning, and only has up to 3pm that same day to fulfill the margin deficit.
PSPL shall have the absolute discretion and without further notice to you, liquidate the CFD account, including shares deposited as collateral, to bring the margin percentage to not less than 20% if the margin requirement is not met within the stipulated time frame.
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26. How can I fulfill my margin call?
You can pledge either cash or shares collateral.
Cash payment can be made at the Head Officer's cashier counter.
EPS (Electronic Payment of Shares) Please choose 'lump sum' payment and initiate payments before 9pm to ensure that your CFD ledger is credited punctually before the next market day. Kindly inform your trading representative that the EPS is meant for your CFD trading account.
Cheque should be crossed and made payable to 'Phillip Securities Pte Ltd'. Please state your trading account number, name and contact number on the back of the cheque, and indicate that this payment is meant for CFD.
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29. What are the charges associated with the CFD trading?
There are commission, finance charges, interest deficit or excess applied in Phillip CFD trading. Please refer to the Phillip CFD commission document for full details.
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30. How will my trade be credited and debited?
Funds will be debited real-time for all new CFD positions, and credited real-time when the positions is liquidated. Commission, accrued finance charges and unrealized profit or loss will be credited and debited at the end of the day. Interest will be debited or credited at month end.
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31. Will I receive contract notes and trade confirmations for my Phillip CFD trades?
Yes. A contract note will be sent to you the next business day after a trade has been initiated. In addition, you will also receive a monthly statement reflecting all CFD transactions and fees charged to your CFD account.
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32. Can I withdraw cash from my CFD account?
You may withdraw any excess cash from your cash ledger, provided the maintenance margin of 20% has been satisfied.
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33. How will my Phillip CFD contracts denominated in foreign currency be settled?
| Stock Exchange |
Currency Settlement |
| SGX |
SGD |
| KLSE |
MYR |
| HKSE |
HKD |
| NYSE |
USD |
| NASDAQ |
USD |
Example: Investor bought 3 lots of Datacraft US$ @ 0.795. Position was marked to market @ 0.770.
Clients who are interested in trading USD-traded CFD would have a few things to note.
Phillip CFD whose underlying share is traded in a foreign currency would be settled in that particular foreign currency.
Clients trading in foreign currency CFD counters would have to maintain multiple currency ledgers in their CFD account.
All charges are the same for the CFDs denominated in the various currencies, EXCEPT for the penalty charge on margin deficit.
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34. Would there be auto-conversion and transfer between the different ledgers?
No, there will not be any auto conversion or fund transfer. Clients can however submit their currency conversion or fund transfer request via the online forms or through their trading representatives. Currency conversion is done based on the end-of-day rate.
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35. What are the trading strategies available with CFD?
Given that CFD is a leverage product, as well as the ability to short sell, you are open to a host of other trading strategies.
Long
The simplest and most straightforward strategy is to "go Long" (buy CFDs). A long position in CFD will profit from an upward price movement in the underlying share.
Short
CFD allows you to sell the shares that you do not have and buy it back at a later date with no time constraint. This would allow you to ride on the bear market.
Pairs Trading
This involves short selling and simultaneously buying CFD of another underlying shares (usually in the same sector) to set up a performance trade. Conducted in the correct ratio, this leaves the investor market neutral whilst having an exposure to the relative strength of both buying and short selling stock.
Hedging (Risk Management Tool)
Taking a position in CFD opposite to a position held in the cash market to minimize the risk of financial losses from an adverse price change; a purchase or sale of CFD as a temporary substitute for a cash transaction that will occur later.
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36. What are the differences between Ready market Contra-trades and CFD?
Contra trades are subjected to the T+3 business days settlement. In other words, doing a contra on a particular share would mean that you are expose to buying-in possibilities. CFD, on the other hand, allows you to hold a short (sell) or long (buy) position for as long as up to 30 calendar days, with a possibility of a roll over thereafter.
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37. What are the differences between short selling via Securities Borrowing & Lending (SBL) and via CFD?
Using Phillip CFD, you do not need to borrow shares unlike SBL. This advantage reduces the administrative hassles and, more importantly, save time. In other words, you will not miss out the opportunity to long/short your counter at your desired price.
| Securities Borrowing & Lending(SBL) |
Contract For Difference (CFD) |
a. Contact your broker to check whether the securities you want to borrow is available.
b. Check the current borrowing rate and available quantity.
c. Short-sell in the cash market.
d. Deliver the borrowed securities to the new owner.
e. Buy-back.
f. Deliver the securities to the original owner. |
a. Trade at the live market price, either via POEMS online or your Trading Representative. |
Cost involved:
- Commission
- SBL Charge
- Clearing fee
- SBL rate, ranging from 4% to 12% p.a.
|
Cost Involved:
- Commission
- Finance Charge (*4% or 8% p.a.)
*Refer to Cost Info Sheet for list of selected counters. |
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