What is Amalgamation
Amalgamation is way of calculating commission charges. When you place multiple transactions per day, Phillip CFD will amalgamate all contracts and a collective commission is charged against the total value of the day’s transactions, instead of separate commissions for each transaction carried out. This saves the client commission fees if the value of each individual commission per transaction falls below the minimum commission. Phillip CFD amalgamate buy and sell contracts of the same counter transacted on the same day only.
Amalgamation Illustration
Alice bought (Long) 3,000 contracts of Stock A at $2.00 at 10:00 am. At 2:00pm, the price of Stock A had moved to Alice’s Target Profit of $2.10 and she decided to close her contracts. If the commission for that contract is 0.128% with a minimum of $25, the total commission charged to her is
Commission = [(3,000 * $2.00) + (3,000 * $2.10)] * 0.128% = $15.74
Since Alice’s total commission for Opening and Closing the contracts on the same day for the same contract is lower than the minimum commission of $25, the commission charged to her will be $25
However, if Alice bought 10,000 contracts instead of 3,000, the total commission charged to her is,
Commission = [(10,000 * $2.00) + (10,000 * $2.10)] * 0.128% = $52.48
In this situation, since Alice’s total commission for Opening and Closing the contracts on the same day for the same contract is higher than the minimum commission of $25, the commission charged to her will be $52.48
What is Commission
Commission is the percentage of the contract value paid to the broker every time a transaction is carried out. It differs for each contract and while minimum commission charges still apply.
Commission Illustration
Benjamin bought (Long) 3,000 contracts of Stock A at $2.00. If the commission for that contract is 0.128%,
Opening Commission = 3,000 * $2.00 * 0.128% = $7.68 (Since minimum commission for is $25, Benjamin pays $25)
4 days later, Benjamin sold the contracts at $2.10.
Closing Commission = 3,000 * $2.10 * 0.128% = $8.06 (Since minimum commission for is $25, Benjamin pays $25)
Total Commission to Open and Close the contracts = $25 + $25 = $50
What is Finance Charge
It is the charge imposed to reflect the cost of funding for holding a position overnight. It is calculated based on the contract value of the entire position marked to the closing price of the day. There is no finance charge if you close your position on the same day.
Finance Charge Illustration
Chloe bought (Long) 3,000 contracts of Stock A at $2.00 at 10:00 am. At 2:00pm, the price of Stock A had moved to Chloe’s Target Profit of $2.10 and she decided to close her positions. If the commission for that contract is 0.128% with a minimum of $25, the total finance charge charged to her is 0 (Zero).
There is no finance charge if you liquidate the position within the same day.
Finance Charge Illustration
Derrick bought (Long) 3,000 contracts of Stock A at $2.00. 4 days later, the price of Stock A went up to $2.10 and Derrick decided to sell the 3,000 contracts. Assuming the long finance charge for Stock A is 2.5% p.a. The table below shows the closing price for Stock A for the first 3 Days
Stock A | Finance Charge |
Day 1 Closing Price : $2.01 | = 2.01 * 3,000 contracts * 2.5% *1/365 days = $0.41 |
Day 2 Closing Price : $2.04 | = 2.04 * 3,000 contracts * 2.5% *1/365 days = $0.42 |
Day 3 Closing Price : $2.07 | = 2.07 * 3,000 contracts * 2.5% *1/365 days = $0.43 |
Contracts Closed on Day 4 at $2.10 | No Finance Charge Charged on Closing Day! |
Total Finance Charge Charged to Derrick is $0.41 + $0.42 + $0.43 = $1.26