Iceberg Markets offers a personal service in online or phone broked CFDs to both Institutional and Professional Individual Clients. A highly experienced team of brokers can assist you with the fast and efficient execution of your orders directly into the relevant market. We also offer web based DMA trading platforms for clients wishing to trade for themselves in the market. (Click here to view our trading platforms.)
What is a Contract for Difference?
A contract for difference is a flexible and exciting method of gaining exposure to equities without the need to hold the underlying shares. A CFD is an agreement between two parties to exchange the difference between the opening price and the closing price of a contract. CFDs allow you to profit from falling as well as rising markets and trade free of Stamp Duty Tax*. CFDs are also commonly used as a hedging tool to offset any losses incurred in your physical portfolio of shares.
*Under current UK tax laws, CFDs enable investors to trade without having to pay the stamp duty that is applicable to traditional UK stocks and shares (tax laws can and may change).
Clients can execute trades via our suite of online trading platforms or over the phone with our experienced brokers. Clients also have the ability to trade the underlying equities directly.
|Country||Exchange||Large Cap||Mid-Cap (Or USD 1BN+)||Further Markets|
|United Kingdom||London Stock Exchange||FTSE 100||FTSE250||FTSE All Share & AIM|
|London||London International||All over USD 2BN||All over USD 1BN||Over USD 500M|
|United States||NASDAQ and NYSE||S&P 500, NASDQ 100||S&P 400, NASDAQ Comp||Over USD 500M|
|Canada||TSX||TSX 60||TSX Composite||Over USD 500M|
|Germany||Xetra||Dax 30||MDAX 50 / TecDAX 30|
|France||Euronext||Cac 40||CAC Next 20|
|Netherlands||Euronext||AEX 20||AMX 30|
|Ireland||ISE||ISEQ 20||ISEQ General Index|
|Belgium||Euronext||BEL 20||Bel Mid Index|
|Italy||MIB||MIB 40||FTSE Italia Mid Cap 60|
|Switzerland||Virtex & SWX||SMI 20||SMI Mid 30|
|Austria||WBAG||ATX 20||WBI Index|
|Finland||OMX||OMX H 25||OMX Nordic Midcap|
|Denmark||OMX||OMX 20||OMX Nordic Midcap|
|Norway||Oslo||OBX 25||OMX Nordic Midcap|
|Sweden||OMX||OMX 30||OMX Nordic Midcap|
|Turkey||ISC 30||ISC 30||N/A|
|Australia||ASX||ASX 50||ASX 200|
|Japan||Tokyo||NIKKEI 225||TOPIX Mid-400|
|Singapore||SGX||STI 30||FTSE ST MID Cap|
|Hong Kong||Hong Kong||HANG SENG 45||HS Mid Cap 50|
|South Africa||JSE||JSE 40||JSE Mid Cap|
Investors using CFDs pay interest on the value of the long CFDs they hold though will receive 100% net dividend of the underlying share if a dividend is attributable during that period. This means the cost of holding a CFD is the interest charge less any dividend received. A spread above (long CFD) or below (short CFD) Libor is charged on a daily mark-to-market basis though these charges are competitive and keep trading costs low.
Although holders of CFDs receive the same exposure as owning the underlying stock, they are not shareholders and do not possess normal shareholder rights.
It is easy and convenient to take a short position using CFDs subject to short selling restrictions in certain jurisdictions and the availability of stock to borrow. Short positions profit from a fall in the underlying market but will lose if the stock rises. These profits and gains are also magnified as the margin paid upon entering the positions represents a fraction of the contract value. Please note that if you are short a CFD and the dividend is paid, you must pay the net dividend.
Risks of trading CFDs
As leverage magnifies losses and profits, CFDs are not appropriate for everyone and investors must consider their risk appetite, experience and investment strategy before opening a CFD trade. Unlike owning equities through a conventional portfolio, investors can lose more than their initial deposit. You should not invest money that you cannot afford to lose and should seek independent financial advice if you have any doubts concerning the risks surrounding CFD trading.