CFD Terminology

Amalgamation A way of calculating commission charges. 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 of each individual commission per transaction falls below the minimum commission. Phillip CFD amalgamate buy and sell contracts of the same counter traded on the same day.
Available Balance Equity Balance – MM  ± Unrealised credit or debit interest
Buy Long Buying a financial instrument with the intention of selling when the price rises, thus earning the difference in price. It is generally used to profit from rising markets.
Commission The percentage of the contract value paid to the broker every time a transaction is carried out. Ranges from 0.2% to 0.33% of the value of the contract, while minimum commission charges still apply.
Contingent Order An order which is to be executed only if the parent order has been executed first.
Contracts For Difference An agreement between 2 parties to settle the difference between the opening price and closing price of the contract multiplied by the number of shares specified.
Credit Interest Interest acrued on excess of minimum funds.
Debit Interest Interest acrued on an account debit balance.
Equity Balance This refers to the value of the ledger carried forward taking into account the current profit/loss of the contract and the financing charges to continue holding it. Equity Balance = Ledger carried forward ± unrealised profit/loss – unrealised finance charges
Finance Charges The charge for the cost of borrowing from the brokerage to finance a purchase; ranges from 3% to 8% per annum.
Force-Liquidation Margin If equity balance falls below 5% of the market value of the portfolio, the customer will receive notification to top up the account to maintenance margin level.
Fully Done Order An order that is fully filled and all ordered lots have been bought/sold.
Fully Rejected Order An order that has been fully rejected and all ordered lots will not be bought/sold.
Funds for withdrawal Equity Balance – MM ± Unrealised credit or debit interest (lower of the 2 amounts between closing price on the day the form is submitted and the point of which the withdrawal is being done).
Initial Margin The required available balance (margin excess) in customer’s CFD account prior to buying or selling CFD contract. Starts from 10% of market value of portfolio for Equities CFD.
Ledger Brought Forward (B/F) Ledger B/F = Cash deposits – Commission & GST ± Realised profit/loss
Ledger Carried Forward (C/F) Ledger balance after taking into the account the charges debited for the day. Ledger C/F = Ledger B/F ± Adjustments – Commission & GST ± Realised profit/loss – Realised Finance Charges
Leverage Trading Trading in stock with money borrowed from the brokerage. An initial margin, which is a pre-determined percentage of the value of the stock to be the traded is deposited with the brokerage. The funds in that account must be greater than the percentage of the market value of the portfolio in order for the client to continue trading. Once the balance of the account drops below that percentage of the market value of the portfolio, the client has to meet the difference in order to continue trading.
Limit Order An order to buy or sell a stock once the price reaches a specified price. A buy limit order will only be executed at the limit price or lower, and a sell limit order will only be executed at the limit price or higher. The limit price entered must be of a better price as compared to the current market quotes, otherwise the order will be rejected.
Liquidation Counters Counters that have been defined only for liquidation i.e. the closing of the counter.
Long Only Counters Counters that have been defined as only for ‘long’ trading i.e. to be bought before selling.
Maintenance Margin The minimum amount of Equity Balance that must be maintained in customer’s CFD account. Starts from 10% of market value of portfolio for Equities CFD.
Margin Call When equity balance falls below the maintenance margin, a margin call amount equivalent to the difference between the maintenance margin and the equity balance must be made. The client has two business days to top up if the amount is <20% and one business day if the amount is <5%.
Margin Deficit When the value of the equity balance falls below that of the maintenance margin, the difference is the margin deficit. Margin Deficit = Maintenance margin – equity balance
Margin Excess When the value of the equity balance rises above that of the initial margin, the difference is the margin excess. Margin Excess = Equity balance – Maintenance margin
Margin Trading Same as leverage trading.
Marked-to-market prices The price of a security that is taken from its current market value.
Market Order An order to buy/sell stock at the current market price. Client only indicates the quantity to be executed and the system will generate a fill.
One Cancels the Other (OCO) Order An order stipulating that if one part of the order is executed, the other part of the order will be cancelled.
Realised (costs, or profits and losses) Costs, profits and losses that have been credited to or debited from your account.
Roll-over The system process act of renewing the contract after it has expired, after 30 calendar days.
Share Borrowing & Lending Borrowing shares for the purpose of short-selling.

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