Contracts for Difference - CFDs Expiration and Rollover Procedure. Contracts for Difference (CFD) is an arrangement made in financial derivatives trading where the differences in the settlement between the open and closing trade process are cash-settled. There is no delivery of physical goods or securities with CFDs, whose value is linked to an underlying Futures asset with expiration date or maturity. Contracts for Difference can be likened to futures which can be entered into in relation to Commodities or the FTSE-100 index or any other index or share, as well as Currency. However, unlike other futures and options, these contracts can only be settled in cash. Investing in a CFD carries risks like investing in a future or an option and you should be aware of these. Transactions in CFDs may also involve a contingent liability and you should be aware of the implications of this as set out in clause 8 below. Futures are derivative financial contracts obligating the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and set price. Futures—also called futures contracts—allow traders to lock in the price of the underlying asset or commodity. These contracts have expiration dates and set prices that are known upfront. In normal trading, when Futures Contract reaches its Expiration date, all contracts of the quoted underlying month will be closed, and all open positions will be liquidated as soon as the contracts reached its Maturity. To provide CFDs trading without interruptions and to avoid an obligation to close any position by the Customers, CMTrading introduces generic and continuous CFD’s of same underlying Futures but without closure, yet the Expiration will be handled automatically via the Trading Platform by adjusting the Customer’s account balance without interrupting any of the open positions. This adjustment known as CFD Rollover Charge: Example of change from Expiring CFD to Generic CFD: CL-AUG21 □ [why this sign?] Crude Oil NASDQ-SEP21 □ USTECH100 DOW-SEP21 □ US30 Full list of new generic instrument is presented on the site in the following link: xxxxx://xxx.xxxxxxxxx.xxx/cfd-trading/cfds-expirations Up to 3 days prior to the official expiration date (Maturity), Accounts with Open Positions of the Expiring underlying Futures instrument will be adjusted to ensure Clients do not Gain/Loss due to the difference in price between Old and New Contracts. Clients will incur costs in relation to the Spread Cost in closing Old Contract and opening New Contract. Information about upcoming Expiring CFDs is presented on our site at: xxxxx://xxx.xxxxxxxxx.xxx/cfd- trading/cfds-expirations Clients with open positions, who do not wish to be debited or credited when the rollover occurs, are advised to manually close their positions before the CFD expiration date. Calculation of CFD’s Rollover To calculate the CFD Rollover Charge, CMTrading takes the Difference in Prices between the two contracts (Old and New) from the Exchange at the end of the trading day before expiration then add our Spread. The resulting amount is either Credit or Debit to the Client Account via Trade Transaction; CFDROLLOVER Formula: [Number of Lots x Contract size x (New Contract Price - Old Contract Price) - Spread Cost] *Spread Costs are calculated based on Market Spreads at the time of the Rollover Calculation. General Rule: New Price < Old Price è Credit for Long Positions / Debit for Short Positions New Price > Old Price è Debit for Long Positions / Credit for Short Positions Example 1 Crude Oil Trade: 100 Barrels (0.1 Lot)Lot Size: 1,000 BarrelsOld Contract Price: $70.00New Contract Price: $70.40Price Difference = $0.40 (40 pips)Typical Spread: 3 pips (0.03) For such Trade:Long Position: (0.1 x 1000 x -0.40) - (0.03 x 100) = -$43.00 Short Position: (0.1 x 1000 x 0.40) - (0.03 x 100) = $37.00 Debit/Credit will appear in your account according to the example below: Example 2 NADAQ Trade: 1 LotLot Size: 20 IndicesOld Contract Price: 15084.00New Contract Price: 15080.00Price Difference = -4 Index points (-400 pips)Typical Spread: 100 pips (0.50) For such Trade: Long Position: (1 x 20 x 4) - (0.50 x 20) = $70.00 Short Position: (1 x 20 x -4) - (0.50 x 20) = -$90.00 Debit/Credit will appear in your account according to the example below: All rollover adjustments are calculated in the currency the instrument is denominated in. If your account is denominated in a different currency, the system will automatically convert this to the currency of your account using the Market Rate at that time. NOTES *The above adjustment is subject to expiration charge/spread *CMTrading cannot provide rollover adjustment information before the adjustment occurs, if clients do not wish to incur a rollover adjustment fee, they should close open positions close to the expiration period before the scheduled rollover occurs.
Appears in 2 contracts
Contracts for Difference - CFDs Expiration and Rollover Procedure. Contracts for Difference (CFD) is an arrangement made in financial derivatives trading where the differences in the settlement between the open and closing trade process are cash-settled. There is no delivery of physical goods or securities with CFDs, whose value is linked to an underlying Futures asset with expiration date or maturity. Contracts for Difference can be likened to futures which can be entered into in relation to Commodities or the FTSE-100 index or any other index or share, as well as Currency. However, unlike other futures and options, these contracts can only be settled in cash. Investing in a CFD carries risks like investing in a future or an option and you should be aware of these. Transactions in CFDs may also involve a contingent liability and you should be aware of the implications of this as set out in clause 8 below. Futures are derivative financial contracts obligating the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and set price. Futures—also called futures contracts—allow traders to lock in the price of the underlying asset or commodity. These contracts have expiration dates and set prices that are known upfront. In normal trading, when Futures Contract reaches its Expiration date, all contracts of the quoted underlying month will be closed, and all open positions will be liquidated as soon as the contracts reached its Maturity. To provide CFDs trading without interruptions and to avoid an obligation to close any position by the Customers, CMTrading introduces generic and continuous CFD’s of same underlying Futures but without closure, yet the Expiration will be handled automatically via the Trading Platform by adjusting the Customer’s account balance without interrupting any of the open positions. This adjustment known as CFD Rollover Charge: Example of change from Expiring CFD to Generic CFD: CL-AUG21 □ [why this sign?] Crude Oil NASDQ-SEP21 □ USTECH100 DOWXXXXXX000 XXX-SEP21 XXX00 □ US30 Full list of new generic instrument is presented on the site in the following link: xxxxx://xxx.xxxxxxxxx.xxx/cfd-trading/cfds-expirations Up to 3 days prior to the official expiration date (Maturity), Accounts with Open Positions of the Expiring underlying Futures instrument will be adjusted to ensure Clients do not Gain/Loss due to the difference in price between Old and New Contracts. Clients will incur costs in relation to the Spread Cost in closing Old Contract and opening New Contract. Information about upcoming Expiring CFDs is presented on our site at: xxxxx://xxx.xxxxxxxxx.xxx/cfd- trading/cfds-expirations Clients with open positions, who do not wish to be debited or credited when the rollover occurs, are advised to manually close their positions before the CFD expiration date. Calculation of CFD’s Rollover To calculate the CFD Rollover Charge, CMTrading takes the Difference in Prices between the two contracts (Old and New) from the Exchange at the end of the trading day before expiration then add our Spread. The resulting amount is either Credit or Debit to the Client Account via Trade Transaction; CFDROLLOVER Formula: [Number of Lots x Contract size x (New Contract Price - Old Contract Price) - Spread Cost] *Spread Costs are calculated based on Market Spreads at the time of the Rollover Calculation. General Rule: New Price < Old Price è Credit for Long Positions / Debit for Short Positions New Price > Old Price è Debit for Long Positions / Credit for Short Positions Example 1 Crude Oil Trade: 100 Barrels (0.1 Lot)Lot Size: 1,000 BarrelsOld Contract Price: $70.00New Contract Price: $70.40Price Difference = $0.40 (40 pips)Typical Spread: 3 pips (0.03) For such Trade:Long Position: (0.1 x 1000 x -0.40) - (0.03 x 100) = -$43.00 Short Position: (0.1 x 1000 x 0.40) - (0.03 x 100) = $37.00 Debit/Credit will appear in your account according to the example below: Example 2 NADAQ Trade: 1 LotLot Size: 20 IndicesOld Contract Price: 15084.00New Contract Price: 15080.00Price Difference = -4 Index points (-400 pips)Typical Spread: 100 pips (0.50) For such Trade: Long Position: (1 x 20 x 4) - (0.50 x 20) = $70.00 Short Position: (1 x 20 x -4) - (0.50 x 20) = -$90.00 Debit/Credit will appear in your account according to the example below: All rollover adjustments are calculated in the currency the instrument is denominated in. If your account is denominated in a different currency, the system will automatically convert this to the currency of your account using the Market Rate at that time. NOTES *The above adjustment is subject to expiration charge/spread *CMTrading cannot provide rollover adjustment information before the adjustment occurs, if clients do not wish to incur a rollover adjustment fee, they should close open positions close to the expiration period before the scheduled rollover occurs.
Appears in 2 contracts
