Community

Share knowledge. Find answers. Ask questions.

Online Share Trading

Engage and learn about markets and trading online

CFD's Education

Reply
Frequent Contributor
Are there any online courses or brochures available on CFD's on the OST Website? Can find SSF's but not CFD's.If yes - how do I get to them. Thanks.
0 Kudos
16 REPLIES 16
Super Contributor
Help, Downloads, CFD's?
0 Kudos
plasma
Occasional Contributor
Hi Enzed The principles of trading CFD's are the exactly the same as with Futures. They are essentially the same products in slightly different packaging. Although specificaly related, there are courses available on the OST site. Click on help.
0 Kudos
Frequent Contributor
Many thanks to all. I cannot get clear what the essential pros and cons of ssf's vs cfd,s are. Why do you choose cfd's or ssf's. Superficially I see that cfd's are on a 1 for 1 ratio and that they do not expire. They also pay tax free dividends - all of which I like. Why do people like SSF's?
0 Kudos
Not applicable
you need to study the principle of counter party risk to understand the answer to your question. Little bit too difficult to explain in a thread
0 Kudos
Valued Contributor
counter party risk is simple .. SSF's are exchange traded, so no counter party risk as JSE ensures all transactions .. CFD's your counter prty is the issuer and if they go bust your trade goes up in a puff of smoke ..
0 Kudos
Not applicable
But If using SBK as the counter party this risk is small.
0 Kudos
Super Contributor
SSF is listed on the JSE unlike CFD , so you can complain to the JSE Regulators/watchdog if there is no market makers. CFD does not offer you that protection. 2. Gearing is very important, with SSF 1 contract is 100 share and if you are buying Naspers share then the bank will have to go out and buy thoses shares at R400 000 (assuming share price is R400) and for banks operating under these conditions the cost of capital does come with a price, which CFD gearing is 1:1, bank will need less capital and still take your money without any protection from JSE watchdog. 3. NO MATRIX , no transparency of how price is calculated. 4 My all time favourite , CFD's is unlisted , then why does those TRANSCATION COST come from?
0 Kudos
Super Contributor
SSF is listed on the JSE unlike CFD , so you can complain to the JSE Regulators/watchdog if there is no market makers. CFD does not offer you that protection. 2. Gearing is very important, with SSF 1 contract is 100 share and if you are buying Naspers share then the bank will have to go out and buy thoses shares at R400 000 (assuming share price is R400) and for banks operating under these conditions the cost of capital does come with a price, which CFD gearing is 1:1, bank will need less capital and still take your money without any protection from JSE watchdog. 3. NO MATRIX , no transparency of how price is calculated. 4 My all time favourite , CFD's is unlisted , then where does those TRANSCATION COST come from?
0 Kudos
Regular Contributor
Or is it? We hope so.
0 Kudos
Valued Contributor
err .. point 1, do SSF market makers had a legal obligation to make a market at all times ?? I could market make right now, with no obligations waht-so-ever

point 2, totally wrong .. the numbers of shares per contract has nothing to do with the gearing .. gearing is a factor of underlying exposure vs. margin required ..

pt 3, you trade at the underlying share price, so no matrix require ..

pt 4 .. I agree with you on this, everything should be free ..
0 Kudos
Super Contributor
Point 2 So SBK as an example need not purchase the shares on open market in respect of CFD?
0 Kudos
Super Contributor
Simon , at last we can have an intelligent conversation. Pt 3 relates to SSF Point 2 Should be seen from the bank perpective and its impact on its capital structure and cost of borrowing rate. With CFD the ratio is 1:1 and not 100:1 as per SSF.
0 Kudos
Valued Contributor
that's another issue entirely, that's about the market aker hedging their risk .. and again as I understand the JSE does not require any market maker to hedge .. they hedge because they sell risk, not take it ..
0 Kudos
Valued Contributor
I don't think OST has ny clients whose derivative postions (of any nature) seriously actually impact the banks capital .. and anyway, if a client is going to buy 4 SSF contracts being 400 shares, should they buy CFD's instead they will just buy 400 .. so underlying effect is exactly the same
matrix on a SSF is surely pointless becoz while you may have one market makers matrix, there could be many market makers and you merely trade against the best price .. I agree a matrix important, but the new central order book makes it largely useless for above reason ..
0 Kudos
Super Contributor
these products are expensive, stop losses dont work and are very very dangerous. Steer clear until you know exactly what you doing.
0 Kudos