Visit our COVID-19 site for latest information regarding how we can support you. For up to date information about the pandemic visit www.sacoronavirus.co.za.

bs-regular
bs-extra-light
bs-light
bs-light
bs-cond-light-webfont
bs-medium
bs-bold
bs-black

Community


Share knowledge. Ask questions. Find answers.

Online Share Trading

Engage and learn about markets and trading online

SSF or CFD

Reply
Frequent Contributor
Which of the two instruments is the cheapest to trade?
0 Kudos
13 REPLIES 13
Super Contributor
Simon spoke about this in his show last night. CFD, I think. SSF, you pay the interest for the full period to expiry, whereas CFD you only pay for the interest for the holding period. That's all I've picked up from the docs - hopefully more will chime in.
0 Kudos
Not applicable
CFD's by a long margin, and they are easier to trade and manage your slippage costs. Note however, that OST CFD's are only cheap if you are trading in positions in excess of 200k, because of the flat brokerage fee charged on top of the commissions. Anything less than that, and your brokerage fees reach up to 0.8% each way
0 Kudos
Contributor
I guess the real question is "which makes the higher profit?", rather than the lowest costs. I haven't really studied how the interest works on SSFs, but as I understand it, with a CFD the market maker buys the share and so effectively gives you a loan to cover the cost and you currrently pay 9.5% interest on this loan, whereas with an SSF the market maker doesn't actually buy a share, so there is no loan that needs to be serviced, although there is some interest in teh pricing of teh SSF (as I say, I haven't studied the theory behind this yet). However, I have taken 5 SSF trades that I have done over the past couple of weeks, and calculated what my profit would have been if I had done the trades via a CFD, and the SSF trades gave more profit in all cases. My sense is that the CFDs get worse the longer you hold them (because interest is added everyday), and this could represent quite a risk, eventally wiping out any chance of a profit (well the share price would have to rise 9.5% + .35% + .35% + R57 + R57 = about 10.5% over a year, so about 1% for every month you continue to hold the CFD. Note that the flat fee of R57 each way is actually not that relevant in comparison to the .35% each way and the interest at 9.5%. My results were: Share Days held Exposure SSF Profit CFD Profit SOL 5 114,400 1,467 1,324 BIL 8 39,600 1,135 1,122 GFI 7 27,750 1,606 1,605 MTN 7 62,000 2,338 2,330 GFI 16 28,500 1,061 783 Hope the table keeps its formatting when I push send!!
0 Kudos
Contributor
Ok, so it didn't keep its format, but hopefully it is not to difficult to follow!!
0 Kudos
Regular Contributor
I prefer cfd's... We've got a nice selection now , 89 , could we add one more , just to make a round number , TOPI? STX40 Spread ain't well.
0 Kudos
Valued Contributor
SSF the interest is refuynded pro rata if you exit before expirey ..

CFD's are cheaper at 0.35% and R50 +vat vs SSF at 0.4% and R60 +vat ..

notwithstanding different costs, profit is largely the same as gearing is the same ..
0 Kudos
Contributor
Simon, I take it the "interest refund" is factored into the underlying price when you close out the position, ie there is no other "refund" coming in future?
0 Kudos
Contributor
Sorry, not the "underlying" price, but obviously the SSF price
0 Kudos
Valued Contributor
0 Kudos
Super Contributor
Well if you trade short positions as well.. you get paid Interest into your account.. so that evens out the interest you will pay on your long position trades.. or there about
0 Kudos
Valued Contributor
short interest is slightly less then long interest as we have to cover the cost of borrowing the stock ..
0 Kudos
Super Contributor
do u have the numbers for that simon> interested to know..
0 Kudos
Valued Contributor
cfd's
Longs: prime -1%
Shorts and IM: Money market - 0%
0 Kudos