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CFD Trading Accounts

HOW TO OPEN A CFD ACCOUNT

1. Download & Complete the client contract and particular schedule.

Click here to download the mandate and particular schedule:

2. Necessary FICA documentation. Not required if you have an existing account with Xenium that already has FICA documentation.

  • Documents:
  • Certified copy of I.D
  • Proof of physical address (utility bill, bank statement)
  • Tax number (correspondence from SARS)

3. E-mail or fax the completed documents referred to in point 1 and 2:

e-mail: admin@xenium.co.za

fax: 086 725 3114

4. Please mail the original documents to:

CFD Trading

PO Box 1413

Roosevelt Park

2129

It will take approximately 1 day to perform the necessary verification upon receipt of your faxed documents. We will email you your account number and the banking details.

Should you require any assistance for trading please contact us on:

Tel: +27 11 888 8544

WHAT ARE CFD’S?

CFDs are geared or leveraged instruments. This means that a deposit from as little as 15% of the value of the CFD is required. Consequently, it is possible to hold a position 5.71 times (on Top 100) or 6.67 times (on Top 40) greater than would be possible with a traditional investment. Clearly, this degree of gearing means that for a correctly anticipated price movement a greater profit will be generated. On the other hand, the risk of loss increases commensurately if the anticipated price movement proves to be ill founded. In the case of substantial and adverse market movements the potential exists to lose all of the money originally deposited and to remain liable to pay additional funds immediately to maintain the margin requirement.

The counterparty to the holder of a long CFD position will have had to borrow the stock in the market and in order to fully mirror the economics of physical purchase interest will be charged. The margin deposit is held to secure the performance of the contract and is not available to be set-off against the Contract Value. Therefore, a long CFD holder will pay interest on the day-to-day Contract Value. Conversely, the holder of a short CFD position will receive interest also based on the day-to-day Contract Value. Interest is typically calculated at a margin above or below the relevant overnight SAFEX rate for long and short positions respectively.

Other than shareholder privileges, a CFD reflect all corporate actions affecting the underlying stock or share. The net dividend declared by a company will be paid to the holder of a long CFD on the Stock Exchange ex-dividend date. This will be advantageous in cash flow terms as the dividend pay date will normally be several weeks after the ex-dividend date. Holders of short CFDs pay 100% of the gross dividend declared and this must also be paid on the ex-dividend date. These payments reflecting the dividend are made on the ex-dividend date as, all things being equal; the share would be expected to fall by the amount of the declared dividend per share. Similarly, bonus and rights issues and splits are replicated in the CFD on the corresponding ‘ex-date’

Equity CFDs offer a number of investment opportunities and strategies, some of which are unattainable in traditional share investing. They can be summarised as:

An alternative to traditional share trading
Providing economic exposure to a company’s share performance without taking or making physical delivery
Counterbalancing economic exposure on an existing physical share holding, i.e. as a hedging or risk management tool
No Stamp Duty is payable
Delivering a geared return on the capital employed
Freeing-up capital not required for margin for other uses
Allowing you to close-out a position at any time
Potentially positive daily cash flows .

CFD FAQ

What documentation is required to open an account?
See Step 1 & 2 of “How to Open a CFD Account”.

How do I trade?

Trade by phoning orders through to our dealer at Xenium or submit it online.
Tel: +27 11 888 8544

How much do I need to deposit?

You need to deposit the equivalent of 15% to 17.5% of the Cost Value (number of shares X cost per share). This is called Initial Margin. A minimum Initial Margin of R7,500.00 (Top 40) to R8,750 (Top 100) is required – this equates to total exposure of R50,000.00

What is contained in the cost per share?

The cost per share is the open market cost plus brokerage.

What reports do I receive?

A daily statement setting out your CFD position.

What shares are covered by a CFD?

Shares that are in the “TOP 100” FTSE/JSE Africa Index Series.

What costs are involved?

1) Brokerage – included in the Cost Value.
2) Interest paid on the Cost Value based on SAFEX plus 2% rate.
3) Interest earned on your margin based on SAFEX minus 2% rate.
4) Scrip lending fee of 1.5% per annum on short positions, with a minimum of R456 per position based on Cost Value.

What is a margin call?

A margin call is made to you when the unrealized loss of your positions exceeds the available funds on your account. You have until 15h00 the same day to rectify the imbalance, otherwise sufficient positions will be closed to cover the margin.
BANKING DETAILS FOR DEPOSITS:

Account Name: Online Securities Limited
Bank: First National Bank
Branch Code: 255005
Account Number: 62225356949
Reference: Your CFD account number