An exchange traded contract for difference (eCFD) is a derivatives contract listed and traded on the Exchange and cleared by JSE Clear. They allow investors to participate in the market, without having ownership of the underlying asset. The underlying asset is a share that is cash settled on expiry.
A CFD is a legal agreement to exchange the difference in value of a share between the time when the contract is opened and the time when it is closed. Unlike with a standard single stock future, dividends are also considered. A funding spread is charged on a daily basis and paid from the long to short holder.
Who is this for?
eCFD’s are simpler to understand and trade and are used by both private and professional investors. Hedgers use CFDs to protect an existing Share portfolio against adverse price movements while speculators use the product to realise a profit on short-term movements of the underlying Shares. Market participants can go long or go short as they see fit.
- Trading in a transparent, listed environment eliminates counter-party default risk.
- Gearing provides a capital efficient way to gain exposure to shares. This also creates greater volatility which amplifies gains and losses.
- Full exposure to the deep and liquid underlying Equity Market.
- Funding offsets for multiple positions.
- Lower brokerage fees than actually trading in the underlying share.
- Provides short selling opportunities to benefit from downward price movements.
- Are subject to initial margin and margin payments.
- Derivatives can be risky and should not be tackled by novice investors.
How to get it
Register as a client with an authorised Equity Derivatives Member.