Products & Services

What is a CFD?

A Contract for Difference is a product traded on margin, which allows you to mirror the performance of the underlying share (price, performance, dividends etc), without the added cost of stamp duty and you pay only a financing cost and basic commission rate.

Main Characteristics

Directional Trading: Trading a CFD short is a convenient and cost effective way of mirroring a potential fall in the underlying share.

Cost Effective: No stamp duty is incurred when trading a CFD as you do not physically buy the shares. Instead, you are issued with an open-ended contract for the trade.

Open-Ended: The long/short CFD position can be held indefinitely, as it is an open-ended contract with no settlement date.

Geared: Holders of a long/short CFD position need only deposit a 20% margin as collateral, rather than pay the full underlying value of the stock.

Benefits of Using CFDs

Professional Trading: You may be able to take the opportunity to sell a CFD short if you are the holder of the physical underlying stock. This will hedge your risk against a short term correction on the downside, as protection for your profits.

Equity Release: If you wish to release funds tied up in Equities you can transfer their position into a CFD, releasing 80% of funds which can be used for reinvestment.

Financing: Holding a long CFD position will make you liable to overnight financing charges on the position. Going short on CFDs means you receive finance on the position.

High Business Turnover: It is easier to trade larger amounts, and more often, if you do not have the capital layout, and Day Trading becomes much more attractive without the added cost of Stamp Duty.

Instant Closure: You have the ability to close out positions instantly, releasing any profits and an instant return on margins.

Corporate Actions: You receive dividends on the ex- dividend date, rather than the pay date. Bonus issues and stock splits are also realised on CFD positions, even though you are not the physical owner of the stock.

Realised Profit & Losses: As prices are marked to market daily, any profits/losses are realised daily.

Derivative Products

Products you can trade as CFDs

• All UK Equities (Margin may be variable on Smaller Cap Stocks)
• Indexes (FTSE, European, Dow, American)
• Foreign Stocks
• Commodities
• Fixed Income
• Foreign Exchange

Alternative Products provided by the Derivatives Department

• Covered Warrants (Brand New Market)
• Structured Product, such as capital guarantee bonds

Risk Warning

Spread Betting, CFDs and Forex are leveraged products and carry a high degree of risk to your capital and it is possible to lose more than your initial investment. Only speculate with money you can afford to lose. These products may not be suitable for all investors, therefore ensure you fully understand the risks involved, and seek independent advice if necessary. Religare Hichens Harrison Plc. are authorised and regulated by the Financial Services Authority. Tax law can be changed or may differ if you pay tax in a jurisdiction outside the UK.