About ASX Listed CFDs
A CFD (contract for difference) is an agreement between a buyer and a seller to exchange the difference in value of a contract, between when the contract is opened and when it is closed. The difference is determined by reference to an 'underlying' instrument - such as a share. CFDs combine;
Buying power (leverage) - with a low Initial Margin, you can gain much greater exposure from your funds. CFDs are leveraged instruments. This means that you are fully exposed to price movements of the ASX Listed CFD without having to pay the full price of the contract. Leverage creates the opportunity for greater gains and losses than a direct investment in the underlying instrument. It is therefore important to understand both the upside benefits as well as the downside risks.
Simplicity - CFDs are easier to trade and understand than most other derivatives
Trade rising and falling markets - with ASX listed CFDs it is possible to trade from both the long and the short side. If you take a long (bought) position, you are anticipating a rise in the value of the underlying instrument and would a loss if the value fell. If you take a short (sold) position, you are anticipating a fall in the value of the underlying instrument. If the value actually rose, you would experience a loss. In contrast to shares, where a trader usually buys first and sells later, with an ASX Listed CFD it is possible to first go short (sell) to exploite falling prices and buy back later.
Benefits of trading CFDs Listed on ASX1
Only ASX CFDs™ offer the added protection of being listed, traded and cleared on ASX. They are the only CFDs that offer the powerful combination of:
- A transparent and well-regulated central CFD market;
- Transaction independence;
- Clearing through ASX's centralised, regulated clearing facility;
- Access to the Fidelity Fund.
Familiarise yourself with the key features of ASX Listed CFDs before trading.
Risks of trading ASX Listed CFDs
ASX CFDs are not suitable for all traders and investors. Before trading ASX CFDs you should carefully assess your experience, investment objectives, financial resources and all other relevant considerations and consult your adviser. In particular you should understand the implications of leverage, additional margin calls and unlimited losses on your investments. Learn more about the risks of trading ASX Listed CFDs (PDF 86KB).
Additional brochures and booklets
- Taxation treatment of CFDs (PDF 366KB)
Note: 1 The market for ASX Listed CFDs is operated by the Sydney Futures Exchange (SFE) ACN 000 943 377 and cleared and settled by SFE Clearing Corporation (SFECC). Both SFE and SFECC are subsidiaries of ASX.