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Key features of ASX Listed CFDs

ASX Listed CFDs

It is important to familiarise yourself with the key features of ASX Listed CFDs before trading.

Long and short positions

With an ASX Listed CFD it is possible to go both 'long' (to buy) and 'short' (to sell). If you take a long position, you are anticipating a rise in the value of the underlying instrument and would experience a loss if the value fell. If you take a short 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 then sells later, with an ASX Listed CFD it is possible to firstly go short (or sell) to exploit falling prices and buy back (or go long) later.

Daily settlement

At the end of each trading day, all positions in ASX Listed CFDs are 'marked to market' using the Daily Settlement Price (DSP).

The DSP for ASX Equity, Index and Commodity CFDs is determined by ASX and is generally¹ equal to that of the closing price of the underlying instrument - this being that quoted by the underlying instrument owner (e.g. ASX, the index price provider, etc) or an independent data source such as Reuters (e.g. in the case of ASX Gold and FX CFDs).

¹In exceptional circumstances where the underlying price is not immediately available, ASX may choose alternate methods to establish the Daily Settlement Price.

Expiry

ASX Listed CFDs do not expire. They are perpetual in nature. The only way to close a position is to trade the opposite side of your position.

There are limited circumstances in which ASX may expire and delist contracts. This is only likely to occur where the contract has open positions in the following situations:

There is a lack of liquidity in the contract;
The underlying has been delisted; or
Access to the data of the underlying instrument becomes permanently unavailable (for example, where an index provider ceases to calculate an index or terminates the index provider agreement with ASX).

If the above action were to be taken, ASX would provide as much notice to the market as possible to enable the closing out of open positions.

Corporate actions

Any position in an ASX Equity CFD is adjusted to reflect the same economic effect as the underlying security on which the ASX Listed CFD is based. This means that whenever there is a corporate action - such as a share split, capital repayment, special dividend, bonus issue, takeover etc - the same impact will be reflected back into the ASX Listed CFD position.

ASX Index CFDs track indexes, which are adjusted by the index provider to reflect all corporate actions.

Profit and loss situations

The table below sets out profit and loss situations when trading ASX Listed CFDs.

Profitable trades	Unprofitable trades
Buy low - Sell high	Buy high - Sell low
Sell high - Buy low	Sell low - Buy high

Exchange for physical

Traders can convert their ASX Equity CFD position into stock. This conversion is allowed through the Exchange for Physical (EFP) facility. The EFP facility enables you to complete both sides of the conversion at a set price eliminating the risk of a price movement before you complete the transaction. To undertake an EFP, you need to speak to your ASX Listed CFD adviser.

ASX CFDs Exchange for Physical

Shares and ASX Listed CFDs are transacted off market at the same
time in the same price and volume as arranged by broker.