ASX Clear (Futures)
The clearing house undertaking all clearing and processing of ASX Listed CFDs.
ASX's trading system used for the trading of futures contracts and ASX Listed CFDs.
Contract for Difference (CFD)
An agreement between buyer and seller to exchange the difference in value of a particular instrument between when the contract is opened and when it is closed. The difference is determined by reference to an 'underlying' - a stock, Index, FX rate or commodity.
An amount calculated daily on all open positions held at the close of trade; paid and received daily by long and short position holders.
Daily Settlement Price (DSP)
Price used by SFECC in marking open positions to market for calculating Variation Margins for open ASX Listed CFD positions.
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.
Designated Price Maker (DPM)
An Exchange approved market maker whose role is to provide liquidity in the ASX Listed CFD market. DPMs receive incentives from the Exchange based on their success in trading ASX Listed CFDs.
Payments replicating the dividends applying to the stocks underlying ASX Listed CFDs. They apply to:
ASX Equity CFDs based on stocks that declare dividends,
ASX Index CFDs where a component stock pays out a dividend.
Long ASX Equity CFD positions receive the Dividend Cashflow. Short ASX Equity CFD positions pay the Dividend Cashflow. The amount of the Dividend Cashflow is determined based on ASX Listed CFD position held. For ASX Index CFDs a weighting is applied and the Dividend Cashflow is denominated in the base currency of the ASX Listed CFD.
Where CFDs are traded on a formal regulated market involving transparent and competitive prices.
Exchange for Physical (EFP)
An off-market trading mechanism that enables a derivatives position to be swapped for an offsetting physical position.
Franking Credit Cashflow (FCC)
The monetary equivalent of the franking credit declared on a particular underlying stock. FCC applies only to ASX Equity CFDs. Holders of long positions receive the FCC. Holders of short positions pay the FCC.
Every trader in the ASX Listed CFD market is required to put up an
Initial Margin (deposit) for each contract they trade. This applies to
both buyers and sellers. This Initial Margin is returned when the
contract is closed out.
Initial Margins protect the Clearing House and Participant against non-payment of losses by any customer. The amount is normally set at a level designed to cover reasonably foreseeable losses on a position between the close of business on one day and the next. The amount of Initial Margin for each contract varies according to the price volatility of the commodity, but is usually about 5% to 10% of the value of the goods described by the contract.
During periods of extreme market volatility, additional margin calls known as an intraday margin calls may be made. Although very rare, such a call can be affected at any point during the trading day and is payable by the time specified by the ASX Clear (Futures).
Mark to market
A system whereby the value of an open position is revalued against the current market for the purpose of calculating Variation Margins. A settlement price is used by the clearing house for marking ASX Listed CFD positions to market. SFECC uses settlement prices at the close of the previous trading day.
Market maker model
Where the OTC CFD provider acts as principal, providing a two-way spread based on the market price, and clients trade directly with the OTC CFD provider.
Where the original parties to a contract created on market are separated by the interposition of a third party, typically a clearing house. The interposition on a clearing party provides certainty of contract completion by the contract guarantee provided by the clearing house.
Open Interest Charge (OIC)
Interest amount paid by both long and short positions. The OIC rate is determined by the ASX and may vary according to product. In the case of ASX Equity CFDs, and only in the case of ASX Equity CFDs, the OIC will also vary depending on whether a long or short position is held.
OTC Direct market access (DMA)
Where the OTC CFD order is replicated by the provider placing a corresponding stock order in the underlying market.
Over the counter (OTC)
Price used by ASX Clear (Futures) in marking open positions to market for calculating Variation Margins for open CFD positions. For ASX Equity CFDs and ASX Index CFDs, ASX Clear (Futures) uses the closing prices/levels of the underlying stock or index on the previous trading day.
Stop loss order
An order placed at the same time as an order to open a position which becomes activated when the market price reaches a designated level. Stop loss orders are used to close out losing positions to prevent further loss.
Refers to the payment of profits or losses following revaluation of an ASX Listed CFD contract. Clearing houses enforce a regime of daily Variation Margin calls. For this purpose, open positions are revalued (or marked to market) against settlement prices at the close of the previous trading day.