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What is a CFD?

A CFD is a Contract for Difference. 

A Contract for Difference (CFD) is an agreement between a buyer and a seller to exchange the difference in price of an underlying instrument over a period of time.

CFDs provide clients with an opportunity to get geared exposure to the performance of a share in a simple and cost efficient format.

CFDs allow investors to position themselves in relation to the rise or fall of JSE-listed securities, without the need for ownership of such securities.

CFDs are leveraged products that require an investor to deposit cash as margin rather than the payment of the full value of the underlying position.

Depending on the position taken by such an investor, the investor may be either the long or the short holder of the CFD. Effectively cash is being borrowed by the long holder and lent by the short holder in respect of the underlying security.

The initial margin deposit will vary depending on the stock traded.

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