FAQs

CFD Frequently Asked Questions (FAQs)

 

1. What is CFD trading?

A CFD is a leveraged derivatives product that tracks the price movement of an underlying instrument. Essentially, a CFD is a contract an investor enters into with a CFD provider to gain exposure to an underlying instrument whereby differences between the closing and the opening value will be settled through cash payments.

 

2.What are the CFDs offered by Phillip Futures?

Phillip Futures is offering Malaysia Shares Direct Market Access (DMA) CFD also known as Shares CFD.

 

3.What kind of CFD model Phillip Futures is using?

The clients can invest in CFD through Phillip Futures via Direct Market Access (“DMA”) model. DMA allows clients to have a direct access to the market. When the clients place an order to Phillip Futures, a corresponding shares order is sent to the exchange and when order is filled on the actual exchange, the client’s trading platform will be updated accordingly.

 

4.What are the margin requirements on the Shares CFDs?

The margin requirement for Shares CFDs is 10% for shares index shares and 20% for non-index shares.

 

5.Can an investor request for physical settlement of his CFDs position?

No. CFDs must be cash settled only. This serves to prevent any ‘stealthy stake’ build up in Shares CFDs.

 

6.Who can invest in a CFD offered?

Currently, CFDs can only be traded by sophisticated investors (i.e., any person who falls within any of the categories of investors set out in Part 1 of Schedule 6 and 7 of the Capital Market Service Act 2007). CFD trading account is only open to Malaysia residents, not open to non-residents. CFDs are a complex leveraged product and investors are advised to fully understand the risks associated with CFDs before trading them.

Sophisticated investors are high net worth individual:-

  1. whose total net personal assets, or total net joint assets with his or her spouse, exceed RM3million excluding the value of the individual’s primary residence;
  2. who has a gross annual income exceeding RM300,000;
  3. who, jointly with his or her spouse, has a gross annual income exceeding RM400,000 per annum in the preceding twelve months.

 

7.What are the fees and charges involved?

The commission rate is 0.5% of the of the full contract value with a minimum commission of RM60.00. Additionally, the long finance charges is 5.5% per annum.

 

8.What are the lot size and minimum contract size?

Please refer to the Phillip CFD product list at www.phillipfutures.com.my for respective lot sizes and minimum contract sizes.

 

9.What are the market trading and order submission hours?

Trading is from Monday to Friday, except on public holidays and other market holidays (when the Bursa Malaysia Exchange is declared closed by the Bursa Malaysia Committee).

Order Submission Hours 0700hrs – 1645hrs

1701hrs – 0500hrs

Non-submission period 0500hrs – 0700hrs

1645hrs – 1700hrs

 

10.What is the minimum deposit to open a CFD trading account?

Customers are required to put up a minimum deposit of RM1,000 to open a CFD Account.

 

11.What are the modes of payment?

Mode Details
Cheque Cheques should be crossed and made payable to “Phillip Futures Sdn Bhd”. Please state the CFD trading account number, name and contact number on the reverse of the cheque, and specify that the payment is meant for your CFD trading account.
Internal Funds Transfer Customers can initiate online funds transfer from futures trading account to CFD trading account through Dealer.
Telegraphic Transfer (“TT”) Please specify CFD trading account number and name along with the telegraphic transfer. Kindly inform your Dealer after the TT transfer that the TT amount is meant for CFD trading account. Customers are liable to pay for all telegraphic transfer charges. Below is the bank account details:

 

Bank: Malayan Banking Berhad

Account Name: Phillip Futures Sdn Bhd – CFD

Account No: 514012111172

Online Transfer Please specify CFD trading account number and name along with the telegraphic transfer. Kindly inform your Dealer after the TT transfer that the TT amount is meant for CFD trading account. Customers are liable to pay for all telegraphic transfer charges. Below is the bank account details:

Bank : Malayan Banking Berhad

Account Name : Phillip Futures Sdn Bhd – CFD

Account No. 514012111172

 

12.What platform will be used for CFD?

We will be introducing a web-based trading platform and a desktop platform for CFD trading.

 

13.Do I need a Central Depository Account or linkage to trade CFDs?

No, you do not need a Central Depository Account or linkage to trade with Phillip CFD.

 

14.How long does it take to open a CFD account?

For existing Phillip Futures customers, the CFD transactions facilities will be opened within three trading days, after their trading representative has signed off on the application form. For new customers, account opening will take around 5 working days.

 

15.Is there any maintenance fee for the CFD account?

There is NO maintenance fee or administrative fee for the Phillip CFD account.

 

16.Can I have more than one CFD account?

Each customer is limited to 1 CFD account per trading representative. However, each customer is at liberty to open 1 CFD account with different trading representatives.

 

17.How does Phillip Futures CFD quote its prices?

For CFDs, all Bid and Ask prices are quoted at live cash market prices, without any additional spreads. You buy at the current market Ask price and sell at the current market Bid price.

 

18.What are the requirements to open CFD account with Phillip Futures?

Photocopy IC and a bank statement issued within the last 3 months.

 

19.Can I have more in-depth information on the process of CFD trading with Phillip Futures?

Below is a working example of CFD trading.

Mr A is bullish on XYZ component share and decides to buy (LONG) 10000 shares of XYZ share at RM2.78. Assume margin requirement for XYZ component stock is 10%.

 

Calculation of Full Contract Value and Margin Requirement

XYZ share price : RM2.78

Full Contract Value = Price x Number of shares

10000 shares of XYZ share = RM2.78 x 10000 = RM27,800.00

 

10% initial margin for XYZ share CFD:

Full contract value x 10% = Margin Requirement

RM27,800.00 x 10% = RM2780.00 to own 10000 shares of XYZ shares CFD.

 

Calculation of Commission paid

0.5% of full contract value = Commission paid

0.5% x RM27,800.00 = RM139.00

 

Financial Charges Example on XYZ  share CFD

Mr A buy 10000 shares of XYZ Share CFD and closed his position on Day 3. Long Finance Charges is 5.5% per annum.

The following are the last done prices on the next few days:

Day 1 : RM 2.81

Day 2 : RM 2.77

Day 3 : RM 2.79

 

Financial Charge (FC) = Financial Charge Rate x Closing Price x Quantity / 365

 

FC for day 1:

5.5% x RM2.81 x 10000 / 365 = RM4.23

 

FC for day 2:

5.5% x RM2.77 x 10000 / 365 = RM4.17

 

Total FC = RM8.40

 

Due to Mr A close out the trade on Day 3, therefore there will be no financial charges on Day 3.

 

Profit and Loss Calculation Example on XYZ share CFD

Initial deposit = RM3,000.00

 

Profit Scenario

BUY (long) 10000 XYZ share CFD at RM2.78, and XYZ share close at RM2.83

Unrealized Profit = (Closing price – Opening Price) x Quantity

= (RM2.83 – RM2.78) x 10000

= RM500 (Excluding commission and other charges)

 

Loss Scenario

BUY (long) 10000 XYZ share CFD at RM2.78, and XYZ share close at RM2.72

Unrealized Loss = (Closing price – Opening Price) x Quantity

= (RM2.72 – RM2.78) x 10000

= -RM600.00

 

Margin Call Example on XYZ share CFD

Initial deposit = RM3,000

BUY (long) 10000 XYZ share CFD at RM2.78, and XYZ share close at RM2.72

 

Opening Commission = 0.5% x RM27800 = RM139.

 

Financial Charge (FC) = Financial Charge Rate x Closing Price x Quantity / 365  

= 5.5% x RM2.72 x 10000/365

= RM4.01

 

Unrealized Profit/Loss = (Closing price – Opening Price) x Quantity

= (RM2.72 – RM2.78) x 10000

= -RM600

 

Maintenance Margin = Quantity x Closing Price x 10%

= 10000 x RM2.72 x 10%

= RM2720

 

Equity Balance = Cash Deposit – Opening Commission – FC – Unrealized Profit/Loss

= RM3,000.00 – RM139.00 – RM4.01 – RM600.00

= RM2256.99

 

Margin Deficit (Amount to top up for margin call)

= Maintenance Margin – Equity Balance

= RM2720.00 – RM2256.99

= RM463.01

Above is margin call situation. Client is having a margin call amounting to RM463.01 at 30 minutes before market close. If there is further market movement against the Client (and/or the Client does not top up the Margin Deficit), Phillip Futures reserves the right to force-liquidate without further notice.

 

20.Where the funds for CFD will be deposited to?

All the monies and property deposited with Phillip Futures by the client or received by Phillip Futures for or on behalf of the client will be segregated and paid into the client’s segregated account for the purpose of CFD.

 

21.Any SST for CFD trading?

Yes, our fees and charges are subjected to SST.

 

22.What are the good reasons for you trade CFD with PFSB?

 

23.What are the good reasons for you to trade CFD over margin financing?

Open an Account

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