14 October 2005
Macquarie Bank today announced the launch of Contract for Difference (CFD) trading, a new alternative to share trading.
CFDs offer the ability to trade on a leveraged basis with only a small percentage of the share value required as collateral to secure either a long or short exposure to the underlying share. CFDs give investors the opportunity to exploit trading opportunities from both rising and falling share prices without actually owning the relevant securities.
Dan Semmler of Macquarie CFDs, said "We are very excited to be the first investment bank to offer this innovative product to the Australian market."
Macquarie's custom-built online trading platform offers direct access to live CFD prices and liquidity identical to the underlying share market as well as providing a straight-through execution capability and real-time position and order monitoring. Macquarie CFDs are currently offered in relation to securities in the S&P/ASX 300 index.
Macquarie CFDs offer an 'all in one' trading solution that should appeal to experienced traders who wish to gain a greater exposure to both rising and falling movements in share prices.
One of the unique features that distinguishes Macquarie's CFD product is optional Guaranteed Stop Loss (GSL) protection. Macquarie's GSLs, which can be placed online, offer the ability to protect a long or short CFD position from unexpected adverse share price movements.
Mr Semmler said "Guaranteed Stop-Loss protection acts to reduce the risk associated with a CFD position and reduces the maximum potential loss whilst retaining all of the profit potential. With Macquarie CFDs the initial collateral required for a CFD position can be reduced to as little as 1 per cent of the share value where GSL protection is utilised".
Macquarie has entered the CFD market to expand and complement its existing product range and to satisfy the increasing demand from investors looking to trade this exciting new product with the backing of Australia's largest investment bank. According to Mr. Semmler, the simple and transparent structure and the fact that client CFD accounts have bank deposit security has also contributed to the strong interest in Macquarie&'s CFD offering.
According to Mr. Semmler, traders are also attracted to Macquarie CFDs "Direct Market Access" model. Under this model, Macquarie hedges all CFDs directly into the underlying share market and as such CFD clients receive actual market prices, he said.
CFDs have been extremely popular in some offshore markets, in particular the UK where CFD related trading accounts for a large proportion of daily turnover on the London Stock Exchange.
For further information, please contact:
Macquarie Equity Markets Group
Tel: (612) 8232 8535
Macquarie Bank Limited
Tel: (612) 8232 3294
This information contains a brief description only of certain features of the Macquarie CFD Accounts and CFDs. Full details are set out in the Product Disclosure Statement ("PDS") issued by Macquarie Bank Limited ABN 46 008 583 542 ("Macquarie") dated 8 November 2004, as supplemented. You can contact Macquarie on 1800 187 434. This general advice has been prepared by Macquarie and does not take into account investors' personal objectives, financial situation or needs. Before acting on this advice, investors should consider its appropriateness based on their personal circumstances. In deciding whether to open a CFD Account and engage in CFD trading, investors should obtain the CFD PDS from www.macquarie.com.au, and consider its content. To open a CFD Account, you must complete the application form attached to the PDS.
Macquarie or its associates, officers or employees may have interests in CFDs or Reference Securities by acting in various roles and may receive fees, brokerage or commissions. Further, Macquarie or its associates, officers or employees may buy or sell the Reference Securities as principal or agent and may effect transactions which are not consistent with any recommendations above.
Investments in CFDs are subject to significant investment risk, including possible delays in repayment and loss of income and capital invested. None of Macquarie Bank Limited ("Macquarie") or any member of the Macquarie group of companies guarantees the performance, return of capital from or any particular rate of return of a CFD or CFD Account. Investment products are always subject to investment risk. Investors should not invest in CFDs unless they are experienced in equity derivatives and understand and are comfortable with the risks of investing in CFDs. We recommend obtaining professional advice before investing. Investors may lose more than the amount of funds in their CFD Account.
The information is current as at 14 October 2005 and subject to change without notice.