A Contract for Difference (CfD) enables an investor to take leveraged positions in global securities including futures and options, indices and interest rates. The ability to go both long and short allows the investor flexibility in his trading strategy. KSF is the issuer of the CfD and the client has the economic exposure to the movements in the underlying security. The investor receives many of the benefits of normal cash equity share ownership, such as price performance, corporate actions and dividends; however the client does not normally receive any voting rights.

The KSF CfD Desk is aimed at the professional investor looking for the leverage and flexibility of margin trading together with the full services and balance sheet of Kaupthing Singer & Friedlander and Kaupthing Bank.

The Desk is part of the Capital Markets department, an institutional broking business, and has the support of its highly experienced team of market makers, salesman, traders, analysts and corporate finance.

The Client is not required to pay the full consideration of the trade but instead deposits a percentage of the consideration with KSF, which is the margin. This margin typically ranges between 10% and 30% depending on a number of factors including the liquidity of the stock, size of the position, and the diversity of the client’s portfolio held with KSF - this margin level must be maintained at all times. CfDs are considered a high-risk derivative product where returns on an investment can be dramatically high or low.

Other advantages of CfD trading include stamp duty exemption in the UK, increased trading flexibility, and access to international markets through one account. They can be used as a hedging tool, therefore reducing an overall portfolio risk.

CfDs can be used as a means of capital release. Fully paid for equity shares can be converted by a separate transaction to a CfD in order to release a maximum of 90% of the value of the equity portfolio.

The pricing of a CfD trade is transparent. The stock is bought / sold in the market at the same price as the underlying instrument. The client is charged commission on the purchase / sale and daily interest on the total position value and will receive interest on his Free Equity. For larger strategic positions KSF can structure tailor made solutions.

More Information

• CfD Brochure
   Contracts for Difference Services 2008

To discuss how we can best meet your needs, please contact:

• Adam Zucker
  Head of High Net Worth Sales
  Tel: +44 (0) 20 3205 7537

Remember CfDs are a leveraged product that requires the deposit of a small percentage of the total trade value.  As the financial outcome is determined by price movements on the total trade value this can result in losses that exceed your initial deposit. Trading CfDs may not be suitable for everyone, so please ensure that you fully understand the risks involved and if necessary seek the advice of an Independent Financial Advisor.