The following article is intended to provide a general introduction to share-based Contracts for Differences (CFDs) issued by IB.
For Information on IB Index CFDs please see IB Index CFDs - Facts and Q&A.
Topics covered are as follows:
I. CFD Definition
II. Comparison Between CFDs and Underlying Shares
III. Cost and Margin Considerations
IV. Worked Example
V. CFD Resources
VI. Frequently Asked Questions
I. Share CFD Definition
IB CFDs are OTC contracts which deliver the return of the underlying stock, including dividends and corporate actions (read more about CFD corporate actions).
Said differently, it is an agreement between the buyer (you) and IB to exchange the difference in the current value of a share, and its value at a future time. If you hold a long position and the difference is positive, IB pays you. If it is negative, you pay IB. The CFD contract is marked to market daily with gains/losses settled into your account in cash in the form of variation margin.
IB Share CFDs are traded through your margin account, and you can therefore enter long as well as short leveraged positions. The price of the CFD is the exchange-quoted price of the underlying share. In fact, IB CFD quotes are identical to the Smart-routed quotes for shares that you can observe in the Trader Work Station and IB offers Direct Market Access (DMA). Similar to shares, your non-marketable (i.e., limit) orders have the underlying hedge directly represented on the deep book of those exchanges at which it trades. This also means that you can place orders to buy the CFD at the underlying bid and sell at the offer.
To compare IB’s transparent CFD model to others available in the market please see our Overview of CFD Market Models.
IB currently offers approximately 3800 Share CFDs covering the principal markets in the US, Europe and Asia. The constituents of the major indexes listed below are currently available as IB Share CFDs. In many countries IB also offers trading in liquid small cap shares. These are shares with free float adjusted market capitalization of at least USD 250 million and median daily trading value of at least USD 300 thousand. Please see CFD Product Listings for more detail. More countries will be added in the near future.
|United States||S&P 500, DJA, Nasdaq 100, S&P 400 (Mid Cap), Non-Index Mid Cap|
|United Kingdom||FTSE 350 + Liquid Small Cap (incl. IOB)|
|Germany||Dax, MDax, TecDax + Liquid Small Cap|
|Switzerland||Swiss portion of STOXX Europe 600 (48 shares)|
|France||CAC Large Cap, CAC Mid Cap + Liquid Small Cap|
|Netherlands||AEX, AMS Mid Cap + Liquid Small Cap|
|Belgium||BEL 20, BEL Mid Cap + Liquid Small Cap|
|Sweden||OMX Stockholm 30|
|Finland||OMX Helsinki 25|
|Denmark||OMX Copenhagen 30|
*not available to Singapore residents
II. Comparison Between CFDs and Underlying Shares
BENEFITS of IB CFDs
DRAWBACKS of IB CFDs
No stamp duty or financial transaction tax (UK, France, Belgium)
No ownership rights
Generally lower commission and margin rates than shares
Complex corporate actions may not always be exactly replicable
Tax treaty rates for dividends without need for reclaim
Taxation of gains may differ from shares (please consult your tax advisor)
Exemption from day trading rules
III. Cost and Margin Considerations
IB CFDs can be an even more efficient way to trade the European stock markets than IB’s highly competitive stock offering.
Firstly, IB CFDs have low commissions compared to stocks, and the same low financing spreads:
GBP 6.00 + 0.05%*
*per order + 0.05% of excess over GBP 50,000
**CFD financing on total position value, stock financing on borrowed amount
When you trade more, CFD commissions become even lower, as low as 0.02%. Financing rates are reduced for larger positions, to as low as 0.5%. Please see CFD Commissions and CFD Financing Rates for more details.
Secondly, CFDs have lower margin requirements than stocks. This is because for CFDs we can apply a risk based margin rather than the regulatory formulas we must apply to stocks:
25% - 50%
*Typical margin for blue-chips. Standard 25% intraday maintenance margin, 50% overnight. Portfolio Margin shown is maintenance margin (incl. overnight). More volatile issues are subject to higher requirements
Please refer to CFD Margin Requirements for more detail.
IV. Worked Example
Let’s look at an example. Unilever’s Amsterdam listing has returned 3.2% in the past month (20 trading days to May 14th, 2012) and you believe it will continue to perform well. You want to build a EUR 200,000 exposure and hold it for 5 days. You do 10 trades to build up and 10 trades to unwind. Your direct costs would be as follows:
EUR 200,000 Position
Commission (round trip)
Total Direct Cost
Note: Interest expense for CFDs is calculated on the entire contract position, for shares interest is calculated on the borrowed amount. The applicable rates are the same for both shares and CFDs.
But let’s assume you only have EUR 20,000 available to fund the margin. If Royal Dutch Shell continues to perform as it has in the past month, your potential profit would compare as follows:
*past month's (to May 14th, 2012) average daily return over 5 days
Please keep in mind that leverage works both ways, and you can potentially lose more with CFDs than with higher margin stocks, including more than your initial investment.
V. CFD Resources
Below are some useful links with more detailed information on IB’s CFD offering:
The following video tutorials are also available:
VI. Frequently Asked Questions
What Stocks are available as CFDs?
Large and Mid-Cap stocks in the US, Western Europe, Nordic and Japan. Liquid Small Cap stocks are also available in many markets. Please see CFD Product Listings for more detail. More countries will be added in the near future.
Do you have CFDs on Stock Indices?
Yes. Please see IB Index CFDs - Facts and Q&A.
How do you determine your Share CFD quotes?
IB CFD quotes are identical to the Smart routed quotes for the underlying share. IB does not widen the spread or hold positions against you. To learn more please go to Overview of CFD Market Models.
Can I see my limit orders reflected on the exchange?
Yes. IB offers Direct market Access (DMA) whereby your non-marketable (i.e., limit) orders have the underlying hedge directly represented on the deep book of those exchanges at which it trades. This also means that you can place orders to buy the CFD at the underlying bid and sell at the offer.
How do you determine margins for Share CFDs?
IB establishes risk-based margin requirements based on the historical volatility of each underlying share. The minimum margin is 10%. Most IB CFDs are margined at this rate, making CFDs more margin-efficient than trading the underlying share in most cases. There are however no portfolio off-sets between individual CFD positions or between CFDs and exposures to the underlying share. Very large positions may be subject to additional margin. Please refer to CFD Margin Requirements for more detail.
Are short Share CFDs subject to forced buy-in?
Yes. In the event the underlying stock becomes difficult or impossible to borrow, the holder of the short CFD position will become subject to buy-in.
How do you handle dividends and corporate actions?
IB will generally reflect the economic effect of the corporate action for CFD holders as if they had been holding the underlying security*. Dividends are reflected as cash adjustments, while other actions may be reflected through either cash or position adjustments, or both. For example, where the corporate action results in a change of the number of shares (e.g. stock-split, reverse stock split), the number of CFDs will be adjusted accordingly. Where the action results in a new entity with listed shares, and IB decides to offer these as CFDs, then new long or short positions will be created in the appropriate amount. For an overview please CFD Corporate Actions.
*Please note that in some cases it may not be possible to accurately adjust the CFD for a complex corporate action such as some mergers. In these cases IB may terminate the CFD prior to the ex-date.
Can anyone trade IB CFDs?
All clients can trade IB CFDs, except residents of the USA, Canada, Hong Kong and Australia. Singapore residents can trade IB CFDs except those based on shares listed in Singapore. There are no exemptions based on investor type to the residency based exclusions. More details are available in CFD Trading Access.
What do I need to do to start trading CFDs with IB?
You need to set up trading permission for CFDs in Account Management, and agree to the relevant trading disclosures. IB will then set up a new account segment (identified with your existing account number plus the suffix “F”). Once the set-up is confirmed you can begin to trade. You do not need to fund the F-account separately, funds will be automatically transferred to meet CFD margin requirements from your main account. For detailed instructions please see CFD Trading Access and How to Request Trading Permissions for IB CFDs (video).
Are there any market data requirements?
The market data for IB Share CFDs is the market data for the underlying shares. It is therefore necessary to have market data permissions for the relevant exchanges. If you already have set up market data permissions for an exchange for trading the shares, you do not need to do anything. If you want to trade CFDs on an exchange for which you do not currently have market data permissions, you can set up the permissions in the same way as you would if you planned to trade the underlying shares.
How are my CFD trades and positions reflected in my statements?
Your CFD positions are held in a separate account segment identified by your primary account number with the suffix “F”. You can choose to view Activity Statements for the F-segment either separately or consolidated with your main account. You can make the choice in the statement window in Account Management.
Can I transfer in CFD positions from another broker?
IB will be glad to facilitate the transfer of CFD positions, subject to the agreement of the other broker. As the transfer of CFD positions is more complex than is the case for share positions, we generally require the position to be at least the equivalent of USD 100,000.
Are charts available for Share CFDs?
What account protections apply when trading CFDs with IB?
CFDs are contracts with IB UK as your counterparty, and are not traded on a regulated exchange and are not cleared on a central clearinghouse. Since IB UK is the counterparty to your CFD trades, you are exposed to the financial and business risks, including credit risk, associated with dealing with IB UK. Please note however that all client funds are always fully segregated, including for institutional clients. IB UK is a participant in the UK Financial Services Compensation Scheme ("FSCS"). IB UK is not a member of the U.S. Securities Investor Protection Corporation (“SIPC”).Please refer to the IB UK CFD Risk Disclosure for further detail on risks associated with trading CFDs.
In what type of IB accounts can I trade CFDs e.g., Individual, Friends and Family, Institutional, etc.?
All margin accounts are eligible for CFD trading. Cash or SIPP accounts are not.
What are the maximum a positions I can have in a specific CFD?
There is no pre-set limit. Bear in mind however that very large positions may be subject to increased margin requirements. Please refer to CFD Margin Requirements for more detail.
Can I trade CFDs over the phone?
No. In exceptional cases we may agree to process closing orders over the phone, but never opening orders.
These regulations further require that all securities transactions be effected and margined in the securities segment of the Universal account and commodities transactions in the commodities segment.1 While the regulations allow for the custody of fully-paid securities positions in the commodities segment as margin collateral, IB does not do so, thereby limiting their hypothecation to the more restrictive rules of the SEC. Given the regulations and policies which direct the decision to hold positions in one segment vs. the other, cash remains the only asset eligible to be transferred between the two and for which customer discretion is provided.
Outlined below is a discussion as to the cash sweep options offered, the process for selecting an option as well as selection considerations.
You may then select the radio button alongside the option of your choice and select the Continue button. Your choice will take effect as of the next business day and will remain in effect until a different option has been selected. Note that subject to the trading permission settings noted above, there is no restriction upon when or how often you may change your sweep method.
Unless an account holds solely long stock, bond, option or forex positions which have been paid for in full (i.e., no margin) and/or contains limited risk derivative positions such as option spreads, it is at risk of losing more than the original investment.
In the case of portfolios where the risk is indeterminable, there is no mechanism whereby the account holder can specify, at the portfolio level, a maximum dollar threshold of losses which, if reached, would limit their liability. IB does, however, provide a variety of tools and settings designed to assist account holders with managing and monitoring their exposure, including specialized order types, alerts and the Risk Navigator. A brief overview of each is provided below:
Account holders may manage exposure on an individual trade level through several order types designed to limit risk. These order types include, but are not limited to: Stop, Adjustable Stop, Stop Limit, Trailing Stop and Trailing Stop Limit Orders. All of these order types allow you to specify an exit level for your individual positions based on your risk tolerance. For example, an account holder long 200 shares of hypothetical stock XYZ at an average price of $20.00 seeking to limit their loss to $500.00 could create a Stop Limit order having a Stop Price of $18.00 (the price at which a limit sell order is triggered) and a Limit Price of $17.50 (the lowest price at which the shares would be sold). It's important to note, however, that while a Stop Limit eliminates the price risk associated with a Stop order where the execution price is not guaranteed, it exposes the account holder to the risk that the order may never be filled even if the Stop Price is reached. For instructions on creating a Stop Limit order, click here.
Alerts provide account holders the ability to specify events or conditions which, if met, trigger an action. The conditions can be based on time, trades that occur in the account, price levels, trade volume, or a margin cushion. For example, if the account holder wanted to be notified if their account was nearing a margin deficiency and forced liquidation, an alert could be set up to send an email if the margin cushion fell to some desired percentage, say 10% of equity. The action may consist of an email or text notification or the triggering of a risk reducing trade. For instructions on creating an Alert, click here.
The Risk Navigator is a real-time market risk management platform contained within the TraderWorkstation, which provides the account holder with the ability to create 'what-if' scenarios to measure exposure given user-defined changes to positions, prices, date and volatility variables which may impact their risk profile. For information on using an Risk Navigator, click here.
As a result of elevated risk concerns, the list of stocks below are subject to an increased 'house' margin requirement of 100% (i.e. no loan value). Note that this list may be subject to periodic updates.
|ISSUER NAME||SYMBOL||PRIMARY LISTING EXCHANGE|
|AAA ENERGY INC||AAV||FWB|
|ABRA MINING LTD||AII||ASX|
|ACORN INTERNATIONAL INC-ADR||ATV||NYSE|
|ACTIONS SEMICONDUCTOR CO-ADR||ACTS||NASDAQ|
|AGRIA CORP - ADR||GRO||NYSE|
|AIRMEDIA GROUP INC-ADR||AMCN||NASDAQ|
|AIRTAC INTERNATIONAL GROUP||1590||TAI|
|AMBOW EDUCATION HOLDING-ADR||AMBO||NYSE|
|ANDATEE CHINA MARINE FUEL SE||AF0||SWB|
|ANDATEE CHINA MARINE FUEL SE||AMCF||NASDAQ|
|APOLLO SOLAR ENERGY INC||FXA||SWB|
|A-POWER ENERGY GENERATION||APWR||NASDAQ|
|A-POWER ENERGY GENERATION||4OS||FWB|
|BCD SEMICONDUCTOR MANUFA-ADR||BCDS||NASDAQ|
|BIOSTAR PHARMACEUTICALS INC||7BN||SWB|
|BIOSTAR PHARMACEUTICALS INC||BSPM||NASDAQ|
|BITAUTO HOLDINGS LTD-ADR||BITA||NYSE|
|BODISEN BIOTECH INC||DZ9||FWB|
|BOHAI PHARMACEUTICALS GROUP||3B2||SWB|
|BONA FILM GROUP LTD-SPON ADR||BONA||NASDAQ|
|BOYUAN CONSTRUCTION GROUP IN||BOY||TSE|
|CAMELOT INFORMATION SYS-ADS||CIS||NYSE|
|CHARM COMMUNICATIONS INC-ADR||CHRM||NASDAQ|
|CHEMSPEC INTL LTD - ADR||CPC||NYSE|
|CHINA 3C GROUP||GXS||SWB|
|CHINA BAK BATTERY INC||B6J||FWB|
|CHINA BAK BATTERY INC||CBAK||NASDAQ|
|CHINA CABLECOM HOLDINGS LTD||CCUN||IBIS|
|CHINA CABLECOM HOLDINGS LTD||CABL||NASDAQ|
|CHINA CENTURY DRAGON MEDIA I||ZDR||SWB|
|CHINA CERAMICS CO LTD||CCCLU||NASDAQ|
|CHINA CERAMICS CO LTD||C9E||SWB|
|CHINA CGAME INC||CA6N||IBIS|
|CHINA CGAME INC||CCGM||NASDAQ|
|CHINA DASHENG BIOTECHNOLOGY||16D||FWB|
|CHINA DIGITAL TV HOLDING-ADR||STV||NYSE|
|CHINA DISTANCE EDUCATION-ADR||DL||NYSE|
|CHINA ENERGY CORP||ZCE||SWB|
|CHINA ENERGY RECOVERY INC||CNI||FWB|
|CHINA FINANCE ONLINE CO-ADR||JRJC||NASDAQ|
|CHINA GENGSHENG MINERALS INC||CGS||FWB|
|CHINA GRENTECH CORP LTD-ADR||GRRF||NASDAQ|
|CHINA INDUSTRIAL WASTE MANAG||GD9||TIQSSWB|
|CHINA KANGTAI CACTUS BIO-TEC||IWN1||FWB|
|CHINA LINEN TEXTILE INDUSTRY||C60||SWB|
|CHINA MASS MEDIA CORP-ADR||CMM||NYSE|
|CHINA MEDICAL TECH-SPON ADR||CMED||NASDAQ|
|CHINA MEDICINE CORP||XM2||SWB|
|CHINA NEPSTAR CHAIN DRUG-ADR||NPD||NYSE|
|CHINA NUOKANG BIO-PH-SP ADR||NKBP||NASDAQ|
|CHINA ORGANIC AGRICULTURE IN||4CA||FWB|
|CHINA POWER EQUIPMENT INC||5XP||TIQSSWB|
|CHINA REDSTONE GROUP INC||RS0||SWB|
|CHINA RITAR POWER CORP||YXC||SWB|
|CHINA RUNJI CEMENT INC||WRJ||SWB|
|CHINA SHENGDA PACKAGING GROU||0CH||FWB|
|CHINA SHENGDA PACKAGING GROU||CPGI||NASDAQ|
|CHINA SHENGHUO PHARMACEUTICA||54C||IBIS|
|CHINA SHENGHUO PHARMACEUTICA||KUN||AMEX|
|CHINA SHUANGJI CEMENT LTD||C99N||FWB|
|CHINA SOLAR & CLEAN ENERGY S||NCS2||FWB|
|CHINA SUN GROUP HIGH-TECH CO||BP7||FWB|
|CHINA SUNERGY CO LTD-ADR||CSUN||NASDAQ|
|CHINA TECHFAITH WIRELESS-ADR||CNTF||NASDAQ|
|CHINA TMK BATTERY SYSTEMS IN||T35||SWB|
|CHINA WATER GROUP INC||DI1||FWB|
|CHINA XD PLASTICS CO LTD||02Y||FWB|
|CHINA XINIYA FASHIO-SPON ADR||XNY||NYSE|
|CHINA ZENIX AUTO INTERNA-ADR||ZX||NYSE|
|CHINACACHE INTERNAT-SPON ADR||CCIH||NASDAQ|
|CLEANTECH SOLUTIONS INTERNAT||CLNT||NASDAQ|
|CLEANTECH SOLUTIONS INTERNAT||CWZN||FWB|
|CONCORD MEDICAL - SPON ADR||CCM||NYSE|
|COUNTRY STYLE COOKI-SPON ADR||CCSC||NYSE|
|DAQO NEW ENERGY CORP-ADR||DQ||NYSE|
|DEHAIER MEDICAL SYSTEMS LTD||J8D||FWB|
|DEHAIER MEDICAL SYSTEMS LTD||DHRM||NASDAQ|
|DUOYUAN PRINTING INC||DPT||FWB|
|EASTERN ENVIRONMENT SOLUTION||V5E||SWB|
|E-COMMERCE CHINA-SPON ADR||DANG||NYSE|
|EFUTURE INFORMATION TECHNOLO||4EF||FWB|
|ELONG INC-SPONSORED ADR||LONG||NASDAQ|
|ETERNAL TECHNOLOGIES GROUP||ETO||FWB|
|FORLINK SOFTWARE CORP||YNO1||FWB|
|FUNTALK CHINA HOLDINGS LTD||FTLK||NASDAQ|
|FUQI INTERNATIONAL INC||3F6A||IBIS|
|FUWEI FILMS HOLDINGS CO LTD||F4B||IBIS|
|GC CHINA TURBINE CORP||7GC||SWB|
|GLG LIFE TECH CORPORATION||GLG||TSE|
|GLOBAL EDUCATION & TECH-ADR||GEDU||NASDAQ|
|GOLD HORSE INTERNATIONAL INC||0GH||SWB|
|GUSHAN ENVIRONMENTAL ENE-ADR||GU||NYSE|
|HANGFENG EVERGREEN INC||HF||TSE|
|HARTCOURT COMPANIES INC||HCT||SWB|
|HIGHPOWER INTERNATIONAL INC||HKN||SWB|
|HIGHPOWER INTERNATIONAL INC||HPJ||NASDAQ|
|HISOFT TECHNOLOGY INT-ADR||HSFT||NASDAQ|
|HOLLYSYS AUTOMATION TECHNOLO||46H||FWB|
|HOLLYSYS AUTOMATION TECHNOLO||HOLI||NASDAQ|
|IFM INVESTMENTS LTD-ADS||CTC||NYSE|
|JA SOLAR HOLDINGS CO LTD-ADR||JASO||NASDAQ|
|JADE ART GROUP INC||JAC||SWB|
|JINGWEI INTERNATIONAL LTD||WJI||SWB|
|JINKOSOLAR HOLDING CO-ADR||JKS||NYSE|
|JINPAN INTERNATIONAL LTD||3QN||FWB|
|JINPAN INTERNATIONAL LTD||JST||NASDAQ|
|KANDI TECHNOLOGIES CORP||K8A||FWB|
|KINGTONE WIRELESSINFO SO-ADR||KONE||NASDAQ|
|KU6 MEDIA CO LTD-SPN ADR||KUTV||NASDAQ|
|LDK SOLAR CO LTD -ADR||LDK||NYSE|
|LEGEND MEDIA INC||LM2||SWB|
|LENTUO INTERNATI-SPON ADS||LAS||NYSE|
|LIZHAN ENVIRONMENTAL CORP||LZEN||NASDAQ|
|MECOX LANE LTD-ADR||MCOX||NASDAQ|
|MINCO SILVER CORPORATION||MSV||TSE|
|MINDRAY MEDICAL INTL LTD-ADR||MR||NYSE|
|NETQIN MOBILE INC - ADR||NQ||NYSE|
|NEW DRAGON ASIA CORP||BQ4||IBIS|
|NOAH EDUCATION HOLDINGS-ADR||NED||NYSE|
|ORIGIN AGRITECH LTD||39O||SWB|
|ORIGIN AGRITECH LTD||SEED||NASDAQ|
|ORSUS XELENT TECHNOLOGIES IN||O5X||FWB|
|ORSUS XELENT TECHNOLOGIES IN||ORS||AMEX|
|OSSEN INNOVATION CO-SPON ADR||OSN||NASDAQ|
|PHOENIX NEW MEDIA LTD -ADS||FENG||NYSE|
|PRIME ACQUISITION CORP||PACQ||NASDAQ|
|PRIME ACQUISITION CORP||PACQU||NASDAQ|
|QIAO XING MOBILE COMMUNICATI||F2A||IBIS|
|QIAO XING MOBILE COMMUNICATI||QXM||NYSE|
|QIAO XING UNIVERSAL RESOURCE||QXU||FWB|
|QIAO XING UNIVERSAL RESOURCE||NASDAQ|
|RDA MICROELECTRON-SPON ADR||RDA||NASDAQ|
|RECON TECHNOLOGY LTD||HRC||FWB|
|RECON TECHNOLOGY LTD||RCON||NASDAQ|
|SANCON RESOURCES RECOVERY IN||FTVA||SWB|
|SEARCHMEDIA HOLDINGS LTD||IDI||AMEX|
|SEARCHMEDIA HOLDINGS LTD-UTS||IDI U||AMEX|
|SGOCO GROUP LTD||SGOC||NASDAQ|
|SHENGTAI PHARMACEUTICAL INC||ESZ||SWB|
|SINO GAS & ENERGY HOLDINGS L||SEH||ASX|
|SINO GAS INTERNATIONAL HOLDI||QGS||SWB|
|SINOTECH ENERGY LTD-SPON ADR||CTE||NASDAQ|
|SINOVAC BIOTECH LTD||SVQ||FWB|
|SINOVAC BIOTECH LTD||SVA||NASDAQ|
|SKY DIGITAL STORES CORP||YN3||FWB|
|SKY-MOBI LTD-SP ADR||MOBI||NASDAQ|
|SUNTECH POWER HOLDINGS-ADR||STP||NYSE|
|SYSWIN INC-SPON ADS||SYSW||NYSE|
|TAL EDUCATION GROUP- ADR||XRS||NYSE|
|TAOMEE HOLDINGS LTD-SP ADR||TAOM||NYSE|
|TELESTONE TECHNOLOGIES CORP||MSOA||FWB|
|TIANLI AGRITECH INC||7TA||FWB|
|TIANLI AGRITECH INC||OINK||NASDAQ|
|TIBET PHARMACEUTICALS INC||TXP||SWB|
|TIBET PHARMACEUTICALS INC||TBET||NASDAQ|
|TRINA SOLAR LTD-SPON ADR||TSL||NYSE|
|TRI-TECH HOLDING INC||TTW||FWB|
|TRI-TECH HOLDING INC||TRIT||NASDAQ|
|TRUNKBOW INTERNATIONAL HOLDI||TBJ||IBIS|
|TRUNKBOW INTERNATIONAL HOLDI||TBOW||NASDAQ|
|U.S. CHINA MINING GROUP INC||RJ2B||SWB|
|VIMICRO INTERNATIONAL CO-ADR||VIMC||NASDAQ|
|VISIONCHINA MEDIA INC-ADR||VISN||NASDAQ|
|WSP HOLDINGS LTD-ADR||WH||NYSE|
|XINHUA CHINA LTD||X5R||IBIS|
|XINYINHAI TECHNOLOGY LTD||3XI||SWB|
|XINYUAN REAL ESTATE CO L-ADR||XIN||NYSE|
|YAYI INTERNATIONAL INC||8YJ||SWB|
|YINGLI GREEN ENERGY HOLD-ADR||YGE||NYSE|
|YOUKU.COM INC-SPON ADR||YOKU||NYSE|
|YUCHENG TECHNOLOGIES LTD||YCT||SWB|
|YUCHENG TECHNOLOGIES LTD||YTEC||NASDAQ|
|ZHENG HE GLOBAL CAPITAL LTD||ZHE||ASX|
|ZOOM TECHNOLOGIES INC||ZT2A||FWB|
|ZUOAN FASHION LTD-SPON ADR||ZA||NYSE|
|ABV||ADVANCED BATTERY TECHNOLOGIE|
|ABAT||Advanced Battery Technology|
|4AG||AGFEED INDUSTRIES INC|
|A50||AMERICAN LORAIN CORP|
|RXZ||AMERICAN ORIENTAL BIOENGINEE|
|AOB||American Oriental Bioengineering|
|5CA||AOXING PHARMACEUTICAL CO INC|
|AUTC||Autochina International LTD|
|V39||CHINA ADVANCED CONSTRUCTION MA|
|4CN1||CHINA AGRITECH INC|
|CNAM||China Armco Metals|
|CNAM||China Armco Metals|
|X7C||CHINA ARMCO METALS INC|
|CAAS||China Automotive Systems|
|RYV||CHINA AUTOMOTIVE SYSTEMS INC|
|CBPO||China Biologic Products|
|0CB||CHINA BIOLOGIC PRODUCTS INC|
|CBP||China Botanic Pharmaceutical|
|ENF2||CHINA BOTANIC PHARMACEUTICAL I|
|CDM||China Century Dragon Media|
|CCCL||China Ceramics Co.|
|CDII||China Direct Industries|
|CH4A||CHINA DIRECT INDUSTRIES INC|
|CEU||China Education Alliance|
|FCPA||CHINA EDUCATION ALLIANCE INC|
|FCPA||CHINA EDUCATION ALLIANCE INC|
|ZTE||CHINA ELECTRIC MOTOR INC|
|CELM||China Electric Motors|
|CFSG||China Fire & Security|
|CFG||CHINA FIRE & SECURITY GROUP IN|
|CGA||China Green Agcriculture Inc|
|GR0||CHINA GREEN AGRICULTURE INC|
|HGSH||China HGS Real Estate|
|CHLN||China Housing & Land Dev|
|4CL||CHINA HOUSING & LAND DEVELOPME|
|CNIT||China Information Technology|
|02C||CHINA INFORMATION TECHNOLOGY I|
|C74||CHINA INFRASTRUCTURE INVESTMEN|
|CBEH||China Integrated Energy|
|7C1||CHINA INTEGRATED ENERGYINC|
|CIL||China Intelligent Lighting|
|4I6||CHINA INTELLIGENT LIGHTING &|
|CJJD||China Jo-Jo Drugstores|
|CJJD||China Jo-Jo Drugstores|
|04CN||CHINA JO-JO DRUGSTORES INC|
|CMFO||China Marine Food|
|ZMF||CHINA MARINE FOOD GROUP LTD|
|6CE||CHINA MEDIAEXPRESS HOLDINGS IN|
|CCME||China MediaExpress Holdings Inc|
|CHNG||China Natural Gas|
|C7IN||CHINA NATURAL GAS INC|
|BORN||China New Borun|
|NEP||China North East Petroleum|
|53C||CHINA NORTH EAST PETROLEUM H|
|3NF||CHINA NUTRIFRUIT GROUP LTD|
|G60||CHINA OPPORTUNITY ACQUISITIO|
|CHOP||China Opportunity Acquisition|
|CPHI||China Pharma Holdings|
|XQJ||CHINA PHARMA HOLDINGS INC|
|CPSL||China Precision Steel|
|3CP||CHINA PRECISION STEEL INC|
|CREG||China Recycling Energy|
|CR9||CHINA RECYCLING ENERGY CORP|
|C7M||CHINA SECURITY & SURVEILLANC|
|CSR||China Security & Surveillance|
|SHZ||China Shen Zhou Mining|
|SZM||CHINA SHEN ZHOU MINING & RESOU|
|CSKI||China Sky One Medical|
|CH2||CHINA SKY ONE MEDICAL INC|
|CTFO||China TransInfo Technology|
|ITC||CHINA TRANSINFO TECHNOLOGY COR|
|CVVT||China Valves Technology|
|ICXN||CHINA VALVES TECHNOLOGY INC|
|CWS||China Wind Systems|
|CWZN||CHINA WIND SYSTEMS INC|
|CNYD||China Yida Holding|
|8CY||CHINA YIDA HOLDINGS CO|
|C5N||CHINANET ONLINE HOLDINGS INC|
|6TC||CLEANTECH INNOVATIONS INC|
|CTEK||CleanTech Innovations Inc|
|3QM||COGO GROUP INC|
|DEER||Deer Consumer Products|
|D11||DEER CONSUMER PRODUCTS INC|
|DGW||Duoyuan Global Water|
|4AD||FEIHE INTERNATIONAL INC|
|F4U||FUSHI COPPERWELD INC|
|FSIN||Fushi Copperweld Inc|
|GSI||General Steel Holdings|
|3GL||GENERAL STEEL HOLDINGS INC|
|7GF||GUANWEI RECYCLING CORP|
|R29A||GULF RESOURCES INC|
|X9O||HARBIN ELECTRIC INC|
|HQS||HQ Sustainable Maritime|
|QHP||HQ SUSTAINABLE MARITIME INDU|
|GNY1||JIANGBO PHARMACEUTICALS INC|
|7KJ||KINGOLD JEWELRY INC|
|7LM||L&L ENERGY INC|
|LLEN||L&L Energy Inc|
|J7L||LIHUA INTERNATIONAL INC|
|3LI||LONGWEI PETROLEUM INVESTMENT|
|IYM||LOTUS PHARMACEUTICALS INC|
|NEWN||New Energy Systems|
|C1KN||NEW ENERGY SYSTEMS GROUP|
|63NN||NF ENERGY SAVING CORP OF AMERI|
|NFEC||NF Energy Savings|
|N0I||NIVS INTELLIMEDIA TECHNOLOGY|
|NIV||NIVS IntelliMedia Technology|
|UOPN||ORIENT PAPER INC|
|P631||PUDA COAL INC|
|71Q||QKL STORES INC|
|R28||RINO INTERNATIONAL CORP|
|SKU||SHENGKAI INNOVATIONS INC|
|S80||SHINER INTERNATIONAL INC|
|SCEI||Sino Clean Energy|
|SVL||SINO CLEAN ENERGY INC|
|SPU||SkyPeople Fruit Juice|
|P9F||SKYPEOPLE FRUIT JUICE INC|
|SOKF||SOKO Fitness & Spa|
|3SK||SOKO FITNESS & SPA GROUP INC|
|SORL||SORL Auto Parts|
|A9S||SORL AUTO PARTS INC|
|5BF||SUTOR TECHONOLOGY GROUP LTD|
|ITO||SYNUTRA INTERNATIONAL INC|
|THTI||THT Heat Transfer Tech|
|60T||TIANYIN PHARMACEUTICAL CO INC|
|UTA||Universal Travel Group|
|VOA1||UNIVERSAL TRAVEL GROUP|
|WWIN||Winner Medical Group|
|3LW||WINNER MEDICAL GROUP INC|
|WATG||Wonder Auto Technology|
|WND||WONDER AUTO TECHNOLOGY INC|
|WUHN||Wuhan General Group|
|WG9||WUHAN GENERAL GROUP CHINA INC|
|2YB||YONGYE INTERNATIONAL INC|
|YI5||YUHE INTERNATIONAL INC|
|ZSTN||ZST Digital Networks|
|ZS8A||ZST DIGITAL NETWORKS INC|
Interactive Brokers currently offers the ability to short sell stocks before taking delivery on an intra-day basis. In accordance with IB’s intra-day shorting rules, traders are required to deliver shares sold or close short stock positions prior to the end of the trading session.
Should traders establish a short stock position intra-day and still hold the position ten minutes prior to the end of the trading session at 15:20 IST, Interactive Brokers may, on a best efforts basis, close the position on your behalf. If the position is not closed by the end of the day and the shares are not delivered by the customer before settlement, the loss on account of auction will be borne by the customer. Please note that prices in the auction market are highly variable and typically not favorable compared to the normal market.
It is important to note, IB will not take into consideration any closing orders for short stock positions placed by the customer which may still be working. If your account holds a short position ten minutes prior to the end of the trading session and you have placed working orders to close those positions, there is the possibility your closing order will execute and that IB will act to close out your short position. In this situation you will be responsible for both executions and will need to manage your long position accordingly.
A fee of INR 2,000 will be charged for this manual processing in addition to any external penalties in the case of short stock positions resulting in auction trades. As such, we strongly urge customers to monitor their positions and take appropriate action themselves in order to avoid this.
Below is a listing of some of the more commonly used margin terms:
Equity with Loan Value (ELV) – Forms the basis for determining whether a client has the necessary assets to either initiate or maintain security positions. Equals cash + stock value + bond value + mutual fund value + European and Asian options value (excludes market value U.S. securities & futures options and cash maintained in futures segment).
How to convert a currency if you wish to trade products in a currency other than the currency your account was initially funded in
For additional information on currency conversions please refer to the Knowledge base articles:
The particular regulation which determines the minimum amount of margin collateral that each broker is required to collect from clients transacting in U.S. exchange listed products generally depends upon the following 3 factors:
1. Product Classification - the principal determinant of regulatory oversight is based upon whether the product is classified as a security or commodity. Security products, including stocks, bonds, options and mutual funds are regulated by the Securities and Exchange Commission (SEC). Commodity products, which include futures contracts and options on futures contracts, are regulated by the Commodities Futures Trading Commission (CFTC). Single stock futures, a special class of futures contracts, are considered a hybrid product subject to joint regulation by the SEC and CFTC.
In the case of security products, the US central bank referred to as the Federal Reserve (FRB) holds responsibility for regulating the extension of credit by brokers and dealers. This is accomplished through Regulation T, or Reg T as it is commonly referred, which provides for establishment of a margin account and which imposes the initial margin requirement and payment rules on certain securities transactions. For example, on stock purchases, Reg T currently requires an initial margin deposit by the client equal to of 50% of the purchase value, allowing the broker to extend credit or finance the remaining 50%. Reg T does not establish margin requirements for securities options which fall under the jurisdiction of exchange rules (subject to SEC approval). In addition, the FRB has excluded from Reg T the authority to establish either initial or maintenance margin requirements on securities positions held in a portfolio margining account. here margin authority resides with the security exchanges whose rules are subject to SEC approval.
The authority for establishing margin rates on commodity products resides with the listing exchanges, with the exception of broad based stock index futures, for which the FRB has delegated authority to the CFTC.
In the case of single stock futures, margin is set by the listing exchange and subject to SEC approval to the extent the position is carried in a securities account, and subject to an agreement that the margin be equivalent whether held in a securities or commodities account. Margin for single stock futures are currently set at 20% of the underlying stock value.
2. Initial or Maintenance - initial margin generally refers to the amount of money or its equivalent that the customer must deposit in order to initiate the position and maintenance margin the amount of equity which must be maintained in order to continue holding the position. As noted above, Reg T controls the initial margin requirement on securities transactions. The rules of the listing exchanges specify the maintenance margin requirements on security transactions subject to SEC approval. The maintenance margin requirement for long stock positions is currently set at 25% although brokers often establish 'house margin' requirements in excess of that, particularly where the security is considered low-priced or subject to volatile price changes.
Commodities exchanges establish both the initial and maintenance margin requirements for products which they list (subject to provisions for broad based index futures and single stock futures as noted above).
3. Listing Exchange - as noted above, in the case of US securities products the listing exchange has the authority to establish rules for the maintenance margin requirement on positions held in a Reg T margin account and initial and maintenance margin (currently the same) for positions held in a portfolio margin account. Exchange margin rules, however, require prior SEC approval which acts to ensure that margin requirements are set in a consistent manner across exchanges.
Subject to the provisions noted above, commodities exchanges maintain authority to establish both initial and maintenance margin requirements. As a general rule, US commodities exchanges employ the same risk-based margining methodology referred to as SPAN for determining the margin requirement on listed positions with each exchange specifying the relevant SPAN input factors (e.g., Price Scan Range, Volatility Scan Range, Spread Charges, Combined Commodity offsets).
Leveraged Exchange Traded Funds (ETFs) are a subset of general ETFs and are intended to generate performance in multiples of that of the underlying index or benchmark (e.g. 200%, 300% or greater). In addition certain of these ETFs seek to a generate performance which is not only a multiple of but also the inverse of the underlying index or benchmark (e.g., a short ETF). To accomplish this, these leveraged funds typically include among their holdings derivative instruments such as options, futures or swaps which are intended to provide the desired leverage and/or inverse performance.
Exchange margin rules seek to recognize the additional leverage and risk associated with these instruments by establishing a margin rate which is commensurate with that level of leverage (but not to exceed 100% of the ETF value). Thus, for example, whereas the base strategy-based maintenance margin requirement for a non-leveraged long ETF is set at 25% and a short non-leveraged ETF at 30%, examples of the maintenance margin change for leveraged ETFs are as follows:
1. Long an ETF having a 200% leverage factor: 50% (= 2 x 25%)
2. Short an ETF having a 300% leverage factor: 90% (= 3 x 30%)
A similar scaling in margin is also in effect for options. For example, the Reg. T maintenance margin requirement for a non-leveraged, short broad based ETF index option is 100% of the option premium plus 15% of the ETF market value, less any out-of-the-money amount (to a minimum of 10% of ETF market value in the case of calls and 10% of the option strike price in the case of puts). In the case where the option underlying is a leveraged ETF, however, the 15% rate is increased by the leverage factor of the ETF.
In the case of portfolio margin accounts, the effect is similar, with the scan ranges by which the leveraged ETF positions are stress tested increasing by the ETF leverage factor. See NASD Rule 2520 and NYSE Rule 431 for further details.