The Australian Stock Exchange (ASX) has recently listed ASX CFDs for equities, indices, currencies and commodities.
These CFDs are identical to the CFDs issued by other CFD providers in the market, but there are a few differences in the way they trade.
How to Trade Contracts For Difference Issued by the ASX ASX CFDs are traded through a broker approved by the ASX to trade these derivatives.
All orders are placed into a centralised order book which is operated on a similar basis to the share order book.
Orders are filled in a centralised order book strictly on a price and time basis, where the first order in at a set price gets priority over any later order that is placed.
Because the ASX provides a central market place and standardises the contracts it is possible to buy an ASX CFD through one broker and sell it through another broker.
This is not possible when you use other providers as all positions opened with one provider must be closed with the same provider.
Guaranteed In addition to this all ASX CFDs are guaranteed by the ASX and their guarantee fund, so in the event of a default by the broker they still retain their value.
In the event of a default of another provider there is no guarantee that a client will receive their money back, though ASIC does require that all client money is held separately to the funds of the CFD provider.
The ASX also offers an exchange for physical program where CFDs issued by the ASX can be exchanged for the underlying share.
This transaction can be completed by the CFD broker as an off market transfer at identical pricing.
It is not possible to exchange Contracts for Difference directly for shares when using other CFD providers.
Drawbacks One of the main drawbacks with CFDs issued by the ASX, like other exchange traded products, is the lack of liquidity.
The independent CFD Providers or over the counter (OTC) providers ensure that liquidity is readily available so trades are executed when required.
The other mechanics of ASX CFDs are very similar to Contracts for Difference issued by other providers.
These CFDs are identical to the CFDs issued by other CFD providers in the market, but there are a few differences in the way they trade.
How to Trade Contracts For Difference Issued by the ASX ASX CFDs are traded through a broker approved by the ASX to trade these derivatives.
All orders are placed into a centralised order book which is operated on a similar basis to the share order book.
Orders are filled in a centralised order book strictly on a price and time basis, where the first order in at a set price gets priority over any later order that is placed.
Because the ASX provides a central market place and standardises the contracts it is possible to buy an ASX CFD through one broker and sell it through another broker.
This is not possible when you use other providers as all positions opened with one provider must be closed with the same provider.
Guaranteed In addition to this all ASX CFDs are guaranteed by the ASX and their guarantee fund, so in the event of a default by the broker they still retain their value.
In the event of a default of another provider there is no guarantee that a client will receive their money back, though ASIC does require that all client money is held separately to the funds of the CFD provider.
The ASX also offers an exchange for physical program where CFDs issued by the ASX can be exchanged for the underlying share.
This transaction can be completed by the CFD broker as an off market transfer at identical pricing.
It is not possible to exchange Contracts for Difference directly for shares when using other CFD providers.
Drawbacks One of the main drawbacks with CFDs issued by the ASX, like other exchange traded products, is the lack of liquidity.
The independent CFD Providers or over the counter (OTC) providers ensure that liquidity is readily available so trades are executed when required.
The other mechanics of ASX CFDs are very similar to Contracts for Difference issued by other providers.
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