Trading Products

There are no commission charges for trading CFDs. However, at the end of each trading day, open positions in your account will be subjected to a ‘holding cost’. The holding cost can be positive or negative depending on the direction of your position and the applicable holding rate. The applicable holding rate differs across various underlying assets, and is a function of:

• Overnight financing charge (Based on benchmark rates)
• Cost of Carry adjustments
• Dividends adjustments
• Mark ups
• Hard-to-borrow cost

Formula for overnight financing charge across CFDs = nights held x (Previous Day Closing Price of instrument* x Trade Size x (Relevant benchmark rate** +/- 3%) / 360

*Previous Day Closing Price is taken from Bloomberg

**Relevant benchmark rate is determined by the currency in which the underlying instrument is denominated in

Note: The formula uses a 365-day divisor for Singapore, Hong Kong, Japan, & UK markets. For other markets, a 360-day divisor is used in the formula.

As illustrated below, your net profit can increase when you trade CFD at zero commission.

Trader A buys DBS Shares CFD with Phillip Nova (that has a spread included in the prices, but does not charge any commissions). Trader B also buys DBS shares CFD at the same time from a conventional CFD provider. Both sold it an hour later. The table below shows how Trader A was able to save $10 more by trading CFDs on zero commission with Phillip Nova. View the table below to learn more:

Should you have any other query on zero commission CFD trading, you may contact the Client Service team at 6538 0500 or email to nova@phillip.com.sg.

CFDs allow you to speculate on the market movements of its underlying asset, without actually owning or taking physical delivery of the underlying asset. CFDs can also be used to hedge a portfolio’s value.

Benefits of trading CFDs include:

• Flexibility to Short
• Leverage
• No Expiry Date of Spot CFD Contracts*
• Transparent Pricing
• Ease of Trading

*Please refer to our full contract specifications here.

There are a number of risks involved in trading CFDs. Customers are advised to understand the nature and risks involved in margin and CFD trading before trading.

Some of the risks include:

Leverage Risk

As CFDs are traded on margin, gains and losses can be amplified. A relatively small market movement will have a proportionately larger impact on your equity balance. If the market moves against your position or if margin levels are increased, you may be called upon to pay additional funds on short notice in order to maintain your position (also known as a margin call*).

Liquidity Risk and Risk of trading suspension

CFDs are traded on an over‐the‐counter (OTC) basis, which are subject to the availability of buy and sell prices and volume. CFD traders may experience insufficient depth of market liquidity and a wide bid-offer spread when the underlying markets are experiencing volatility, off peak trading or are closed. As such, Phillip Nova does not offer CFD trading when the exchange for the underlying market is closed. As slippages can be expected when liquidity is thin, working orders may not be filled at the exact specified price. Hence, it is important that customers seek clarification and gain understanding on the nature of contracts they intend to trade.

Additionally, there may be instances where CFD trading is temporarily suspended for reasons such as,

• Severe market volatility in the underlying market where spreads are unfavourable

• Underlying market hits the limit up, or limit down, bands and trading is suspended

• Trading halts on the underlying, as announced by the associated exchange

• Negative pricing experienced on the underlying asset

Even when trading is suspended on the MT5 trading platform, liquidation may still happen to customer’s CFD positions should the Equity Balance fall below the stipulated force‐selling margin level (also known as the Close Out Level).

Additional Risks

Due to pricing errors from market makers, CFDs are subjected to having a stale price traded off the current fair values. In a “price discrepancy” situation, Phillip Nova reserves the right to amend the executed price in CFD to the price deemed to be fair by liquidity providers.

Market volatility

Financial markets may fluctuate rapidly and the prices of our products will reflect this. Gapping is a risk that arises as a result of market volatility. Gapping occurs when the prices of our products suddenly shift from one price to another, as a consequence of market volatility. You may not be able to place an order or the platform may not be able to execute an order between the two price levels. This could result in stop orders being executed at unfavourable prices, either higher or lower than what you may have anticipated, depending on the direction of your trade. Customers can limit the risk and impact of market volatility by applying an order boundary (i.e. stop-limit orders).

Risk of Shares Recall

To enable the customer to take a short position in Shares CFD, there may be a need to borrow the shares of the underlying to conduct a short hedge. Lenders of the shares have the right to recall anytime. In the event of a recall, the shares may have to be returned at short notice and the CFD provider might no longer be able to maintain the short hedge. This may result in the Phillip Nova force closing your short Share CFD positions immediately or at a short notice. In addition, where working short Share CFD orders have been accepted, Phillip Nova will be entitled to disregard or cancel those orders without liability as a result of such action.

Regulatory changes prohibiting short selling and share borrowing in specific shares or in the entire underlying market may also result in the broker force closing customers’ short positions in CFD.

Counterparty Risk

CFD is an over-the-counter (OTC) leveraged product traded on an off-exchange basis. However, CFD trading is regulated by the Monetary Authority of Singapore (MAS), and is maintained in high integrity in accordance to MAS regulations. The firm with which customers conduct their transactions (which may be Phillip Nova, or another firm, if Phillip Nova acts as your broker to effect a transaction with such firm) may be acting as counterparty to the transaction.

Please refer to the Risk Disclosure Statement on our website and our Product Information Sheet for more details on the risks involved in trading CFDs.

Note: *Please note that margin call is not applicable to MT5. MT5 will auto liquidate the positions when equity balance falls below the stipulated force-selling margin level (also known as the Close-out Level)

You will need to meet the Customer Knowledge Assessment (CKA) requirements and acknowledge the Risk Fact Sheet (RFS).

If you are an existing customer, but have not acknowledged the RFS, please click here.

You can trade Indices, Commodities, Cryptocurrencies, Shares and ETF CFD on the Phillip MetaTrader 5. For the full list of contracts available, please click here.

You can trade Indices, Shares and Cryptocurrencies CFD on Phillip Nova 2.0.

Our CFD bid-ask prices are derived from prices of the reference instrument quoted in the underlying exchange, market or liquidity provider. Therefore, the CFD prices will only be available if the underlying exchange or market is open or if there is sufficient liquidity.

Spreads may vary across different CFDs and across trading hours.  

Please see the examples below to understand how profit and loss of a CFD contract is calculated.

Profit and Loss (Commodity)

Assuming that you bought 1 CFD (contract size of 100 barrels) of UKOIL at USD70 per barrel, and

A) Sold 1 UKOIL CFD at USD73 subsequently. You will gain a profit of USD300. This can be calculated as (USD73 – USD70) x 100 barrels = USD300;

B) Sold 1 UKOIL CFD at USD65 subsequently. You will incur a loss of USD500. This can be calculated as (USD65 – USD70) x 100 barrels = -USD500.

Profit and Loss (Indices)

Assuming that you sold 1 CFD (contract size of 1 index share) of US30 at USD25,000, and

A) Bought 1 US30 CFD at USD24,000 subsequently. You will gain a profit of USD1,000. This can be calculated as (USD25,000 – USD24,000) x 1 CFD = USD1,000;

B) Bought 1 US30 CFD at USD25,100. You will incur a loss of USD100. This can be calculated as (USD25,000 – USD25,100) x 1 CFD = -USD100.

Profit and Loss (Shares)

Assuming that you bought 1 CFD (contract size of 1000 shares) of DBS-SGX at SGD19.16, and

A) Sold 1 DBS-SGX CFD at SGD20.55 subsequently. You will gain a profit of SGD1390. This can be calculated as (SGD20.55 – SGD19.16) x 1000 shares = SGD1390;

B) Sold 1 DBS-SGX CFD at SGD18.17 subsequently. You will incur a loss of SGD990. This can be calculated as (SGD18.17 – SGD19.16) x 1000 shares = -SGD990;

C) In the worst case scenario, the price of DBS-SGX CFD falls to zero and the underlying stock is delisted. You will incur a loss of the full contract value of SGD19,160. This can be calculated as (SGD19.16 – SGD0) x 1000 shares = -SGD19,160. You may also be liable for additional charges, costs and fees incurred.

Please refer to our CFD Product Information Sheet for more details.

CFD margins will be based on a percentage of the previous day settlement price.

For more details, please refer to our full contract specifications here.

There will not be partial fills on your orders for Spot CFDs. All limit orders for Spot CFDs are Fill or Kill (FoK).

In the event of severe market volatility, regulated central exchanges (for e.g. CME Group, SGX, etc.) may sometimes suspend trading on one side of the underlying market. These are called Limit Up or Limit Down, depending on the direction that the market has moved. These limits can also be referred to as Circuit Breakers. Both a Limit Up and a Limit Down are used to prevent certain assets reaching excessively high volatility levels.

As trading is suspended in the underlying market, CFD for the underlying instrument will also be suspended for trading on the MT5 trading platform.

Current Limit Up/Limit Down bands

The Limit Up and Limit Down thresholds are fixed by the exchange on which the assets trade, and are set for each asset. As such they are subject to change. For more information on a particular exchange’s thresholds and the latest threshold prices, you can look directly on the exchange’s website.

Dividend adjustments are to negate the impact of the drop in an index price due to dividend pay-outs from its underlying component stocks when they go ex-dividend. All things remain equal, the price of an index price will fall by the total value of the dividend amount issued by its component stocks.

If you are holding a long position to an ex-dividend date, you will be credited the dividend adjustment. If you are holding a short position to an ex-dividend date, you will be debited the dividend adjustment.

Dividend adjustments are presented as a component of the holding costs. The amount applicable is computed, along with financing charges, into the “swap” field of the MT5 trading platform.

Please note that dividend adjustments will be subjected to the relevant tax holding rates according to the country or region in which the index is listed.

Phillip Nova reserves the right to make revisions to the dividend adjustment post ex-dividend date.

Dividends

A dividend adjustment will apply to CFD on Equities for positions held to the ex-dividend date of its underlying shares. Where applicable, this adjustment will be calculated based on the weight of the stock in the index. For single shares, local taxation rules applicable are accounted for.

Dividend adjustments are presented as a component of the aforementioned holding costs. The amount applicable is computed, along with financing charges, into the “swap” field.

Example of Dividends inclusion in Holding Rate

For example, the underlying share of DBS Group Holdings announced a final dividend of 33 cents per share. On ex-dividend date, customers holding DBS-SGX share CFD will incur a holding rate presented as follows. A positive rate indicates that customers will receive, while a negative rate indicates that customers will pay.

Assuming that you bought 1 CFD (contract size of 1000 shares) of DBS-SGX, and you held this position to the next day, which is the ex-dividend date. The holding cost for carrying this buy position will be calculated as:

• Holding Value   = (Applicable swap rate in points x Pricing Precision) x Contract Size

= (32.83 x 0.01) x 1000 share      = SGD $ 328.3 (receive)

Assuming that you sold 1 CFD (contract size of 1000 shares) of DBS-SGX, and you held this position to the next day, which is the ex-dividend date. The holding cost for carrying this sell position will be calculated as:

• Holding Value    = (Applicable swap rate in points x Pricing Precision) x Contract Size

= (-33.09 x 0.01) x 1000 share     =  – SGD $ 330.9 (pay)

Dividend adjustments are denominated in the respective instrument’s settlement currencies.

Rights Issue

Trading of rights, when issued, is not facilitated. Customers, who are eligible for the rights, will not be able to sell or exercise the rights. Appropriate cash adjustments will apply when the underlying shares undergo rights issue, only for customers with long positions. To do this, rights received will automatically be subscribed on ex-right date, on condition that the rights are In-The-Money. Phillip Nova will at its sole and absolute discretion trade out the new positions from the rights subscription upon receiving the underlying shares when the market is open, or where liquidity in the market is permissible, whichever is deemed more appropriate by Phillip Nova in light of the circumstances.

The amount of cash adjustment applicable will be as follows:

•  Cash adjustment amount = (Price where new positions sold – Subscription Price) x No. of shares held x US Dollar conversion rate

Customers who do not wish to be subjected to this discretionary action should liquidate their positions before ex-right date. Short positions will have to be liquidated one day before ex-right date. Customer shall indemnify Phillip Nova and Phillip Nova shall not be liable for any loss arising from or in connection with Phillip Nova’s or the Customer’s action or inaction in relation to such corporate action resolution.

Warrants

Trading of warrants, when issued, is not facilitated. Customers will not be able to sell or exercise the warrants. Appropriate cash adjustments will apply when the underlying shares undergo warrants issue (i.e. warrants rights issue or bonus warrants), only for customers with long positions. This process is similar to the rights issue procedure.

Customers who do not wish to be subjected to this discretionary action should liquidate their positions before ex-warrant date. Short positions will have to be liquidated one day before ex-warrant date. Customers shall indemnify Phillip Nova and Phillip Nova shall not be liable for any losses arising from or in connection with Phillip Nova’s or the Customer’s action or inaction in relation to such corporate action resolution.

Bonus Issue (Stock Dividend)

There will be no new CFD quantity allocated on exercise date, and no change to the original CFD position. Similar to rights issue, Phillip Nova will at its sole and absolute discretion trade out the new positions from the bonus issue upon receiving the underlying shares when the market is open, or where liquidity in the market is permissible, whichever is deemed more appropriate by Phillip Nova in light of the circumstances. Appropriate cash adjustments will apply where customers holding long positions will receive positive cash adjustments, while customers holding short positions will incur negative cash adjustments.

There is no requirement that short positions will have to be liquidated one day before exercise date. However, customers who do not wish to be subjected to this discretionary action should liquidate their positions before exercise date. Customer shall indemnify Phillip Nova and Phillip Nova shall not be liable for any losses arising from or in connection with Phillip Nova’s or the Customer’s action or inaction in relation to such corporate action resolution.

Stock Split (Reverse Stock Split)

Stock splits usually take place when the value of a company’s stock is getting too high. The share price will fall by a pre-determined percentage and holders will gain the same percentage of shares. To account for this, the current Share CFD position will be closed and re-booked at Zero P&L. All orders related to the CFD on the underlying Share will be cancelled. The settlement rate and associate margins required will also be adjusted for the stock split.

Example on Share CFD stock split

Assuming that you bought 1 CFD (contract size of 1000 shares) of DBS-SGX at $19.16. As an example, DBS Group Holdings announces a stock split of 2 for 1. You held this position to split day date. This means that, for every 1 share you hold, you will be issued 2.

The original buy position of 1 CFD on DBS-SGX at $19.16 will be closed at $19.16. The new position will be re-booked at Zero P&L, so you will now hold 2 CFD on DBS-SGX at the reduced price of $9.58. Note that the overall contract value remains the same.

Suspension

Whenever a stock suspends, Phillip Nova’s Risk committee will conduct an internal review and decide whether it is likely to trade again. If the news surrounding the company is negative, customers with open share CFD on the underlying stock will be notified that the margin requirement may be raised substantially after internal review. There will be no trading allowed for the share CFD during the suspension period. The margin requirement could remain at elevated levels until there is further news in the underlying market.

Delist

As soon as a company announces it is delisting, the stock status will first need to be reviewed by Phillip Nova’s Risk committee. For open share CFD positions on a stock that delists, the position will be closed at a level of zero. All orders related to the CFD on the underlying Share will be cancelled. Phillip Nova, on best effort basis, will seek returns to shareholders, a process which may take years. Any return found will be credited back to the customer’s account.

Other Corporate Actions not considered by Phillip Nova

Notwithstanding the foregoing, Phillip Nova reserves the right to close all open positions and working orders relating to CFDs of the underlying security before the ex-date for any corporate action not mentioned above.

In the event there is a combination of Corporate Actions (“CA-Cum All”), where it includes corporate actions other than the above mentioned, customers may not be able to enjoy the entitlement and may be required to close off all open positions before the ex-date.

Please refer to our CFD Product Information Sheet for more details on how corporate actions are handled.

Force‐liquidation Margin (FM)

Phillip Nova reserves the right to liquidate your CFD positions without prior notice when the Equity Balance falls below the stipulated force‐selling margin level (also known as the Close-out Level*). For Phillip MT5 system, you will be receiving a notification should your account be in margin deficit. You are required to reduce your position(s) or top up your funds immediately to bring your margin level back above initial margin level requirements. It is your responsibility to monitor the equity balance in your account to avoid the risk of your account meeting the Close-out Level which will result in the automatic liquidation of your position(s) at market prices.

*Close-out level on MT5 for Accredited Investors is 50%, and Non-Accredited Investor at 20%.

For more information, please refer to our CFD Product Information Sheet here.

1. Within the Market Watch panel, mouse over your desired instrument and right-click
   
   
2. Select ‘Specification’to view more details of the instrument.
   
   
3. Calculate swap for 1 standard lot of LONG or SHORT position accordingly:
   – LONG: Contract Size * Tick Size * Swap Long
   – SHORT: Contract Size * Tick Size * Swap Short
   
   
4. The calculated swap value is in the instrument currency which will then be converted to USD.

Illustration:

Trader A establishes a 2 lot (Long) DBS contract at the price of S$21.07 with the specifications shown above and wants to find out the overnight swap rate that will be credited or debited.

Overnight Swap Rate Calculation:

Contract Size * Tick Size * Swap Long

= 2000 * 0.01 * (-0.16) * 21.07

= -S$3.2 (Negative rate refers to debit/ Positive refers to credit)

You can reach our Technical Support Desk at (65) 6597 3241.