Please heed the following warning on contracts for difference CFDs [note #1]. We provide this warning in the interests of safe investing.
Due to the current market conditions a number of financial authorities are announcing rule changes that affect short-selling physical stocks. These rule changes are put in place protect the integrity and quality of the securities market and strengthen investor confidence and safe investing.
Please note that margin requirements for new trades of offered CFD instruments may have changed. These instruments are constantly being re-evaluated and margin requirements may be changed without notice based on market volatility.
We strongly recommend avoiding CFD trades.
US CFDs
The US Securities and Exchange Commission (SEC) has temporarily banned naked short-selling of US stocks and short-selling in general in US financial stocks. This affects the short-selling of CFDs on US stocks. For more information and latest announcements please visit the SEC website.
UK CFDs
The UK’s Financial Services Authority (FSA) has temporarily banned short-selling of UK financial stocks. This affects the short-selling of CFDs on UK financial stocks. For more information and latest announcements please visit the FSA website.
Australian CFDs
The Australian Securities and Investments Commission (ASIC) has banned naked short selling and, in addition, stipulated covered short selling must be disclosed. The official ASIC announcements can be found on the ASIC website.
Swiss CFDs
The Swiss Federal Banking Commission (SFBC) has emphasized that naked short selling is currently not permitted. Saxo Bank is currently reviewing what types of short CFD trading is allowable. For more information and latest announcements please visit the SFBC website.
[1] A contract for difference (CFD) is a contract between two parties, typically described as "buyer" and "seller", stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time. (If the difference is negative, then the buyer pays instead to the seller.) For example, when applied to shares, such a contract is an equity derivative that allows investors to speculate on share price movements, without the need for ownership of the underlying shares
Contracts for difference allow investors to take long or short positions, and unlike futures contracts have no fixed expiry date, standardised contract or contract size. Trades are conducted on a leveraged basis with margins typically ranging from 1% to 30% of the notional value for CFDs on leading equities.
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