Monday, May 19, 2008
Research on CFD Providers
Man Financial was voted the best CFD provider in Australia but only seems to offer CFDs on individual shares. So I can't use that. CMC Markets is the biggest in Australia - they require you to use downloaded software, which I suspect won't run on the Mac. I sent them an e-mail to ask. Otherwise their offering seems very similar in costs etc. to City Index. Commonwealth Securities charge 0.055% each way on index CFDs with a $14.95 minimum. So that is out of the question. It looks like City Index, which was the runner up in that contest will be the winner for me. More on Thursday after the seminar.
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4 comments:
It would be interesting to see how the Macquarie CFD for CDF (Commonwealth Diversified Fund) stock trades compared to XAO - it's supposed to be a proxy for the index, but the real shares often move out of step to the market quite a bit. Arbitrage with the real shares isn't possible (trading costs and low liquidity) but the CFD for this share may be different since the CFD provider would be doing their own pricing as a market maker...
I don't know much about that fund but from what I read on the CommSec site it is a closed end fund (LIC) rather than an ETF and presumably pays out both capital gains and dividends received minus management fees and so the price is going to underperform the index as well as have fluctations due to supply and demand for the shares. Also it doesn't own all the shares in the index. I'd assume the CFD traded very close to the CDF shares.
how about igmarkets?
I just checked out IG. Their interest rate is 0.5% higher and their spread on the SPI futures is 3 points rather than 2 points. Here is a big difference - their SPI contracts are $25 and $5 per point while City Index has a $1 per point contract.Otherwise they are very similar to City Index but they allow CFDs on options which is interesting... The SPI options are $10 per point which is the same as the regular XJO contract size on the ASX which I can trade through Interactive Brokers for a low commission.
So given this I'll still go with City Index.
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