Do you pay borrow fee on share CFDs at IB?

That is an interesting question, as when you buy or sell short a CFD, there is no delivery. It is like a booked bet on the outcome. I'd also be interested to know if there are borrowing costs to be long with leverage. We do not offer them, so I'm not overly familiar with them.
 
Robert Morse said:
That is an interesting question, as when you buy or sell short a CFD, there is no delivery. It is like a booked bet on the outcome. I'd also be interested to know if there are borrowing costs to be long with leverage. We do not offer them, so I'm not overly familiar with them.
More...
There are borrowing costs on leverage
 
Interesting. CFDs seem to trade like futures except your counter party is your broker vs the CME. If I have an account of $100,000, and I buy $200,000 of a CFD on say AAPL, I did not expect there would be a charge as your cash does not go toward providing funds to the seller. Your broker is the seller and you only get a journal of the "bet". Interesting product, but not allowed in the USA.

Maverick2608 said:
There are borrowing costs on leverage
More...
 
Robert Morse said:
Interesting. CFDs seem to trade like futures except your counter party is your broker vs the CME. If I have an account of $100,000, and I buy $200,000 of a CFD on say AAPL, I did not expect there would be a charge as your cash does not go toward providing funds to the seller. Your broker is the seller and you only get a journal of the "bet". Interesting product, but not allowed in the USA.
More...
I assume most CFD brokers buy/sell short the underlying to hedge the position. Hence I am convinced there is a borrow fee.

However, they probably also try to match orders internally in which case there is not need to hedge the underlying.
 
The advantages to CFD's is lower margin requirements, easy access to markets, no shorting or day trading rules, and little or no fees.

Thank you nanny-state over-regulated CFTC and SEC for your prohibitions.

Very easy work around to their prohibitions.
 
Maverick2608 said:
However, they probably also try to match orders internally in which case there is not need to hedge the underlying.
More...

Yeah, presumably it's only net exposure that gets hedged (disregarding details on how to avoid extra roundtrips when e.g. an open to buy follows an open to sell of another customer on a lag).
 
In my experience (do not know with IB although) there is an overnight charge, not advantageous bid/ask entry points, and market with weak regulations. And never heard an interview of someone that became financially independent with CFD
 
Just be aware that IB CFDs don't behave exactly as expected. I had odd missed executions years ago and quite many. So they're not a direct substitute for shares (never had similar execution issues with the underlyings).
 
You must log in or register to reply here.
Back
Top