I am sure your anecdotes about your whoring trips to Shenzhen as you outlined to everyone in another thread are drawing a larger crowd than presenting facts about CFDs. In that I wholeheartedly agree with you.
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New Tax on All Stock Trades
- Thread starter seasideheights
- Start date
Some other facts that were grossly distorted by some other users earlier:
* UK stamp 0.5% (quite high, no arguing about it)
* HK stamp 0.1% and I can only repeat what I said, there are many professional prop traders at investment banks and hedge funds who trade intraday positions and are not tax exempt and still make good money. Just saying it is not possible to make money because there is a small duty on stock transactions is naive if not outright lazy.
* Korea 0.3% (only on sells)
I can list a lot more but I think the point is made that unlike in the UK stamp duty is manageable and nowhere near the levels some claimed the levy to be around the globe.
Just trying to keep the facts straight.
* UK stamp 0.5% (quite high, no arguing about it)
* HK stamp 0.1% and I can only repeat what I said, there are many professional prop traders at investment banks and hedge funds who trade intraday positions and are not tax exempt and still make good money. Just saying it is not possible to make money because there is a small duty on stock transactions is naive if not outright lazy.
* Korea 0.3% (only on sells)
I can list a lot more but I think the point is made that unlike in the UK stamp duty is manageable and nowhere near the levels some claimed the levy to be around the globe.
Just trying to keep the facts straight.
Just so that we still stick to facts rather than anecdotes, anyone who is interested in the actual facts and truth of CFD pricing is recommended to read the following (or similar) papers:
http://kevindavis.com.au/secondpages/workinprogress/CFDs-final-Nov29-09_2.pdf
Particularly the following passage on page 20 and following applies:
"4.3.1 CFD spreads and the spreads on the underlying Because DPMs are rebated the OIC and face very low trading costs, the zero profit spread from market making activities resulting from competition should, in the absence of hedging risks, be not much wider than those in the underlying market. However, for customers, there is a potentially much wider spread which is consistent with them being willing to take positions in the CFD rather than in the underlying using margin loans, short selling, or trading the physical. This arises because the effective interest cost on long CFD positions is lower than that associated with margin loan purchases and the interest return is higher than on investing proceeds from short positions in the physical. Incorporating the Open Interest Charge on positions levied by the ASX of 1.50% p.a., the effective interest cost (return) on CFD positions is r +0.015 or r -0.015 p.a., where r is the RBA target cash rate. Over the period of our study, the indicator margin lending rate averaged 3.4% higher than the RBA cash rate. The interest paid on bank cash management accounts (in excess of $50,000), which would be an upper bound on returns paid by brokers to retail clients on cash generated from short sales, was 1.1% lower than the RBA cash rate."
--> Essentially the point is that CFDs are priced completely differently than their underlyings. The reasons for that are interest charges, different commission models and generally wider spreads than the underlying. Just because some DMA Brokers show identical prices and spreads between CFD and underlying cash equity means nothing (well, nothing other than that the CFD price and spread shown is actually showing the price and spread of the underlying), because the ensuing cash flows are entirely different. All it means to have identical prices shown at the outset is that the underlying economics are mimicked by the CFD. But still that does not lead to an identical pricing during the life time of the CFD by any means.
your presentation is purposely written to mislead others. unlike you i presented numbers to prove my point. you need to take a course in basic statistics and basic logic. instead of contradicting my numbers you ignore them. that is typical of all snake oil salesman.Some other facts that were grossly distorted by some other users earlier:
* UK stamp 0.5% (quite high, no arguing about it)
* HK stamp 0.1% and I can only repeat what I said, there are many professional prop traders at investment banks and hedge funds who trade intraday positions and are not tax exempt and still make good money. Just saying it is not possible to make money because there is a small duty on stock transactions is naive if not outright lazy.
* Korea 0.3% (only on sells)
I can list a lot more but I think the point is made that unlike in the UK stamp duty is manageable and nowhere near the levels some claimed the levy to be around the globe.
Just trying to keep the facts straight.
for the rest of the readers I repeat my previous post:
according to volpunter he has has friends in the hedge funds in hong kong who make 100 basis points per day and are glad to pay the stamp tax. I am going to give the answer to disapprove his assertion. if these so called "friends" were able to achieve this $1 at the beginning of the year at the end of the year they would have $3.48 assuming a .005 stamp tax.your presentation is purposely written to mislead others. unlike you i presented numbers to prove my point. you need to take a course in basic statistics and basic logic. instead of contradicting my numbers you ignore them. that is typical of all snake oil salesman.
for the rest of the readers I repeat my previous post:
there are no such animals on the hedge fund level or on the retail level.
my suggestion is to take any of volpunter's assertions with a grain of salt or better still still make it a full shaker if you like a lot of salt.
"there are many professional prop traders at investment banks and hedge funds who trade intraday positions and are not tax exempt and still make good money.according to volpunter he has has friends in the hedge funds in hong kong who make 100 basis points per day and are glad to pay the stamp tax. I am going to give the answer to disapprove his assertion. if these so called "friends" were able to achieve this $1 at the beginning of the year at the end of the year they would have $3.48 assuming a .005 stamp tax.
there are no such animals on the hedge fund level or on the retail level.
my suggestion is to take any of volpunter's assertions with a grain of salt or better still still make it a full shaker if you like a lot of salt.
volpunter has gone from claiming that his so call hedge fund friends in hong kong have gone from pulling 100 basis points per day from the market to making good money. of course, he presents no numbers.
the reason he went that route because is incapable of disputing my numbers that these guys would be making a return of 250%+ a year if his statement was true which it is not.
by the way i hear that stevie cohen has tied up the telephone lines incoming to hong kong trying to find these mythical awesome traders.
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Some other facts that were grossly distorted by some other users earlier:
* UK stamp 0.5% (quite high, no arguing about it)
* HK stamp 0.1% and I can only repeat what I said, there are many professional prop traders at investment banks and hedge funds who trade intraday positions and are not tax exempt and still make good money. Just saying it is not possible to make money because there is a small duty on stock transactions is naive if not outright lazy.
* Korea 0.3% (only on sells)
I can list a lot more but I think the point is made that unlike in the UK stamp duty is manageable and nowhere near the levels some claimed the levy to be around the globe.
Just trying to keep the facts straight.
Impossible. What you think their profit margins are?
Below is an official HK stock exchange link listing the trading costs on HKSE, expenses on HK stock trades are much higher than 0.005%, trading fees and stamp tax already come up to 0.2% on a return trip.
https://www.hkex.com.hk/eng/market/sec_tradinfo/trancost.htm
On top of those one needs to add commissions, which are also higher than in the US( IB starts at 0.088% one way if i remember correctly, a return trip there costs me almost 0.5% in various fees, so I do much less than Volpunter's succesful friends)
I'm curious about Zdreg updated calculations.
https://www.hkex.com.hk/eng/market/sec_tradinfo/trancost.htm
On top of those one needs to add commissions, which are also higher than in the US( IB starts at 0.088% one way if i remember correctly, a return trip there costs me almost 0.5% in various fees, so I do much less than Volpunter's succesful friends)
I'm curious about Zdreg updated calculations.
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When they charge stamp duties for options, is it on the notional or on the premium price?
20bps per notional on an options trade is a lot. if you think about a typical vol trade, you will trade 1.5-2x notional to get delta neutral. 30bps-40bps of slippage/notional. For an index like the SPX, that's about 2-3 vols round trip.
Not insignificant. Would affect that market a lot probably.
Not insignificant. Would affect that market a lot probably.