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CFDs Frequently Asked Questions

These are the most commonly asked questions about our CFD service.

What are CFDs?
CFDs are aimed at the more experienced dealer. CFDs work in a similar way to ordinary share dealing, but with a number of additional benefits and features. CFDs are so called because they are a contract between 2 parties, the investor and the CFD provider. The contract is that at the close of the contract the 2 parties will settle the difference between the opening price of the contract and the closing price.

When dealing in CFDs you get indirect access to stocks or indices price movements. In other words, you can access share price movements without ever taking delivery of the actual shares. As an investor in CFDs you will be effectively dealing on which direction the share price will go, so you can make money when the value of a share falls as well as when it rises. In addition, because CFDs are 'geared', you simply pay an initial deposit of as little as 10% of the contract value. This allows you to take a larger position than you might usually be able to and can translate into much higher profits, or indeed losses.

What is the difference between CFDs and Listed CFDs?
The main difference between a Listed CFD and a CFD is that Listed CFDs are listed on the London Stock Exchange (LSE) and CFDs are not. This provides Listed CFDs with the pricing transparency of a LSE listing. More importantly, another difference between a Listed and unlisted CFD is the fact that a Listed CFD embeds a guaranteed stop loss at no extra cost. You can never lose more than your initial margin payment when you trade a Listed CFD, no matter how badly markets move against you. In other words, only Listed CFDs offer unlimited upside, with strictly limited downside.

Can I trade Listed CFDs with Barclays Stockbrokers?
Yes simply call the Client Service Team.

What is the difference between CFDs and Spread Trading?
The main differences between CFDs and Spread Trading are:

1. When trading CFDs you are liable for Capital Gains Tax (CGT) if you make profits but losses can be offset against other CGT liabilities. With Spread Trading on the other hand you are not liable for CGT on profits however, you cannot offset losses either.
2. With CFDs you choose when to close your position but when you Spread Trade, you have a set close date which cannot be changed unless you roll the trade.
3. When trading CFD you pay us commission, but you do not with Spread Trading. In this case the commission is priced into the spread.
4. If you hold a long position trading CFDs you will receive a proportion of any dividends the underlying equity receives, however if you are on a short CFD you may be liable for a proportion of the dividend. With Spread Trading you are not liable to pay any dividends but neither will you receive any dividend adjustments

What is the risk level associated with CFD dealing?
CFDs carry a high level of risk to your capital and you should only deal with money you can afford to lose. The value of investments can fall as well as rise and you may lose significantly more than your initial margin payment. If you want to deal in CFDs you need to sign a risk warning notice.

What is trading on margin?
Trading on margin allows you to take on leverage which means that you can enhance your return without increasing investment. Essentially, it is a method of financing an investment by which you only pay a small percentage of the purchase price in cash, with the balance supplemented by borrowed funds, in order to generate a greater rate of return than would be produced by paying primarily cash for the investment.

Will flexible commission rates apply to CFD deals I make?
No. CFD deals will not count towards reduced commission rates on other Barclays Stockbrokers accounts.

Do I need to hold any other type of account to deal CFDs with Barclays Stockbrokers?
No you can open a CFD account without holding any other Barclays Stockbroker accounts.

What documents do I need to open an account?
You will need to supply an original of one of these items: current signed passport, Inland Revenue tax notification, copy of current UK driving license. In addition you will need to supply one of the following documents dated within the last three months: utility bill, mortgage statement, bank or credit card statement.

Can I deal CFDs by telephone?
Yes this service will be available to all Barclays Stockbrokers CFD clients.

Can I short stocks using CFDs?
Yes. It is only possible to short UK and EU stocks which have at least a market capitalisation of £200mn and €200mn. It is also possible to short US stocks however only those with a market capitalisation of greater that $1bn.

Are prices and graphs live-streaming on a CFD account?
Yes they are.

Do you offer guaranteed stop losses as part of the service?
These are available on limited stocks and indices and must be placed by telephone

Who do I contact if I have a problem or need more information about the Barclays Stockbrokers CFD service?
Call 0845 355 0802*.

Can I transfer money from my existing Barclays Stockbroker accounts to my CFD account and vice versa?
Yes, simply call the Client Service Team. It will take a maximum of 24 hours.

Can I trade CFDs in a SIPP?
This will be available in the near future.

Can I trade commodities using CFDs?
Yes.

Can I trade foreign stocks using CFDs?
Yes

What other investments can I trade through Barclays Stockbrokers?
1. Stocks and shares that are listed on the LSE and plus markets
2. Foreign stocks (telephone only)
3. Covered Warrants
4. Listed CFDs
5. Spread betting through a Financial Spread Trading account
6. Bonds (gilts and corporate bonds)
7. ETFs (Exchange Traded Funds) and ETCs (Exchange Traded Commodities)
8. PIBS (Permanent Interest Bearing shares)
9. Investment notes (tradable structures products)
10. REITs (Real Estate Investment Trusts)
11. Funds, Unit trusts and OEICs
12. Options and futures through Financial Spread Trading
13. FX (Foreign Exchange) through CFDs/FST and BARXdirect: FX

Does Barclays Stockbrokers offer corporate CFD accounts?
Yes, please contact Will Burge on 0044 (0) 777 555 0205 or will.burge@barclays.com for further information

Do I need a separate login from my existing Barclays Stockbrokers login?
Yes and this will be supplied to you as part of the registration process.

Can I link my CFD account to BARXdirect?
Yes.

Are commissions charged on opening and closing of CFD positions?
Yes commissions are charged on both sides of the transaction.

What are the dealing hours for Barclays Stockbrokers CFDs?
The dealing hours for Barclays Stockbrokers CFDs are dependent on the opening hours of the underlying markets but please note that the major index contracts - FTSE 100, Wall St, and S & P are available between 7.00am and 9.15pm.

What happens if Barclays Stockbrokers cant locate me if they want to urgently discuss a CFD position I am holding?
Depending on the circumstances this may result in Barclays Stockbrokers CFDs closing a CFD position if there are not sufficient funds in your account.

What does the term LIBOR mean?
LIBOR (London Inter-Bank Offered Rate) is the bank rate at which banks offer to lend money to each other compiled by the British Bankers Association. This rate is the basis for calculating overnight financing charges for CFD positions held overnight.

What are Stop Losses and Guaranteed Stop Losses?
A Stop Loss order allows you to set a price which if reached will automatically trigger a sell order (for long positions) or buy order (for short positions) to close your current position. This facility is available on most deals when placing a deal by telephone. A simple stop loss will be executed at the next available price at the time of dealing. A guaranteed stop loss is, as it suggests, guaranteed to be executed at the price you specify even if the underlying share never actually deals at the price you specify due to a sudden price movement. This guaranteed stop loss facility is available by phone on many leading equities and indices with Barclays Stockbroker CFDs service. There is an additional charge for this service.

 

* Calls made to 0845 numbers are free for BT residential customers (current as at January 2009). The price on non-BT phone lines may vary; please check with your service provider. Calls may be recorded to monitor the quality of our service, to check instructions and for security purposes.