Frequently asked questions:
Can Central Markets give me advice?
What are the benefits of using Central Markets?
What is the minimum account opening size?
What is the process of transferring my existing portfolio to Central Markets from another broker?
How do I place an order?
How do I open an account?
Who is eligible to open an account with Central Markets to trade CFDs?
Which products can I trade through my Central Markets account?
How long can I hold a CFD?
Are there any tax implications through trading CFDs?
What is Margin Trading and how does it work?
What are the costs?
How does the Financing work?
What does Marking to Market mean?
Can I ever be forced to close my Equity CFD position?
If I buy Equity CFD does that mean I own the shares?
Am I entitled to receive Dividends on Equity CFDs?
What stocks can be traded as Equity CFDS?
Can Central Markets give me advice?
At Central Markets, you will have your own experienced Stockbroker who will be available to give you as much or as little advice as is required. As each client is different we are able to tailor the service to suit your individual needs. To discuss this further please call us on 020 72657900.
What are the benefits of using Central Markets?
Central Markets is an independent, privately owned company with no conflicts of interest. We provide high quality trading and broking services including advice, recommendations, independent research and market leading trading software. We are fully licensed and regulated by the FSA. We have a highly experienced trading team who are always available to discuss trades. We are always looking at new products within the ever-changing financial markets to give our clients a leading edge.
What is the minimum account opening size?
We will require a minimum of £10,000 to open an individual account. Alternatively, you can lodge existing holdings/portfolios with us.
What is the process of transferring my existing portfolio to Central Markets from another broker?
This is a very simple process and normally takes no longer than a couple of days. We will need details of the stocks we can expect to receive and where they will be coming from. We will organise the rest and we do not charge for stock transfers coming in.
How do I place an order?
You place an order(s) for a CFD as you would for an ordinary share purchase. As all trades are settled for cash, no order will be accepted unless there are sufficient cleared funds in your account. These orders can be placed over the phone or on-line through our on-line trading platform.
How do I open an account?
Opening an account with Central Markets is simple. We will assist you in completing all the documentation required. Please click on the open an account link to apply online. Alternatively please call one of the Account Executives on: + (44) 020 7265 7900.
Who is eligible to open an account with Central Markets to trade CFDs?
Opening an account with Central Markets is a straight forward process. We will do as much of the work as possible to make the account opening process simple for you. Prior to issuing account opening documentation, Central Markets is required by the FSA to establish initial information regarding a prospective client. CFDs are only available to experienced investors. The nature of the risks is too high for inexperienced investors as their knowledge and understanding of leverage is limited. Once your account is approved you will be issued with your own account number, where you can then fund your account by debit card or by transferring the money direct into your trading account.
Which products can I trade through my Central Markets account?
You can trade Equity CFDs, Index CFDs, Sector CFDs, Foreign Exchange, Futures, Options and cash equities (shares) all through one single account.
How long can I hold a CFD?
CFDs have no expiry dates, so as a result you can run a position, long or short, for as long as you require.
Are there any tax implications through trading CFDs?
Whilst CFDs are exempt from stamp duty, any profits may be subject to CGT (Capital Gains Tax), however losses may also be offset against CGT.
What is Margin Trading and how does it work?
As a holder of a long or short CFD you do not pay the full underlying value of the contract. However, you are required to deposit margin as collateral known as the initial margin. The initial margin is calculated as a percentage of the full contract value and the rate varies according to the market capitalisation and volatility of a particular share. For example if the initial margin is set at 10 % you can go long or short of a CFD worth £100,000 and deposit just £10,000, gaining ten times leverage.
What are the costs?
Commission is charged for either side of the contract, as a percentage of the total contract value. There are no hidden costs and you deal at the market price as we do not widen the spread of the share. Central Markets is committed to offering a competitive commission rate which includes all the advice and monitoring you require.
How does the Financing work?
Clients pay interest on the contract value of a
long CFD. Interest is charged at a percentage over LIBOR (LIBOR is the London
Interbank Offered Rate and is linked to base interest rates).
Clients holding short CFD contracts receive interest on the cash that the sale
of the underlying stock would have generated. This is similarly paid at an
agreed rate under LIBID
(London-Interbank-Bid-Rate).
For example, if a client was paying a long CFD funding charge of perhaps 3 %
over LIBOR and if LIBOR was 4 %, the client would be paying a funding rate of 7
% per annum. If the total contract value was £100,000 the funding charge would
be around £19 for every day the contract was maintained (£7000 divided by 365).
This amount would be debited daily from your CFD account. The funding charge is
only incurred if the position is held overnight. These amounts will be credited
or debited on the next trading day.
What does Marking to Market mean?
Marking to market is a daily adjustment to the margin requirement based on the movement in the value of the underlying asset. You must cover any shortfalls in margin immediately. If they are not covered, your position may be closed irrespective of your wishes. Margin deposits are required in cleared funds, but mark to market excesses or deficits are not credited or debited to your margin account until closure of the position.
Can I ever be forced to close my Equity CFD position?
Normally, an Equity CFD will remain open until the holder decides to close the position. However, there are certain circumstances under which the position will be closed, irrespective of the client's wishes.
The client's failure to meet any Margin requirements. As previously explained, Margin is calculated daily on a mark-to-market basis. If there is any shortfall it must be covered on the same day as the margin call. Failure to do so may result in the position being closed at the prevailing market price, irrespective of the client's view. Any shortfall will be deducted from the Initial Margin deposit and any resulting balance will be credited to the client's account.
Takeover of the company underlying the CFD. At times, companies on which Equity CFDs are open will be subject to takeover bids, either agreed or hostile. Positions in CFDs may remain open or be opened during this time. However, any open position will be closed out at the prevailing market price in the event that the shares cease to be quoted in their existing form.
If I buy Equity CFD does that mean I own the shares?
The agreement reached between the two trading parties for an Equity CFD is to exchange the profit or loss on a stated transaction and does not involve any exchange of ownership of the underlying asset. As such the owner of the 'long' side of the transaction based on an underlying equity has no voting rights or any right to instruct the seller to act in any particular manner, as in a takeover situation.
Am I entitled to receive Dividends on Equity CFDs?
Following a purchase of an equity holding, you are entitled to receive any dividends paid by that company. Although you are not the beneficial owner of the shares, as the holder of a long Equity CFD position you are entitled to receive a cash sum similar to any dividend declared by the company while the position is held open (less any tax or administration charges). Conversely, if you are the holder of a short Equity CFD you are required to pay a sum equal to the gross dividend, irrespective of whether you hold the underlying position. The deciding date for the entitlement to a dividend is the same as the ex-dividend date declared by the underlying company. You are advised to check the dates of any impending dividends before entering into Equity CFD positions, your personal stockbroker at Central Markets can provide you with ex-dividend dates.
What stocks can be traded as Equity CFDS?
CFDs can be traded on most stocks on all the major global exchanges (e.g. FTSE, S&P, NASDAQ, and DAX). CFDs on smaller capitalised stocks can be traded on a prior approval basis. Approval usually takes a matter of minutes.
