ASX CFDs vs. OTC CFDs

[jono1887]

whats the difference between ASX CFDs and OTC CFDs??

 

[jono1887]

does anyone on this forum have an answer for this??
which is more liquid? which one do you guys trade?

I really have no idea....

 

[Krusty the Klown]

In essence ASX CFD's are the same as OTC CFD's, the ASX product is offered by the ASX but not on an exchange - it is an OTC product.

They are both a contract between two parties and cannot be bought from or sold to a third party.

The ASX is competing against other CFD providers in the marketplace.

I don't trade ASX CFD's simply because there are providers out there with cheaper commissions and margins.

Liquidity is not a concern as it is a contract between you and the product provider only, there is no "issue" of units or shares like in an IPO. The product provider can open as many individual contracts as their risk management allows.

 

[Boggo]

I have had moderate success with ASX cfd's.

The issues that I have had that have cost me most are the 40 point rule and the limit order rule.

Basically if you buy an ASX CFD and then the stock runs up and the value of the CFD is more than 40 points away from the last traded value then the order will be denied and you will have to ring the broker, explain the issue and get him to adjust the rule and the you can retry the order.
This process cost me last week when LEI dropped over 80c while I was getting the above sorted out and took a chunk of my profit.

The other issue is that if you put on an 'At Market' order and the market moves or the bid or ask does not match your buy or sell price then the order will also be rejected so you really need to place a 'market limit order' when buying and selling if don't want to be replacing orders in a moving market.

I actually really like the damn things but just those few items are a pain.

Current LEI equity and CFD below as an example...

 

[Krusty the Klown]

Which broker are you using there Boggo?

That would also be a difference between ASX and other CFD's.

ASX CFD's are the only ones where you have to use an external broker.

All other CFD's are traded with the product provider's platform.

 

[Boggo]

Which broker are you using there Boggo?

Morrison.

Auto deny...

 

[Krusty the Klown]

I use GFT and have used CMC, I've never had that problem, maybe because they are both MM's.

 

[yrebrac]

The other issue is that if you put on an 'At Market' order and the market moves or the bid or ask does not match your buy or sell price then the order will also be rejected so you really need to place a 'market limit order' when buying and selling if don't want to be replacing orders in a moving market.
.

The issue there may be that the exchange only accepts one order type - limit orders. So there is no such thing as a market order in this product on the SNFE. Market orders (like stops) would be simulated by your broker, so if your market order was rejected it may simply mean that your limit was exceeded.