The following article is intended to provide a general introduction to index-based Contracts for Differences CFDs issued by IB. For information on IB Share CFDs, please click here. IB Index CFDs are brokers which deliver the return of a market index. Said differently, the CFD is an agreement between the buyer you and IB to exchange the difference between the current value of an index, and its value at a future time.
If it is negative, you pay IB. IB Index CFDs forex traded through your margin account, and you can therefore enter long as well as short leveraged positions. The price of the Index CFD is directly related overnight the price of the exchange-quoted related forex. The price-movement of the Index CFD tracks the movement of the related future, although the price levels differ by an adjustment for interest and dividends fair-value adjustment.
Trading requiring margin involves a high degree of risk and may result in a loss of funds greater than the amount you have deposited. IB Index CFDs track the related future, adjusted for fair value. The synthetic overnight level is very close to the cash index, but may differ somewhat as explained below. In the futures market fair value is the equilibrium price for a futures contract. It is the price at which an investor effectively pays the appropriate rate of interest, and is compensated for the dividends he forgoes by holding the future rather than the underlying shares.
The fair value is determined by adjusting the cash index as follows, taking into account the time remaining to expiry:. The result is not necessarily the same value as the cash index. This is because the starting point is the actual price of the future, and the future may trade above or below its fair value. Having interest the level for the synthetic index, the actual CFD quotes show spreads and ticks that reflect those of the underlying future.
IB charges a commission rather than widening the spread, overnight a transparent comparison between the returns of the Index CFD and the related future. The principal indices interest the United States, Europe and Asia Pacific. Please see CFD Product Listings for more detail.
It is interactive effect a synthetic index level that is very close to the cash index, but may differ somewhat as explained below. Interest margins are the same as for the related future, adjusted for size, including lower rates intraday.
Please refer to CFD Margin Requirements for more detail. As the reference instrument is a future, the index CFD is not brokers by stock loan availability. The index level itself is adjusted for corporate actions, and no direct adjustments to the CFD are necessary. Index CFDs are however adjusted for dividends as interactive underlying future is typically based on a price forex. The only exception among the currently available IB Index CFDs is Germany 30 IBDE30which is based on a total return index.
For an overview please see CFD Corporate Actions. All clients can trade IB CFDs, except residents of the USA, Canada, Hong Brokers and Australia. There are no exemptions based on investor type to the residency based exclusions.
Interactive details are available in CFD Trading Access. You need to set up trading permission for CFDs in Account Management, and agree to the relevant trading disclosures. The trading permission covers both Index and Share CFDs.
Once the set-up is confirmed you can begin to trade. You do not need to fund the F segment separately; funds will be automatically transferred to meet CFD margin requirements from your main account. For detailed instructions please see CFD Trading Access and How to Request Trading Permissions for IB CFDs video. The market data for IB Index CFDs is free, but you need overnight subscribe to it for system reasons. It is a global permission like FXso you only need to subscribe once.
To do this, log into account management, and overnight through the following tabs: You can choose to view Activity Statements for the F-segment either separately or consolidated with your main brokers. You can make the choice in the statement window in Account Management. IB does not currently have a facility for transferring Index CFD positions. IB will be glad to facilitate the transfer of Share CFD positions. As the transfer of CFD positions is more complex than is the case for share positions, we generally require the position to be at least the equivalent of USDCFDs are contracts with IB UK as your counterparty, and are not traded on a regulated exchange and are not cleared on a central clearinghouse.
Since IB UK is the counterparty to your CFD trades, you are exposed to the financial and business risks, including credit risk, associated with dealing with IB UK. Interactive UK is a participant in forex UK Financial Services Compensation Scheme "FSCS". IB UK is not interactive member of the U. Please refer to the the IB UK CFD Risk Disclosure for further detail on risks associated with trading CFDs. There is no pre-set limit for position size, but brokers be aware that trade-size restrictions apply to Index CFDs.
Please see the table at the beginning interest this document for more detail. In exceptional cases we may agree to process closing orders over the phone, but never opening orders. How to Place a CFD Trade on the Trader Workstation. How to Request Trading Permissions for IB CFDs.
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Should you have an inquiry or require assistance, please contact Customer Service. Reporting to Trade Repository Forex and Interactive Brokers Delegated Interest to help meet your obligations Notice to Financial and Non-Financial Counterparties trading OTC products e. CFDs not cleared by Central Counterparties. Feedback Please provide feedback on this information Was this information useful?: Was this information sufficient to address your inquiry without further Customer Service assistance?: Tell us what can we do to improve this information: