Geneva - Saxo Bank, the online trading and investment specialist, is launching its first Commodity Contracts for Difference (CFDs), lowering barriers to trading the most liquid global commodities as demand for energy, agricultural and metals futures contracts grew 64.5% in 2008.
Saxo Bank's Commodity CFDs will create greater access to energy, metal, soft commodity and grain markets as well as more flexibility. CFDs are available at smaller trade sizes and are more simply priced (per unit) than the equivalent futures contracts. Furthermore, CFD margin requirements will generally be lower than a future as traders will be able to gain more exposure for less.
According to numbers from Futures Industry Magazine, 2008 saw a 64.5% increase in the market for non-precious metals, a 38.7% increase in the market for agricultural derivatives as well as a 16.8% increase in energy derivatives. Precious metals increased 19.5%.
Alan Plaugmann, Head of Futures and Fixed Income at Saxo Bank, says: “2008 saw massive growth in the market for energy, metals and agricultural futures and we are currently in the midst of another commodities rally as investors continue their flight from equities to investments that traditionally hold their value, such as gold and oil. Saxo Bank believes this trend is likely to continue through 2009 and we want investors to benefit from this rally. Therefore, we have launched Commodity CFDs to allow traders and investors to take advantage of the potential we see in this market”.
Saxo Bank Commodity CFDs will offer up to 20 Commodity CFDs during 2009 and the contracts will be available on all Saxo Bank's platforms (SaxoTrader, SaxoWebTrader and SaxoMobileTrader).
Alan Plaugmann continued: “Saxo Bank's Commodity CFDs have low margins, small trade sizes, and no commissions, which mean traders will be able to gain exposure to liquid commodities more readily than via futures contracts. Investors will now be able to easily diversify their exposure by adding energies, metals and commodities to their portfolios”.
Saxo Bank Commodity CFDs will offer the following CFDs.
About Saxo Bank Commodity CFDs
Saxo Bank's Commodity CFDs will expire each month and will be cash settled on the expiry date of the underlying future. Front month (current contract) and back month (following contract) will be offered to enable clients to manually roll positions from one contract to the next. Commodity CFDs are denominated in smaller lots than the underlying future. For example, the entry point for US Crude CFD is 25 barrels of oil, rather than 1,000 barrels. Each CFD is quoted as 1 unit of the underlying contract (e.g. 1 barrel). There is no financing cost or commission charged on Commodity CFDs but there is a spread included in the bid/offer prices Saxo Bank derives for each CFD. This means that whilst the CFD prices track the future they are not exactly the same. Saxo Bank direct clients and IB clients will automatically be enabled for CFD commodities from 2 June 2009. Saxo partners and partner clients will automatically be enabled for Commodity CFDs upon request.