Nedbank Capital Contracts for Difference (CFDs) are an exciting new trading product that allows investors exposure to JSE-listed securities on a leveraged basis.

A contract for difference (CFD) is an over-the-counter derivative contract under which two parties agree to exchange the difference between the opening and the closing value of the contract, with reference to an underlying equity instrument. CFDs allow investors to position themselves in relation to the rise or fall of JSE-listed securities, without the need for ownership of the securities.

CFDs are a leveraged product that requires from an investor a deposit of cash as margin rather than the payment of the full value of the underlying position. Depending on the position taken by such an investor, the investor may be either the long or the short counterparty to the CFD. Effectively cash is being borrowed by the long counterparty and lent by the short counterparty in respect of the underlying security.

Investor summary of the major cash flows attributable to fluctuations in security prices and interest and dividend payments, as they impact on long or short CFD positions.