Phillip Futures said in a recent statement CFD is one of a popular form of derivatives trading.
“CFD allows investors to trade on the future price movements of the underlying asset without actually owning the underlying asset.
“CFD is also commonly utilised as a hedging tool to offset any potential loss in value of your physical investments with the ability of short selling,” it said.
The offering of the CFD framework is in line with the Capital Market Masterplan 2 to promote and develop the derivatives market.
The Securities Commission (SC) introduced it in April 2018 to widen the range of investment products to cater to the needs and risk appetites of the increased sophistication of Malaysian investors.
Phillip Futures explained traders worldwide use CFD because of its leverage feature.
Leverage allows them to gain exposure to the financial markets with a smaller upfront capital, known as margin.
This allows them to make their capital work harder for them and achieve a potentially higher return on equity.
However it also cautions that trading on leverage is a double-edged sword, as it is possible to lose more than what you put into the investment, which is why prudent risk management practices and using the right trading platform for your trades is very critical.
The introduction of CFD by Phillip Futures will provide investors with an additional tool to diversify their portfolio and manage the volatility of the market.
“Emphasising on the provision of quality service and education to the public, Phillip Futures will be conducting monthly free educationally seminar or roadshow to empower the public to become better investors,” Phillip Futures Sdn Bhd executive director, Lam Choon Jin said.
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