ABN Amro has launched a new product that allows contract for difference (CFD) style transactions to be traded on the Australian Stock Exchange (ASX).
The new ABN Amro MINIs allow investors to trade both short and long positions on the ASX, with no maturity restrictions, incorporating exposure to the underlying values of equities at a small proportion of shares’ cost.
The ASX-quoted CFDs are made possible through taking out either MINI Longs or MINI shorts that involve contracts regarding in excess of 50 of the most active domestic equities.
The new offering is expected to give the CFD market greater transparency and liquidity to the investment instruments that traditionally have been traded off-market.
ABN Amro Equity Structured Products and Warrants executive director, Aaron Stambulich, said: “Using AMN Amro MINIs, investors are assured that their CFD order will be placed exactly, promptly and anonymously on the exchange, eliminating market impact costs and risks of artificial markets.”
He said the access to buying and hedging at reduced prices would also be popular with some specific investors.
“As ASX-listed long and short equity derivatives, we expect the high leverage offered by ABN Amro MINIs will generate most interest from day traders, speculative investors and those wanting to effectively hedge portfolios,” Stambulich added.
A stop loss protection mechanism has also been included in the product whereby losses generated by the positions taken cannot exceed the amount of capital that has been outlaid.
“Where a share price falls or rises beyond a set price, the contract automatically closes out, protecting the investor from losing more than the amount invested in the long or short strategy,” Stambulich explained.
Retail investors can access the new MINIs either directly through ABN Amro or via ASX-registered stock brokers.
