Section 5
Summary table of the rates and fees used in this example
Margin Rate for Commonwealth Bank of Australia Ltd (CBA) 10.00%
Trading Fee Rate 0.12%6
Long Position Funding Rate 7.25%pa
Client directed payment on Trading Fee Rate 0.05%
Client directed payment on Long Position Funding Rate 0.50%
Timing What happens Examples
5.1.1 When you first place an Order.
The CFD Margin for your Order is calculated and that amount is redesignated from Available Funds to Blocked Orders in your Prime Account when you place your Order.
On 22 January 2009, Jane opens a Macquarie Prime Facility, depositing an amount of $10,000 into her Macquarie Prime Account.
At the same time, Jane applies to transact in CFDs and places a Limit Order to enter into a CFD in respect of 2,000 Commonwealth Bank of Australia Ltd (CBA) Reference Securities at a Limit Price of $30.
Jane specifies she will be the Long Party in this CFD.
The Margin Rate for CBA is 10.00%, making the CFD Margin for this Order $6,0007. This amount of Available Funds is redesignated as Blocked Orders in Jane’s Macquarie Prime Account. The Available Funds balance is therefore $4,000.
As the current market price for CBA is $30.50, the Order is not immediately filled.
5.1.2 When your Order is accepted.
If your Order is a Limit Order to enter into a CFD at a particular Reference Price, the Order may be accepted if the Reference Security trades equal to or better than your specified price. Once the Order becomes a CFD position, the CFD Margin is then redesignated from Blocked Orders to Blocked Funds within your Prime Account.
If and when the Order is accepted, a Trading Fee is payable. This will be payable in two instalments – the first on acceptance of your Order, and the second on Close-out of the CFD.
Later on 22 January, CBA’s Reference Price declines to
$30, and Jane’s Limit Order is accepted.
The first instalment of the Trading Fee of $1028 is debited against the Available Funds in Jane’s Macquarie Prime Account, leaving an Available Funds balance of
$3,998. The $6,000 CFD Margin is transferred from Blocked Orders to Blocked Funds.
This Section provides hypothetical examples of how CFDs may operate. The Reference Prices, GSL Premiums, dividend rates, interest rates, Margin Rates, fees and charges quoted in the examples are provided for illustrative purposes only and should not be taken as an indication or commitment by Macquarie as to the values of these parameters that will actually apply on a CFD or an Order. Investors should read and understand the risks set out in Section 6 of this PDS and discuss these matters with their financial adviser before making any investment decision.
5.1 Long CFD Position
Timing What happens Examples 5.1.3 While your
CFD position is Open.
Interest is payable by overnight holders of Open Long CFDs. This interest amount is calculated and paid daily.
The Long Position Funding Rate is 7.25%pa plus a Client directed payment on Long Position Funding Rate of 0.50%, and CBA’s Reference Price at the close of business is unchanged at $30.
The initial daily interest amount charged on Jane’s position is therefore $12.749. This is debited from Jane’s Macquarie Prime Account.
The Mark-To-Market Payments are calculated.
CFD Margins are calculated continuously, with cash being redesignated between Available Funds and Blocked Funds in your Prime Account as appropriate.
On 23 January, CBA’s price increases to $32. The current CFD Face Value is $4,000 higher than the Previous CFD Face Value, and a Mark-To-Market Payment is made by Macquarie to Jane’s Macquarie Prime Account.
The CFD Margin on Jane’s CFD position has risen to $6,40010, so the extra $400 in Margin is taken from Jane’s $4,000 Mark-To-Market Payment and redesignated as Blocked Funds.
The remaining $3,600 is credited to Available Funds.
Interest is payable by overnight holders of Open Long CFDs. This interest amount is calculated and paid daily.
As the CBA Reference Price at the close of business is $32, the daily interest amount charged on Jane’s position for 23 January is therefore $13.5911. This is debited from Jane’s Macquarie Prime Account.
The cash value of any dividends paid to the holders of the underlying Reference Securities is paid to Investors who hold Open Long CFDs on the ex-dividend date.
CBA announces a cash dividend of $1.00 per share with an ex-dividend date of 24 January. On the ex-dividend date, an amount of $2,00012 is credited to Jane’s Macquarie Prime Account.
5.1.4 CFD position is Closed-out.
A Long Party to a CFD can Close-out that CFD position by placing an Order for Close-out with Macquarie which is accepted by Macquarie.
On 24 January, CBA’s price falls to $31 and Jane decides to close her CFD position by placing a Market-to-Limit Order to Close-out that CFD.
The current balance of Blocked Funds is redesignated as Available Funds and the second instalment of the Trading Fee of $105.4013 is debited from Jane’s Prime Account.
Jane’s Macquarie Prime Account will have the following cash flows during January:
Description Change in Balance of
Available
Funds Blocked
Orders Blocked
Funds Available
Funds Blocked
Orders Blocked
Funds Account Balance
Initial Deposit $10,000.00 – – $10,000.00 – – $10,000.00
Order Placed:
Buy 2,000 CBA @ $30 -$6,000.00 $6,000.00 – $4,000.00 $6,000.00 – $10,000.00
CFD Trade:
Order Accepted and Filled @ $30
– $6,000.00 $6,000.00 $4,000.00 – $6,000.00 $10,000.00
CFD Trade Fee – 1st
Instalment -$102.00 – – $3,898.00 – $6,000.00 $9,898.00
Interest on Open CFD
Position -$12.74 – – $3,885.26 – $6,000.00 $9,885.26
Mark-to-Market Adjustment: Open Long CFDs over CBA marked to $32
$3,600.00 – $400.00 $7,485.26 – $6,400.00 $13,885.26
Interest on Open CFD
Position -$13.59 – – $7,471.67 – $6,400.00 $13,871.67
Dividend: 2,000 Reference Securities
@ $1.00 per Reference Security
$2,000.00 – – $9,471.67 – $6,400.00 $15,871.67
Mark-to-Market Adjustment: Open Long CFDs over CBA marked to $31
-$1,800.00 – -$200.00 $7,671.67 – $6,200.00 $13,871.67
CFD Trade: Open Long CFD Position Closed-out @ $31
$6,200.00 – -$6,200.00 $13,871.67 – – $13,871.67
CFD Trade Fee – 2nd
Instalment -$105.40 – – $13,766.67 – – $13,766.67
Summary table of the rates and fees used in this example
Margin Rate for Commonwealth Bank of Australia Ltd (CBA) 10.00%
Trading Fee Rate 0.12%
Short Position Funding Rate 1.25%pa
Timing What happens Examples
5.2.1 Order is placed and accepted.
The CFD Margin for your Order is calculated and compared to the amount of Available Funds in your Prime Account.
If there are sufficient Available Funds, the CFD Margin is redesignated from Available Funds to Blocked Orders, and your Order may be accepted.
Once the Order has been accepted and a CFD position is opened, the CFD Margin is redesignated as Blocked Funds.
Greg has a Macquarie Prime Facility with $5,000 on deposit in his Macquarie Prime Account and no open positions or Orders.
On 2 April 2008, the current market price for Telstra Corporation Limited (TLS) is $4.70, and Greg places a Market-to-Limit Order to enter into a CFD in respect of 8,000 TLS securities. Greg specifies he would be the Short Party in this CFD.
The Margin Rate for TLS securities is 10.00%, making the CFD Margin on this Order $3,76014. This amount is redesignated from Available Funds to Blocked Orders to Blocked Funds. The Order is accepted by Macquarie at a Reference Price of $4.70.
The first instalment of the Trading Fee of $45.1215 is debited from Available Funds .
5.2.2 While your CFD position is Open.
Interest is receivable by holders of overnight Open Short CFD positions. This interest amount is calculated and paid daily.
The Short Position Funding Rate is 1.25%pa and TLS’s Reference Price at the close of business is $4.70. The initial daily interest on Open positions received on Greg’s position is therefore $1.2916.
5.2.3 GSL protection
is purchased. You may make a Guaranteed Stop-Loss Order, specifying the GSL Period and the GSL Percentage. The GSL Period commences if and when the GSL Order is accepted by Macquarie and the GSL Premium is paid.
On 3 April 2008, TLS’s Reference Price is unchanged, but Greg has become concerned about the affect of a sudden rise in TLS’s Reference Price on his Short CFD position. Greg places a GSL Order in respect of this CFD with a GSL Level of $4.90, a GSL Period of one month, at a cost of 0.70%. The Order is accepted by Macquarie, and the GSL Premium of $263.2017 is debited from Greg’s Macquarie Prime Account.
5.2.4 Calculation of Margin on a CFD protected by a GSL.
A GSL can have the affect of lowering the amount of CFD Margin required on a given CFD.
The CFD Margin required on Greg’s GSL protected CFD is equal to $1,60018. The excess Margin of $2,160 is redesignated from Blocked Funds to Available Funds.
5.2.5 While your CFD position is Open.
Interest is receivable by holders of overnight Open Short CFD positions. This interest amount is calculated and paid daily.
As the TLS Reference Price remains at $4.70 on 3 April 2008, the daily interest amount Greg receives is again
$1.2919.
5.2 Short CFD position with a Guaranteed Stop-Loss
20 8,000 x $4.90 x 0.12% = $47.04
Timing What happens Examples
5.2.6 GSL Level is triggered, position is Closed-out.
If, at any time during the GSL Period, the Reference Price is at or beyond the GSL Level, the CFD is Closed-out at exactly that GSL Level.
On 4 April 2008, TLS makes a positive public announcement regarding its profitability prior to the commencement of trading, and its Reference Price opens at $5.00. The GSL is triggered, and Greg’s CFD is Closedout at the GSL Level of $4.90. While Greg has lost more than $1,600 on this trade, the GSL has protected him from suffering more substantial losses.
The second instalment of the Trading Fee of $47.0420 is payable on this Close-out, and is debited from Greg’s Prime Account.
Greg’s Macquarie Prime Account will have the following cash flows during April:
Description Change in Balance of
Available
Funds Blocked
Orders Blocked
Funds Available
Funds Blocked
Orders Blocked
Funds Account Balance
Open Balance $5,000.00 – – $5,000.00 – – $5,000.00
CFD Order: Open 8,000 Short CFDs
over TLS @ $4.70 -$3,760.00 $3,760.00 – $1,240.00 $3,760.00 – $5,000.00
CFD Trade: Order Accepted and Filled
@ $4.70 – -$3,760.00 $3,760.00 $1,240.00 – $3,760.00 $5,000.00
CFD Trade Fee – 1st
Instalment -$45.12 – – $1,194.88 – $3,760.00 $4,954.88
Interest on Open CFD
Position -$1.29 – – $1,196.17 – $3,760.00 $4,956.17
GSL placed @ $4.90:
Premium charged at 0.70%
-$263.20 – -$2,160.00 $932.97 – $3,760.00 $4,692.97
Blocked Funds
decrease by GSL $2,160.00 – – $3,092.97 – $1,600.00 $4,692.97
Interest on Open CFD
Position $1.29 – – $3,094.26 – $1,600.00 $4,694.26
CFD Close-out: GSL
triggered @ $4.90 $1,600.00 – -$1,600.00 $4,694.26 – – $4,694.26
Mark-to-Market Payment: Open Short CFDs over TLS marked to $4.90
-$1,600.00 – – $3,094.26 – – $3,094.26
CFD Trade Fee – 2nd
Instalment -$47.04 – – $3,047.22 – – $3,047.22