SPA3CFD manages the overall portfolio leverage by executing SPA3 trades in both
CFDs and equities. To achieve this your broker will require some basic requirements
that need to be in place:
Margin requirements
for CFDs on the CFD providers list to be low enough to achieve up to x3
or even x4 overall portfolio leverage by holding combined equities and CFD
positions in a single portfolio.
The ability
for cash and equity holdings in the SPA3CFD portfolio to cross-collateralise
CFD positions.
To achieve
the requirements of points 1 & 2, the equities and CFDs must be traded
from the same trading account.
It would
be preferable that the same execution platform is used for both CFDs and
equities.
At time of publication Share Wealth Systems is not aware of the existence
of a broker that offers the same account and a different execution platform.
Also, using the same execution platform for both CFDs and equities will
reduce the possibility trading error in the heat of the moment. After
much research and meetings with various CFD providers, the only CFD providers
/ brokers that Share Wealth Systems are aware of that can meet these requirements
are:
Commodity
Broking Services (CBS)
Stone Group
Macquarie
Prime
Commsec and E-Trade cannot meet any of the top three requirements, and
neither do CMC or IG Markets. Our research shows that the margin requirements
offered by Commsec will only allow a maximum SPA3CFD leveraged portfolio
of x1.8. Of the four CFD providers that do meet the necessary SPA3CFD
requirement Share Wealth Systems recommends (CBS) for the following reasons:
Share Wealth Systems
already offers the SPA3 Managed Portfolio Service through CBS. CBS therefore
has trained SPA3 traders on their team that know SPA3 and understand the
entry and exit signals and the risk and money management rules.
CBS will
offer new clients free off-market transfer of existing positions with their
existing broker to CBS. Furthermore, for existing SPA3 traders, if a SPA3
exit signal occurs during the off-market transfer (which could take a few
trading days), CBS will short a CFD of the stock (if a CFD exists) hence
ensuring that the SPA3 exit price is locked in for the small additional
cost of a CFD trade.
Share Wealth Systems suggest you should always undertake your own research when choosing an execution broker.
