CFD also allowed you to go long (buy) or short (sell) with margin but there is a daily cost of holding which depends on your borrowing percentage.
DLC on other hand cost 3x or 5x or 7x cheaper which is kind of immediate margin off for you to trade. There are no daily cost of borrowing but you have to beware of the EXPIRY date or DELISTING when value falls to 0 against the mother share.
If you do not have a large capital size to trade, then both product gave you leverage for trading. However, do remember that LEVERAGE can eat BOTH side, you GAIN BIG but can also LOSE BIG. In the end, Your Money, Your Risk and Your Gain.
Trading Daily Leverage Certificates in SGX
DLC are new trading product launch by SGX in 2018. All SG investors need to be Specified Investment Products (SIP) qualified before they can invest in DLCs. This can be easily done by checking with the helpdesk of your broker for the forms that you need to fill and submit.
DLC 5x Long means if the mother share link to it goes up, your DLC 5x Long will goes UP 5 times.
DLC 5x Short means if the mother share link to it goes down, your DLC 5x Short will goes DOWN 5 times.
So, they are volatile and not suitable for every investors.
Does DLCs have any expiry? What happens at expiry?
DLCs have a limited life with a maximum tenure of 3 years. At expiry the final exercised value of the DLC is calculated and automatically paid to investors.
My comments: Not sure why DLC must expired, this mean that investors have to periodically check for newly launched DLC.
What are the cost and fees?
Same as your normal share trading, depending on your brokerage firm.
If you are a FREQUENT trader, then trading DLC is much better as you can easily cover your brokerage fees if the price move in your favor.
For example:
The mother share cost 12000 per 1000 shares.
The DLC Long or Short link to it cost 5000 SGD per 1000 shares.
If it move up to 5300 per 1000 shares, you will make 300 SGD. After deducting 60 SGD for a buy and sell, your actual profits is 240.
The cost of trading is much more cheaper then trading the mother share which is price higher.
What are other risks?
You may lose all your capital if the DLC loses 100% of its value. So far, this had happend once in 16 Aug 2019 on DLC SG5xLong YZJ amid swirling rumours that its executive chairman Ren Yuanlin was taken away by Chinese anti-graft investigators in June.
SG Issuer (the “Issuer”) refers to the announcements dated
8 August 2019 (the “Announcements”) relating to (i) the permanent suspension
of the trading and market making activities for the European Style Cash
Settled Long Certificates relating to the ordinary shares of Yangzijiang
Shipbuilding (Holdings) Ltd. with a Daily Leverage of 5x (the Stock Code:
DJRW) (the “Certificates”) issued by the Issuer and
listed on the Singapore Exchange Securities Trading Limited
(the “SGX-ST”) and (ii) the Issuer’s intention to terminate the Certificates
and delist the Certificates from the Official List of the SGX-ST. As
stated in the Announcements, the Certificates have lost 100% of their value
and the trading and market making activities for the Certificates will
be permanently suspended. The Issuer wishes to announce that the
proposed early termination and delisting of the Certificates have been
approved by the SGX-ST. The Certificates will be terminated in accordance
with Conditions 13(b) and 13(c) of the terms and conditions of the Certificates
and delisted from the Official List of the SGX-ST on 19 August 2019 with
effect from 9:00 a.m. (Singapore time), and the holders
of the Certificates will not receive any payment in respect of the Certificates
upon such early termination. Holders of the Certificates who are
in any doubt as to the action they should take should consult their stockbrokers,
bank managers, accountants, solicitors or other professional advisers immediately.
Cut Loss
When market falls, Long DLC is going to FALL 5-7 TIMES faster. Therefore, it is a HIGH RISK instrument NOT FOR the weak heart traders who cannot bear to cut loss once the STOP LOSS is hit.
What are the DLC investors can trade?
You can trade the Long and Short of specific STI stocks.
There are also Hong Kong related DLC which are link to the mother shares in HK Exchange, you can find them in SGX.com.
The wonderful thing about Hong Kong DLC is that you trade in SGD and there are no conversion gain or losses.
When you trade DLC, always trade the newer ones as they have longer expiry date.
Singapore DLC - Long and Short are mirrored against the mother share.
| SGX Stock Code | Descriptions | Expiry Date |
| DXAW | DLC SG5xLong AREIT | 08 Dec 2022 |
| DGBW | DLC SG5xShort AREIT | 08 Dec 2022 |
| DLQW | DLC SG5xLong CapLand | 25 Feb 2022 |
| DKFW | DLC SG5xShort CapLand | 25 Feb 2022 |
| DCLW | DLC SG5xLong CityDev | 30 Jun 2022 |
| DCSW | DLC SG5xShort CityDev | 30 Jun 2022 |
| DOXW | DLC SG5xLong DBS | 05 Nov 2021 |
| DFFW | DLC SG5xShort DBS | 05 Nov 2021 |
| DTFW | DLC SG5xShort DBS A | 05 Nov 2021 |
| DNEW | DLC SG5xLong Genting | 25 Feb 2022 |
| DMPW | DLC SG5xShort Genting | 25 Feb 2022 |
| DEKW | DLC SG5xLong KepCorp | 05 Nov 2021 |
| DPIW | DLC SG5xShort KepCorp | 05 Nov 2021 |
| DAZW | DLC SG5xShort KepCorp A | 01 Dec 2022 |
| DUZW | DLC SG5xLong OCBC | 05 Nov 2021 |
| DMUW | DLC SG5xLongOCBC A | 01 Dec 2022 |
| DJWW | DLC SG5xShort OCBC | 05 Nov 2021 |
| DFJW | DLC SG5xShort OCBC A | 01 Dec 2022 |
| DSIW | DLC SG5xLong SIA | 30 Jun 2022 |
| DSLW | DLC SG5xShort SIA | 30 Jun 2022 |
| DMQW | DLC SG5xLong SingTel | 05 Nov 2021 |
| DDIW | DLC SG5xShort SingTel | 05 Nov 2021 |
| DGRW | DLC SG5xLong SGX | 30 Jun 2022 |
| DGSW | DLC SG5xShort SGX | 30 Jun 2022 |
| DDWW | DLC SG5xLong UOB | 05 Nov 2021 |
| DBZW | DLC SG5xShort UOB | 05 Nov 2021 |
| DEZW | DLC SG5xShort UOB A | 01 Dec 2022 |
| DLAW | DLC SG5xLong Venture | 05 Nov 2021 |
| DGOW | DLC SG5xShort Venture | 05 Nov 2021 |
| DABW | DLC SG5xShort Venture A | 22 Apr 2022 |
| DFHW | DLC SG5xLong Wilmar | 25 Feb 2022 |
| DNXW | DLC SG5xShort Wilmar | 25 Feb 2022 |
| DDBW | DLC SG5xShortWilmar A | 01 Dec 2022 |
| DXUW | DLC SG5xShort YZJ | 25 Feb 2022 |
Singapore
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