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Currently, Clarity’s trading platform gives you access to financial markets and investment opportunities through Contracts for Difference (CFDs), rather than direct share ownership.
Whilst often associated with margin trading, Clarity also provides fully funded CFD’s called cStocks.
Currently, Clarity’s trading platform gives you access to financial markets and investment opportunities through Contracts for Difference (CFDs), rather than direct share ownership.
Physical equities are in the pipeline as part of Clarity’s development.
This approach allows you to:
It’s important to understand that when trading CFDs, you do not own the underlying asset. Instead, you enter into an agreement that reflects the price movement of that asset. As with any investment product, CFDs carry risks and may not be suitable for all investors.
Using Clarity as your self-directed trading platform means that you are trading with CFD’s or contract-for-difference with Investec Bank. CFDs are financial instruments that allow traders to speculate on the price movements of various underlying assets.
CFDs (Contracts for Difference) and owning shares represent two different ways of participating in the financial markets.
With CFDs, you don’t own the underlying asset (such as a share) but rather enter into a contract with a broker allowing you to participate in the gains and losses.
A CFD, or Contract for Difference, is a financial contract that allows you to gain exposure to the price movements of a share, ETF, or other financial instrument without owning the underlying asset. When you trade a CFD on Clarity, you enter into a contract with Investec that mirrors the performance of the chosen instrument.
If the price of the underlying asset rises, you benefit from the increase. If it falls, you incur a loss. The difference between the opening and closing price of the contract is settled in cash.
When you open a CFD position, you’re agreeing to exchange the price difference of an asset from the time you open the trade to when you close it. The economic outcome is the same whether the position is fully funded or traded using leverage.
Key characteristics of CFDs on Clarity:
CFDs offer flexibility that traditional share ownership doesn’t always provide. They allow investors and traders to tailor their approach depending on their goals, time horizon, and level of experience.
With CFDs, you can:
CFDs carry risk, and it’s important to understand how they work before trading.
Discover the key features, benefits, and considerations of CFD trading in one quick overview.
Geared CFDs (Contracts for Difference) allow you to gain exposure to the price movements of a share or ETF using leverage. Instead of putting up the full value of the investment, you commit a portion of the total value, known as margin, and enter into a contract with Investec to track the price movement of the underlying asset.
This means you can participate in the market with less upfront capital but with greater risk.
When you trade a Geared CFD on Clarity, you’re speculating on whether the price of an instrument will rise or fall. Because you’re using leverage, both gains and losses are amplified relative to the capital you’ve committed.
Key points to know:
Geared CFDs are best suited to experienced traders who understand leverage and actively manage risk.
CFDs offer flexibility that traditional share ownership doesn’t always provide. They allow investors and traders to tailor their approach depending on their goals, time horizon, and level of experience.
With CFDs, you can:
CFDs carry risk, and it’s important to understand how they work before trading.
CFDs are best suited to investors who are comfortable managing risk and understand market movements.
A Fully Funded CFD gives you full economic exposure to a share or ETF: without using leverage. You fund the entire value of the position upfront and enter into a CFD contract with Investec that mirrors the performance of the underlying asset.
In practical terms, this makes a Fully Funded CFD very similar to owning the share, just without the administrative complexity of direct ownership.
What is a fully funded CFD?
When you invest through Clarity, you gain exposure to an instrument through a fully funded Contract for Difference, or CFD.
A CFD is a contract between you and Investec that reflects the economic performance of the underlying instrument. This means you benefit when its price increases and experience a loss when its price decreases. Where applicable, you may also receive a cash adjustment equivalent to a dividend.
What does “fully funded” mean?
Fully funded means you pay for 100% of your investment upfront. You are not borrowing money or using leverage to increase your exposure.
For example, if you invest R10,000:
A 10% increase would grow the value of your position by approximately R1,000.
A 10% decrease would reduce the value of your position by approximately R1,000.
You will not be required to add margin because of normal price movements.
Your potential market loss is limited to the value of your investment, excluding applicable fees and subject to Investec’s counterparty risk.
When you sell, the value of your position – after any gains, losses and applicable fees – is returned to your Clarity account.
Do I own the underlying share?
No. You own a contract that gives you exposure to the instrument’s economic performance, rather than owning the underlying share directly.
This means you:
Benefit from increases in its value.
Experience losses if its value decreases.
May receive an equivalent cash adjustment when a dividend is paid.
Can invest in fractional amounts instead of having to buy a whole share.
Do not receive shareholder voting rights.
Can I short an instrument?
No. Fully funded CFDs on Clarity provide long-only exposure. This means you can invest with the expectation that an instrument may increase in value, but you cannot open a short position to profit from a price decline.
How is this different from a leveraged CFD?
A leveraged CFD allows you to gain greater market exposure by paying only a portion of the position’s value. This can amplify both gains and losses and may result in a margin call.
A fully funded CFD does not use leverage. You fund the full value of your position, so its price movements affect your investment proportionally.
Important to know
Although a fully funded CFD behaves similarly to an investment in the underlying instrument, it remains a contract with Investec. You are therefore exposed to Investec as the contractual counterparty, as well as to movements in the value of the instrument.
Investing involves risk. The value of your investment can go down as well as up, and you may lose some or all of the money invested.
Physical Equities refer to direct ownership of shares in a listed company. When you buy a physical equity, your name (or your nominee’s) is registered as the shareholder, and you own a portion of the business.
This is the traditional way of investing in shares.
When you invest in physical equities:
Physical equities are generally used for longer‑term investing and portfolio building. Unlike CFDs: