The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
For those interested in 8.5s read on, those not just ignore
I think this is what's going on, which is basically good news because it indicates net CFD positions within the UBS umbrella moving longer, and may well be indicative of CFD shorts closing (but equally be long bets getting bigger or some combination)
It seems UBS are hedging the longer CFD positions by buying physical shares and the CFD transaction listed is the flattening of the CFD position with a short
"It remains common for hedge funds and other asset managers to use CFDs as an alternative to physical holdings (or physical short selling) for UK listed equities, with similar risk and leverage profiles. A hedge fund's prime broker will act as the counterparty to CFD, and will often hedge its own risk under the CFD (or its net risk under all CFDs held by its clients, long and short) by trading physical shares on the exchange. Trades by the prime broker for its own account, for hedging purposes, will be exempt from UK stamp duty."
Tig,
Yeah, my bad, didn't see that one, seems odd it had the same price as the UT....
But the UT does set the closing price
Postman
The closing price isn't a normal trade, it's a single price determined in a post-close auction between the market makers, its basically their way of correcting their exposures by offering to buy or sell. All the shares in the auction go at the same price, in this case 32.90 (the result is the so-called UT). The volume was very small, about 5,000 so not a great deal of significance
There will be a similar auction about 7:45 on Monday before trading proper starts
Gibb
As a real or gedenken experiment anyone can open an IG Demo account - they give you 100K to play with in a CFD account
You can open a short in your CFD account (even on EUA if you want to lose some of that 100K)
then you can close it by simply pressing the button marked close - you don't need to go to your broker and buy shares
Then you could open another short in your CFD account phone them up and say "I've bought some shares - how do I use them to close my CFD short?" - and then wait a month for them to stop laughing
Invest2save
From the website you link to:
"By the 3rd November, the Royal Bank of Scotland was trading at 35.93 pence, and you decide to close your short position and take your profits. You would buy 20,000 RBS CFDs to close out the trade, and that would give you a profit of 11.15 pence per share. The profit on your trade would be £2,230."
You would buy 20,000 RBS CFDs - not 20,000 RBS shares!
Shares and CFDs are totally different instruments - you can have both but you can't close out a position in one with the other
I believe this is what is being reported (taken from the takeover code):
"A new note 5(a) on Rule 8 clarifies that where two or more separate but related dealings are executed at or around the same time ("linked transactions"), details of both must be disclosed. For example, where a party to a contract for differences (CFD) referenced to target shares actually acquires some of those shares in the market in order to hedge its exposure, if the party is subject to the disclosure requirements of Rule 8 (ie. because it is an associate of the bidder or target, or holds more than 1% of the target's shares) it will have to disclose both the acquisition of shares and the entry into the CFD."
Tilly
Isn't the sun over the yardarm by now?
by the way everyone - the volumes being reported in the 8.5s are absolutely miniscule in terms of total shares, so it is effectively irrelevant if they are shorts closing or not
so saying they are not shorts closing is not a de-ramping statement
there probably are shorts closing (if there are indeed any open) but these 8.5s are not imo evidence of that
Mac,
You don't close a CFD short by buying physical shares...
jobbytouch
"Are we 100% sure its a short closing?"
Stevengali suggests not and ten posters ticked him up including me
make of that what you will...
waqas
PPS - if you want to read the best bullish poster imo then it is multibagger - he puts a very convincing case for the upside based on fundamentals
I would disregard anyone who says it's about to turn positive, it can't go any lower etc, ppl have been saying that throughout the prolonged slide from around 50p
waqas
I am the most respected poster on this board
worst case you may lose a big chunk of your 10K investment
best case you may make many multiples of that - say 50K on top of the original 10K (and perhaps more)
Only you can put estimates on the probability of those outcomes, and anything in between
Also only you can decide how critical that 10K is (well probably 9K now!)
PS I am probably NOT the most respected poster - but I should be!
mrninja
yes they dynamically hedge their net exposure in each product - like a "pure" MM they don't want to be exposed themselves
friendsp,
yah agreed, I mentioned IG in the context of them hedging their net CFD position
mrninja
IG used to say they hedge with futures - difficult to hedge a financial short with physical shares
monkey
where did options come into it?
Sharpeye,
your answer better because he was talking about the CFD shorts I think...
...but the CFD shorts will still need to be closed out
Mac,
Yes absolutely, at whatever the sp price then is
Slightly more difficult if the shares are suspended...
Jambo
"How do you know it is a short closing ?"
It isn't
It is a physical buy of shares and a further short on CFD. It says it on the RNS. There is no net change in position
j4ams
do does google explain how you close a physical short by buying physical shares and taking a short cfd position????
please feel free to believe whatever you want to...
j4ams
well i'm outvoted - this board believes it's a short closing
(just as well trading doesn't follow democratic principles!)