Morrison Securities Trade Online in Shares, Options and Warrants Sydney Australia

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November 22, 2008 2:18 pm

Online and Phone Trading in Shares, Options, Warrants and Futures at highly competitive rates.

	What are Futures Contracts? A futures contract is a legally binding agreement made between two parties to buy or sell a commodity or financial instrument at an agreed price, on a specified date in the future. With futures contracts, the details of the underlying commodity are specified and the future delivery date is fixed. The price is the only variable and is determined through the interaction of buyers and sellers at the time when the contract is first opened.
	Could I sell futures contracts without buying it first? Yes, you can sell futures contracts without buying it first, which means taking short positions or commonly referred to as shorting the market.
	What type of futures contracts can I trade through Morrison Securities? You can trade all the financial products listed with SFE, of which some key products are SFE SPI 200™ Index Futures, Individual share futures, SFE 3 Year Bond Futures, SFE 10 Year Bond Futures, SFE 90 Day Bank Bill Futures and Exchange traded futures options.
	What are SFE SPI 200™ Equity Index Futures? SFE SPI 200™ Index Futures are the benchmark derivative products for investors trading and hedging in the Australian equity index market. SFE SPI 200™ Index Futures enable you to trade movements in the S&P/ASX 200 Index in a single transaction, thereby allowing exposure to Australia's top 200 companies without having to buy or sell shares in every company in the index.
	What are Exchange Traded Future options? On the SFE several option contracts are traded over futures contracts (commonly known as futures options). For the buyer a future option is the right, not the obligation, to enter into a futures contract at the exercise price of the futures option granted in return for a premium. Looked at from the seller’s viewpoint the seller has no right as such (other than a right to the premium). The seller will be under an obligation to enter into a futures contract at the exercise price of the futures option if the option is validly exercised. Like futures contracts options are standardised so that having bought an option it is possible to sell it later to a third party and vice versa.
	What is tick value? The minimum allowable price move in a futures contract is called a 'tick.' For example, the minimum 'tick' move in the SPI contract is 1 index point, which currently has a value of A$25.
	How do I pay money into my SFE Futures trading account? If you are trading SFE Futures, you may electronically transfer money into the Client Segregated Account (the details of which are below), clearly referencing it with the trading account number that has been assigned to you by Morrison Securities. If you haven't been issued a trading account number as yet, please reference the transfer with your full name. Account Name: Morrison Securities Pty Ltd – Client Segregated Account Bank: Commonwealth Bank of Australia BSB: 062 000 Account: 1231 8880 Alternately, you may also use BPAY (SFE Futures Accounts only). The Biller Code for Morrison Securities is 313296. Please click here to receive your unique BPAY Reference Number.
	What is Contract unit and Contract value? Contract unit refers to the quantity of the underlying instrument/commodity that the futures contract is based upon. For example, in case of Share Price Index (SPI(R)) futures, the contract value is currently fixed at A$25 x All Ordinaries Index.
	What are spot and forward months? As futures contracts essentially represent agreements to buy or sell in the future, investors are able to trade in many different delivery months, e.g. in April you could trade SPI contracts for June, September, December, and in March the following year, and so on. The contract that is closest to maturity (in this example the June contract) is known as the spot month. The other months listed are called forward months.
	What are the trading hours for the abovementioned future contracts? Details of SFE Trading hours can be obtained at the ASX site http://www.asx.com.au/investor/education/basics/trading_hours_sfe.htm
	How are Future contracts settled? Futures contracts can be settled either by the exchange or delivery of the underlying commodity or else in cash. In cash settled contract, the holder of the futures contract either receives or pays the difference in cash value between the traded price and the closing futures price. In a deliverable Contract however, the actual transfer of the underlying commodity, takes place between the buyer and seller.
	What is the last trading day of each future contract? All trading in expiring contracts ceases at 12.00pm on the Third Thursday of the settlement month, unless specified otherwise. Non-expiring contracts will continue to trade as per the stated trading hours.
	Can I buy/sell my contracts before the expiry of contract? Yes, future contracts can be bought/sold before expiry. For example, Although the futures contracts purchased were due to expire at the end of June there was no requirement for the trader to hold the contracts until this time. Once opened, a futures contract can be liquidated by the trader at any time (i.e., weeks, days or even minutes after it is first opened). To do this, the trader would simply sell June SPI futures back into the market to offset those originally purchased.
	What is Initial Margin? The initial margin is the amount of money that is deposited on each futures contract held as security against adverse price moves in the market.
	How much I have to deposit with Morrison Securities as initial margin? You need to deposit minimum $15000 as initial margin with Morrison Securities.
	What is Variation Margins? Variation or settlement margins, as they are otherwise known, are payments that must be made to cover price movements that occur in the market once a position has already been established. For example, a client would have to pay a variation margin on a bought futures position in the event that the market price for that commodity fell after the position was first established. Alternatively, if the market price rose, the client would receive a variation margin payment with the proceeds being credited to the account.
	When is Variation Margin paid/ received? Variation margins must be paid and received on a daily basis. During times of extreme volatility, it is even possible for these margins to be called on an intra-day basis.
	What will happen if I will not be able to pay the variation margin? If an Investor not been able to meet his variation margin requirements, a broker may liquidate the client's position. The money owed will then be deducted from the initial margin monies that are refunded to the investor.
	What commissions will I be charged? For a full description of the charges, please see our Commission Structure

	What is margin lending? Margin lending means borrowing to invest, and is also known as gearing. It allows you to borrow against your existing assets to invest in the sharemarket or managed funds. By combining your own funds with a margin loan, you are able to invest more money, more diversely than you otherwise would have been able to. As there is a bigger investment working for you, there is the potential to increase your investment returns.
	How does it work? Much like mortgaging property under a property loan, your investment portfolio is held as security for the margin loan. The amount you are permitted to borrow from time to time is a function of the lending ratio of the individual investments in your portfolio applied to the market value of those investments.
	What are the benefits? Increase the total amount of money invested, with the potential to increase the investment returns, including dividend income The larger pool of investable funds available allows you to spread capital across a diversified investment portfolio, which may in turn reduce the volatility A margin loan can be used to unlock some of the value of your existing investment portfolio without having to sell your investments or crystallising capital gains Borrowing against your investments through a margin loan can be tax efficient when used as part of an overall financial plan, as loan interest is generally tax deductible when used for investment purposes (depending on your circumstances)
	What are the risks? While borrowing to invest or gearing increases the potential return on investments, it is important to recognise that margin lending can also multiply the effect of falls in sharemarket values Ask your Financial Consultant to determine whether a geared portfolio is suitable for your particular investment objectives and financial position We recommend that you ensure that you have adequate financial resources to meet your interest payments as well as absorb potential falls in the value of your investments (which may result in a margin call being made)
	Who can open a Margin Loan? Individuals, partnerships, companies and trusts can open a margin loan.
	How much can I borrow? The amount you can borrow will be determined by your loan limit and the approved securities (shares or managed funds) you lodge as security on your margin loan. There are no minimum loan requirements.
	Can I draw down cash? You can draw down cash from your margin loan to provided you have enough funds available. These funds will be credited to an account you nominate.
	Can I transfer my existing loan? Yes, simply complete the Loan / Security Transfer Form located in Part C of the Application Booklet.
	How do I lodge my existing shares? You will need to complete the Loan / Security Transfer Form located in Part C of the Application Booklet. If the securities are held issuer sponsored you will need to provide a copy of a recent statement in conjunction with this form.
	Can I use another person’s shares? Yes, but only once they have read and understood the terms and conditions in the margin lending brochure. They will simply need to complete the Application Booklet as guarantor for your margin loan.
	What happens to dividends, dividend reinvestment plans, shareholder discounts and other shareholder entitlements? All securities will be held on your behalf by your Margin Lender, and you will receive all benefits attached to your investments. However, you will need to instruct your Margin Lender upon establishment of your margin loan how you wish to receive your dividends, whether it be cash or reinvested in shares. Where a company initiates a corporate action you will be notified and asked to send written instructions detailing your preference for the particular transaction.
	What is a loan limit? The loan limit is the maximum amount you can borrow against the investments.
	What is the loan to value ratio? The loan to value ratio (LVR) is the percentage of the security's market value we will lend to you. Eg: If you hold BHP shares worth $5,000 we would lend you 75% of $5,000. That is, you would have $3,750 to invest in other securities or acceptable business purposes. If you were to combine the $5,000 of BHP shares with a new portfolio comprising other stocks also with the 75%LVR, then we would be able to lend up to $15,000 giving you a combined portfolio of $20,000
	What is a margin call? A margin call is when the amount of funds you have borrowed is greater than the loan limit inclusive of the margin buffer. That is, the current LVR is greater than the maximum LVR.
	What is a buffer? A buffer is provided against your securities to absorb any market volatility. There is a 5% buffer given for shares and managed funds.
	What happens if I fall into margin call? If your margin loan falls into a margin call, you will need to do one of the following: Lodge additional security that we can lend against; Reduce your loan by lodging cash; Sell sufficient security to rectify the margin call. If you do not action your account by 2pm the following business day your Margin Lender will act on your behalf to rectify the position.
	How can I avoid margin calls? You can mitigate the risk of margin calls by: borrowing conservatively; diversifying your investments; making monthly interest repayments; crediting your dividends to your share loan; using your investment income to purchase further shares or managed fund units; closely monitoring your share loan.
	How often do I receive statements? Upon establishment of your margin loan, you will elect the method and frequency at which you receive your statements. Statements can be sent monthly, quarterly or semi-annually via email or post.
	How do I place share transactions on my margin loan? You will need to establish a trading account with Morrison Securities specifically for settling trades through your margin loan. The details of this account should reflect the exact details of your margin loan. If you wish to place trades you simply notify Morrison Securities who will place the trade in the market. Upon execution of the trade an email and/or fax will be sent to us to confirm the trade details for settlement on T+3.
	How do I buy and sell managed fund investments through my margin loan? If you wish to purchase managed funds you will need to provide an instruction letter to your Margin Lender along with the relevant managed fund application form completed with investment details only. Please leave the applicant details and signature section blank. Upon receipt of your instruction we will complete the application on your behalf under our nominee company and lodge the investment with the relevant fund manager. If you wish to sell an existing managed fund held as security on your margin loan simply complete the redemption request form located on our homepage under Resources or write your own letter and fax it to us on (02) 9210 1888.
	What are the interest payments and how are they calculated? Interest is calculated on your loan amount daily and charged monthly. Alternatively, you can fix and prepay interest 12 months in advance. Interest rates are updated periodically and you can view these rates on our homepage under Resources.
	How does writing calls affect the value given for my shares? You can use your shares as security to write covered calls. This may allow you to earn additional income which can be used to reduce your total borrowings. By writing covered calls you may limit the amount of security value available to borrow if the call option becomes in the money. Where a covered call option is in the money, your security value will be capped at the strike price of the call multiplied by the number of contracts.
	What happens if I get exercised on my open call position? If you are exercised on your open call position, you will automatically have to sell these shares to the buyer of the call option.