FAQs

1. How do I open an account with your company?

There are several ways to open an account. You can either call us at 1800 626 099 or e-mail us at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it and we will send you the forms. Another way is to download the forms from our Open an Account page and send them to us for processing. You are able to pay your opening funds into your account via Bpay or via a cheque made out to MF Global Australia Limited. Once you fill out the forms, send both the forms and the cheque to:

MF Global
PO Box N699
Grosvenor Place
NSW 1220 Australia

We recommend calling us prior to sending the account forms, this way we can go over everything together to make sure all pages are filled out correctly.

2. How long does it take to open an account?

Futures accounts are usually opened within 5 days. Cleared funds must be in your account prior to trading. Funds may take up to five days to clear (typically 1 day for EFT, 2 days for Bpay and 5 days for cheques). Acceptable forms of payment include direct deposit, personal or bank cheque, Bpay, Electronic Funds Transfer (EFT) or swift transfer.

3. How can I be sure that my funds are safe?

Our assurance is very simple. All cheques are made out to MF Global Australia Limited. MF Global is one of the largest and most secure broking and clearing firms in the world. MF Global is located in the UK and is listed in the FTSE 100 holding millions in assets. Several of the world’s largest hedge funds trade through MFGA. Your funds are held separate to that of MF Global’s, in a client segregated account with an Australian regulated bank and are protected by the Australian client money rules.

4. I never traded futures & want to start trading on-line?

This is one of the biggest mistakes that beginning traders make. Unfortunately, trading futures and options is VERY different than trading on-line through an on-line stock brokerage company. Beginning traders need guidance about expiration dates, volatility, reports, liquidity and several other small factors that can make a big difference in the bottom line. We highly advise starting out with a broker, at least for the first few months of trading.

5. Is paper trading accurate?

Paper trading does not involve emotion. This single factor is by far the most important element of trading. When real money is on the line, people’s decision making process, is clouded by fear and greed. These are the two of your worst enemies in commodity trading. Paper trading is great for learning terminology, gaining understanding of the markets and great for building confidence in a specific trading methodology. However, how someone does on paper, has nothing to do with how they will trade with real money.

6. Should I trade futures or options when starting out*?

This is another question we get asked all the time. Whether you should trade options or futures contracts in the beginning largely depends on your account size. A small account is anything in the neighbourhood of $5,000 dollars. The average loss for a very conservative futures contract such as bean oil or corn will be in the $500-$1,000 dollar range. This is realistic when you take into account slippage and commission costs. Also, there are only a handful of contracts that are in this small leverage range. Therefore, common sense should tell you that a small account will only be able to afford a few losers before being wiped out. This is not a practical way to trade a small account because a few losing trades may wipe out the entire account. This can be emotionally devastating, especially for a beginning trader. Contrary to what you may have heard, most professional traders are right on only 35 % of the time on their trades. The key to profits is not how often you are right but how much you make when you are right. This is the difference between expectancy and probability. This is the primary difference between beginning traders and professional traders. Beginning traders always feel that they have to be right, professional traders ride the winners and take very small losses.

7. How can I track my positions and my account status?

Our web site www.mfglobal.com.au has full access to your account status 24 hours per day.

8. I work the late shift, what are your evening hours?

Our standard office hours are from 6am Monday morning to 9am Saturday morning (AEST). You can reach us 24 hours a day during those hours.

9. How much risk am I subject to when I buy or sell a SPI® Futures Contract?

The high gearing or leverage characteristic of futures means that SPI® futures are a high risk/high reward investment. With an initial deposit (currently $5,000*) per SPI® contract, a trader is subject to a profit or loss of $25 per point before brokerage. For example, the SPI® may move 20 points in a single day, which represents a profit or loss of $500 before brokerage.

*Initial margins are subject to change.

10. Can I lose more than the amount I initially invest in SPI futures?

As a result of the high gearing of SPI® futures, it is possible to lose more than the initial margin. One SPI® contract gives the trader an effective exposure to a balanced share portfolio worth around $125,000.

11. How does the margin system actually work?

Each day the Sydney Futures Exchange Clearing House conducts a ‘mark-to-market’ exercise, whereby brokers are required to pay additional margins on all open contracts showing profits through favourable price movements. The brokers then passes these on to individual clients, debiting their accounts for unrealised losses or crediting their accounts for unrealised gains. This process is one of the most important functions of the Clearing House as it ensure that every open contract is always covered by a minimum deposit and that all profits and losses are received or paid as soon as they occur.

12. Is there a way I can be reasonably assured of preventing losses from increasing?

On effective way to prevent losses from increasing is through the use of stop-loss orders. A stop-loss is an order given to your broker, instructing a position to be closed in the event of a certain price trading. If, for example, a trader buys a SPI® contract at 5000, a stop loss order could be placed at 4980. If the market fell to this level, the broker would automatically close the position by selling a SPI® contract at 4980 or at the next available bid price. This order would be given to the broker as “sell one December SPI® at 4980 on stop”.

13. Are there other ways of limiting risk?

A trader can also use a variety of options strategies to limit risk in a futures trade. A trader may, for example, buy a December SPI® and at the same time buy an ‘out-of-the-money’ December SPI® put option. This strategy protects the trader in the event of a significant fall in the market but still provides for a high return if the market were to rise. Your registered futures broker can advise on these strategies.

*There is a risk of loss in futures and options trading.

14. Do I constantly have to watch the market if I trade SPI® futures?

Futures are generally regarded as a time intensive investment. If a trader makes use of stop-loss orders, however, and has a disciplined trading strategy, it is not always necessary (though it is recommended) for the trader to be aware of the market throughout the day unless a very short-term trading strategy is followed.

15. Would it be easier for me to stick with what I know and trade shares or CFDs?

While Futures are often perceived as complex, the reality is that the principle of Futures is quite straightforward. SPI® futures are a powerful investment tool, offering the trader many advantages over trading physical shares.

16. What brokerages can I expect to pay and how does this compare with brokerage on share transactions?

Brokerage rates are generally negotiable between client and broker but as a guide, commission charged could be around $20 per contract per side (although this will vary depending on the volume and frequency of contracts traded). As a comparison, brokerage for a $100,000 portfolio of shares would be approximately $500 as well as having to pay the additional GST.

17. Am I able to exit a trade easily if I change my mind?

Having opened a SPI® contract, a trader is able to take advantage of the high volumes and liquidity* in the futures market and close the trade immediately. Traders are therefore able to ‘day-trade’ the SPI® - that is, open and close a futures position within the same day.

*Please note that while a futures contract is generally considered a highly liquid derivative product, certain types of futures contracts can be illiquid during certain periods of trading.

18. How long does a SPI® futures contract last?

There are six separate SPI® contracts - March June September and December for the current year, and March and June for the following year. For example, upon expiry of the March contract, the June contract becomes the actively traded contract although the five following contract quarter months are also available for trading. A trader buying a March SPI® contract must either close the contract before it expires or settlement will occur automatically at contract expiration date. Trading in each contract terminates on the last business day of the contract month and cash settlement occurs on the second business day following the last day of trading.

19. If I am a long-term investor, how can I maintain a position for more than the life of the contract?

While the immediate SPI® contract has a definite life of up to three months, a medium or long-term investor is able to maintain a position by rolling over the contract. This simply involves closing the contract near to expiry and opening an equivalent contract in the next month.

20. Do I have to take delivery of any shares when the SPI® contract expires?

SPI® futures have a mandatory cash settlement, meaning that a position is held until the contract’s expiry, the contract is automatically closed and all profits or losses accrue at the closing price. The closing price is the All Ordinaries Index level on the expiry day as provided by the ASX. A trader therefore, does not take delivery of any shares but is debited or credited cash.