Overview of IBKR issued Share CFDs

The following article is intended to provide a general introduction to share-based Contracts for Differences (CFDs) issued by us.

For Information on our Index CFDs click here. For Forex CFDs click here. For Precious Metals click here.

Topics covered are as follows:

I. Overview

II. Comparison Between CFDs and Underlying Shares

III. CFD Tax and Margin Advantage


V. CFD Resources

VI. Frequently Asked Questions

Risk Warning

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

63% of retail investor accounts lose money when trading CFDs with us.

You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

ESMA Rules for CFDs (Retail Clients of IBKRs European entities, including so-called F segments)

The European Securities and Markets Authority (ESMA) has enacted new CFD rules effective 1st August 2018.

The rules include: 1) leverage limits on the opening of a CFD position; 2) a margin close out rule on a per account basis; and 3) negative balance protection on a per account basis.

The ESMA Decision is only applicable to retail clients. Professional clients are unaffected.

Please refer to the following articles for more detail:

ESMA CFD Rules Implementation at IBKR (UK) and IBKR LLC

ESMA CFD Rules Implementation at IBIE and IBCE

I. Overview

IBKR CFDs are OTC contracts which deliver the return of the underlying stock, including dividends and corporate actions (read more about CFD corporate actions).

Said differently, it is an agreement between the buyer (you) and us to exchange the difference in the current value of a share, and its value at a future time. If you hold a long position and the difference is positive, we pay you. If it is negative, you pay us.

Our Share CFDs offer Direct Market Access (DMA). Our Share CFD quotes are identical to the Smart-routed quotes for shares that you can observe in the Trader Workstation. Similar to shares, your non-marketable (i.e. limit) orders have the underlying hedge directly represented on the deep book of those exchanges at which it trades. This also means that you can place orders to buy the CFD at the underlying bid and sell at the offer.

To compare our transparent CFD model to others available in the market please see our Overview of CFD Market Models.

We currently offer approximately 8500 Share CFDs covering the principal markets in the US, Europe and Asia. Eligible shares have minimum market capitalization of USD 500 million and median daily trading value of at least USD 600 thousand. Please see CFD Product Listings for more detail. Most order types are available for CFDs, including auction orders and IBKR Algos. CFDs on US shares can also be traded during extended exchange hours and overnight. Other CFDs are traded during regular hours.

II. Comparison Between CFDs and Underlying Shares

Depending on your trading objectives and trading style, CFDs offer a number of advantages compared to stocks, but also some disadvantages:

No stamp duty or financial transaction tax (UK, France, Belgium, Spain) No ownership rights
Generally lower margin rates than shares* Complex corporate actions may not always be exactly replicable
Tax treaty rates for dividends without need for reclaim Taxation of gains may differ from shares (please consult your tax advisor)
Exemption from day trading rules  
US ETFs tradable as CFDs**  

*IB LLC and IB-UK accounts.

**EEA area clients cannot trade US ETFs directly, as they do not publish KIDs.

III. CFD Tax and Margin Advantage

Where stamp duty or financial transaction tax is applied, currently in the UK (0.5%), France (0.3%), Belgium (0.35%) and Spain (0.2%), it has a substantially detrimental impact on returns, particular in an active trading strategy. The taxes are levied on buy-trades, so each time you open a long, or close a short position, you will incur tax at the rates described above.

The amount of available leverage also significantly impacts returns. For our European entities, margin requirements are risk-based for both stocks and CFDs, and therefore generally the same. IB-UK and IB LLC accounts however are subject to Reg T requirements, which limit available leverage to 2:1 for positions held overnight.

To illustrate, let's assume that you have 20,000 to invest and wish to leverage your investment fully. Let's also assume that you hold your positions overnight and that you trade in and out of positions 5 times in a month.

Let's finally assume that your strategy is successful and that you have earned a 5% return on your gross (fully leveraged) investment.

The table below shows the calculation in detail for a UK security. The calculations for France, Belgium and Spain are identical, except for the tax rates applied.

  UK CFD UK Stock UK Stock
  All Entities EU Account IB LLC or IBUK Account
Tax Rate 0% 0.50% 0.50%
Tax Basis N/A Buy Orders Buy Orders
# of Round Trips 5 5 5
Commission Rate 0.05% 0.05% 0.05%
Overnight Margin 20% 20% 50%
Financing Rate 1.508% 1.508% 1.508%
Days Held 30 30 30
Gross Rate of Return 5% 5% 5%
Investment 100,000 100,000 40,000
Amount Financed 100,000 80,000 20,000
Own Capital 20,000 20,000 20,000
Tax on Purchase 0.00 2,500.00 1,000.00
Round-trip Commissions 500.00 500.00 200.00
Financing 123.95 99.16 24.79
Total Costs 623.95 3099.16 1224.79
Gross Return 5,000 5,000 2,000
Return after Costs 4,376.05 1,900.84 775.21
Difference   -57% -82%

The following table summarizes the reduction in return for a stock investment, by country where tax is applied, compared to a CFD investment, given the above assumptions.

Stock Return vs CFD Tax Rate EU Account IB LLC or IBUK Account
UK 0.50% -57% -82%
France 0.30% -34% -73%
Belgium 0.35% -39% -75%
Spain 0.20% -22% -69%


EEA area residents who are retail investors must be provided with a key information document (KID) for all investment products. US ETF issuers do not generally provide KIDs, and US ETFs are therefore not available to EEA retail investors.

CFDs on such ETFs are permitted however, as they are derivatives for which KIDs are available.

Like for all share CFDs, the reference price for CFDs on ETFs is the exchange-quoted, SMART-routed price of the underlying ETF, ensuring economics that are identical to trading the underlying ETF.

V. Extended and Overnight Hours

US CFDs can be traded from 04:00 to 20:00 EST, and then again overnight from 20:00 to 3:50 the following day. Trades in the overnight session are attributed to the day when the session ends, even if a trade is entered before midnight the previous day. This has implications for corporate actions and financing.

Trades entered before midnight on the day before ex-date will not have a dividend entitlement. Trades before midnight will settle as if they had been traded the following day, delaying the start of financing.

VI. CFD Resources

Below are some useful links with more detailed information on our CFD offering:

Contract Specifications

CFD Product Listings

CFD Commissions

CFD Financing Rates

CFD Margin Requirements

VII. Frequently Asked Questions

What Stocks are available as CFDs?

Large and Mid-Cap stocks in the US, Western Europe, Nordic and Japan. Liquid Small Cap stocks are also available in many markets. Please see CFD Product Listings for more detail. More countries will be added in the near future.

Do you have CFDs on other asset classes?

Yes. Please see Index CFDs - Facts and Q&A, Forex CFDs - Facts and Q&A and Metals CFDs - Facts and Q&A.

How do you determine your Share CFD quotes?

Our CFD quotes are identical to the Smart routed quotes for the underlying share. We do not widen the spread or hold positions against you. To learn more please go to Overview of CFD Market Models.

Can I see my limit orders reflected on the exchange?

Yes. We offer Direct market Access (DMA) whereby your non-marketable (i.e. limit) orders have the underlying hedges directly represented on the deep books of the exchanges on which they trade. This also means that you can place orders to buy the CFD at the underlying bid and sell at the offer. In addition, you may also receive price improvement if another client's order crosses yours at a better price than is available on public markets.

How do you determine margins for Share CFDs?

We establish risk-based margin requirements based on the historical volatility of each underlying share. The minimum margin is 10%, making CFDs more margin-efficient than trading the underlying share in many cases. Retail investors are subject to additional margin requirements mandated by the European regulators. There are no portfolio off-sets between individual CFD positions or between CFDs and exposures to the underlying share. Concentrated positions and very large positions may be subject to additional margin. Please refer to CFD Margin Requirements for more detail.

Are short Share CFDs subject to forced buy-in?

Yes. In the event the underlying stock becomes difficult or impossible to borrow, the holder of the short CFD position may become subject to buy-in.

How do you handle dividends and corporate actions?

We will generally reflect the economic effect of the corporate action for CFD holders as if they had been holding the underlying security. Dividends are reflected as cash adjustments, while other actions may be reflected through either cash or position adjustments, or both. For example, where the corporate action results in a change of the number of shares (e.g. stock-split, reverse stock split), the number of CFDs will be adjusted accordingly. Where the action results in a new entity with listed shares, and we decide to offer these as CFDs, then new long or short positions will be created in the appropriate amount. For an overview please CFD Corporate Actions.

In some cases it may not be possible to accurately adjust the CFD for a complex corporate action such as some mergers. In these cases we may terminate the CFD prior to the ex-date.

Can anyone trade our CFDs?

All clients can trade our CFDs, except residents of the USA, Canada, Hong Kong, New Zealand and Israel. There are no exemptions based on investor type to the residency based exclusions.

What do I need to do to start trading CFDs?

You need to set up trading permission for CFDs in Client Portal, and agree to the relevant disclosures. If your account is with IBKR (UK) or with IBKR LLC, we will then set up a new account segment (identified with your existing account number plus the suffix “F”). Once the set-up is confirmed you can begin to trade. You do not need to fund the F-account separately, funds will be automatically transferred to meet CFD initial margin requirements from your main account.

If your account is with another of our entities, only the permission is required; an additional account segment is not necessary.

Are there any market data requirements?

The market data for our Share CFDs is the market data for the underlying shares. It is therefore necessary to have market data permissions for the relevant exchanges. If you already have market data permissions for an exchange for trading the shares, you do not need to do anything. If you want to trade CFDs on an exchange for which you do not currently have market data permissions, you can set up the permissions in the same way as you would if you planned to trade the underlying shares.

How are my CFD trades and positions reflected in my statements?

If you are a client of IBKR (U.K.) or IBKR LLC, your CFD positions are held in a separate account segment identified by your primary account number with the suffix “F”. You can choose to view Activity Statements for the F-segment either separately or consolidated with your main account. You can make the choice in the statement window in Client Portal.

If you are a client of our other entities, there is no separate segment. You can view your positions normally alongside your non-CFD positions.

Can I transfer in CFD positions from another broker?

We do not facilitate the transfer of CFD positions at this time.

Are charts available for Share CFDs?


In what type of account can I trade CFDs e.g., Individual, Friends and Family, Institutional, etc.?

All margin and cash accounts are eligible for CFD trading.

What are the maximum a positions I can have in a specific CFD?

There is no pre-set limit. Bear in mind however that very large positions may be subject to increased margin requirements. Please refer to CFD Margin Requirements for more detail.

Can I trade CFDs over the phone?

No. In exceptional cases we may agree to process closing orders over the phone, but never opening orders.