Meritz Securities Launches Domestic Stock CFDs

[Asia Economy Reporter Ji Yeon-jin] Meritz Securities (CEO Choi Hee-moon) announced on the 5th that it will launch the ‘Domestic Stock Contract for Difference (CFD) Service’ on the 9th.

CFD is a product exclusively for professional investors, an over-the-counter derivative that settles the difference between the entry price and the liquidation price in cash without actually holding the underlying stock.

Unlike spot stocks, the CFD service allows the use of leverage and enables stock trading with a lower margin compared to similar financial products such as credit loans or collateral loans. It also offers the advantage of being able to enter into short-selling contracts as well as purchase contracts, allowing profit generation and hedging even in a declining market. However, since the risk of investment loss is higher than general stock investment, only registered professional investors can use this service.

Through this service, over 2,500 domestic stocks can be traded, and income generated from these transactions is subject to the derivative product capital gains tax rate (11%, including local income tax). Additionally, like spot stocks, CFDs pay dividends, making it possible to devise dividend stock investment strategies using leverage.

Meritz Securities’ CFD service adopts a method of providing the service through its own hedging without going through foreign securities firms, unlike most securities companies. Thanks to this, despite being transactions based on domestic stocks, the inconvenience of having to deposit dollar margin with separate currency exchange fees has been eliminated, and it has been able to offer industry-lowest trading commissions and interest rates.

By opening a CFD-dedicated account through non-face-to-face account opening on the Meritz Securities smartphone app, an industry-lowest trading commission of 0.10% is applied for online trading. Another advantage is that, breaking the practice of foreign securities firms deducting a certain portion before paying dividends arising from the underlying stocks, the full amount of dividends is paid to investors.

Song Young-gu, Executive Director of Retail Business Division, said, “CFD will appropriately supply liquidity to the capital market while enabling investors to employ various investment strategies using leverage and short selling,” and added, “We plan to expand the service to overseas stocks in the second half of the year.”

This content was produced with the assistance of AI translation services.