CFDs on commodity assets are based on the underlying futures contracts. Saxo Capital Markets offers CFDs on crude oil, heating oil, gold, silver, corn and wheat.
The benefit of trading commodities CFDs is that it offers a flexible alternative to trading large lot sizes that are stipulated by the exchanges. Clients will be able to trade fractional lot sizes of the corresponding futures, normally being a minimum of 10% of the contract sizes. Additionally, the margin requirements can be lower than those of futures, which enables greater leverage possibilities. However, the cost of trading these CFDs is built into the price quoted, rather than having a separate commission charge, as with the corresponding futures contracts. This means that the price quoted for the CFDs on the Saxo Capital Markets' trading platform may be slightly different, than the futures price for the stated commodity.
Furthermore the charges may not be exactly pro rata. Unlike equity-based CFDs, Commodities CFDs have an expiry date. As a result, the front month and following month is quoted. The contract will be closed out on a cash-settled basis, on the expiry date of the underlying future with no automatic rollover.