How do they cover stamp duty on DMA CFD

[kensfishbar1]

Hi,

As I understand that some DMA CFD provider hedge their client position on the stock market. I thought buying shares will need to pay stamp duty. So does CFD provider needs to pay stamp duty when buying shares? If they need to pay, they must some how need to charge the stamp duty via spread, commission etc.... However, I do not read anything about how the stamp duty affect the charges we pay to the CFD provider.

Many thanks.

 

[ns1000]

In the UK, their is an exemption to stamp duty for an LSE member who is buying to hedge a derivative transaction.

Elsewhere, it's generally included in the commission you pay.

 

[kensfishbar1]

In the UK, their is an exemption to stamp duty for an LSE member who is buying to hedge a derivative transaction.

Elsewhere, it's generally included in the commission you pay.

Thanks for the info.

Does it mean that an LSE member can buy shares to write a cover call option without paying stamp duty on the share transaction?

 

[whipsaw]

In the UK, their is an exemption to stamp duty for an LSE member who is buying to hedge a derivative transaction.

ns1000 is right,
usually there exist two exemptions, Market Maker Exemption and Broker Dealer Exemption.

MM Exemption is for those Brokers available where they acting as market maker in the securities.

Broker Dealer Exemption is available when a Broker firm is a member of the ISE or LSE and where shares are acquired as principal.

 

[ns1000]

Thanks for the info.

Does it mean that an LSE member can buy shares to write a cover call option without paying stamp duty on the share transaction?

Exactly right.