Complex or Leveraged Exchange Traded Products (CLPs) are financial instruments that trade on an exchange but have very different characteristics from ordinary stocks or exchange-traded funds (ETFs).
Key Characteristics of CLPs:
- They may use leverage, derivatives, or complex investment strategies to achieve their objectives.
- Examples include leveraged ETFs, inverse ETFs, and other sophisticated exchange-traded products.
- Some investment trusts may be classified as CLPs due to their structure or use of leverage, even if the leverage is relatively low.
- CLPs are often designed for short-term trading and can be risky when held for extended periods due to potential value decay.
Risks and Considerations:
- CLPs typically carry higher risks than traditional ETFs or stocks.
- They require a deeper understanding of their mechanics and associated risks.
- Investors should carefully review the product's prospectus and risk disclosures before trading.
Trading CLPs on Interactive Brokers:
- To trade CLPs on your Interactive Brokers account, you need specific trading permissions. Here is how to request them:
- Log in to Client Portal.
- Click the User menu (head and shoulders icon in the top right corner) followed by Settings
- If you manage multiple accounts, select your account within the Account Selector popup.
- Under Account Settings find the Trading section
- Click on Trading Permissions
- Find "Complex or Leveraged Exchange Traded Products" and select Request
- Review and sign the disclosures and agreements.
- Click CONTINUE
- Review financial information and investment objectives on the following pages and make any necessary changes.
Requirements for Trading CLPs:
- To be approved for trading CLPs, you must:
- Meet certain financial requirements
- Have a specific amount of prior trading experience
- Ensure the products/permissions align with your investment objectives for the specific asset class
- Be at least 21 years old
- Demonstrate product knowledge
Note
- Approval is subject to Compliance review, which typically takes 1-2 business days.
- Retail investors of IB Singapore need to complete the Specified Investment Products (SIP) Suitability Questionnaire before requesting permissions for CLPs and Leveraged Forex.
- The trading restriction does not apply to existing positions that you are attempting to close. Use the Close button to create a closing order for any related position you hold.
- UGMA and UTMA accounts are not eligible to trade CLPs.
- Residents of India are not eligible to trade CLPs.
Additional Information