The latest cutting-edge financial products often take a bit of time to hit Thailand.

A derivatives-trading company, Global Trader headquartered in London, has finally opened its offices in Bangkok after receiving its licence in the middle of last year.

CEO Fleur Gremmen attended the company's grand opening in Bangkok.

"We are a pioneering international financial institution offering spread trading and contract for differences [CFD] services," she told The Nation.

Gremmen, who worked at JP Morgan after receiving her master's degree in biochemistry from Oxford University, and a group of market professionals established Global Trader in Europe in 2000.

"Our clients are some of the most sophisticated investors in the world, so it's natural for us to open up new dynamic markets such as Thailand and other parts of Southeast Asia ," she said.

The company has operations in Europe, Russia, Canada, South Africa and now Thailand, which will act as its Asian headquarters.

"We are proud to be the first non-Thai financial institution to be registered by the Thai Securities and Exchange that can offer derivatives to the Thai market," she said.

Global Trading customers can purchase CFDs that allow them to profit from the price difference of any designated underlying security.

"CFDs are an agreement between two parties to exchange the difference between the opening price of the contract and the closing price of the contract," she said.

For instance, an investor could buy a CFD for 100 shares of Bangkok Bank Plc (BBL) at today's price and sell the contract 10 days later at that day's closing price. The investor would receive the difference if the BBL shares were to rise and would suffer a loss if BBL stock were to fall.

By using a CFD, the investor bypasses a direct investment in the underlying shares. The investor places a cash deposit (initial margin) of 20-30 per cent, depending on the market and security they are investing in.

"CFDs have developed in the United Kingdom over the past 30 years as an alternative financial product and now account for [directly and indirectly] up to 30 per cent of the London Stock Exchange's daily turnover," Gremmen said.

CFD's can be purchased via the Internet or by calling a Global Trader broker.

"Commissions are about 0.05 per cent in and out and are based on the total value of the contract," she said.

Because CFDs are highly leveraged transactions, buyers of long CFDs must pay a daily finance charge for the difference between the contract's full purchase price and the initial margin. Those who purchase short CFDs receive interest income during the holding period.

Brian Hoegee, Global Traders Asia's managing director, who is based in Thailand, said this country's Derivatives Act of 2004 had opened the market to risk management and speculative trading derivatives products.

"Global Trader's over-the-counter products allow investors to go both long and short on margin. This creates opportunities for savvy investors to not only make money when the markets are going up, but also to make money during bear markets," he said.

Thai authorities have recognised that the highly leveraged aspects of these types of derivative instruments should only be available to very sophisticated and deep-pocketed investors.

"Global Traders CFDs in Thailand are only available to qualified institutional investors," he said.

Global Traders CFDs can only be purchased by banks, brokers, private funds and entities that have Bt500 million in registered capital or Bt100 million in funds registered for trading.

"High-net-worth individuals will not be able to trade the product unless they do it through a private fund or through their fund-management company," he said.

Global Trader directly hedges all of its CFD contracts with counterparties such as ING, UBS, Calyon, Bear Stearns, Jeffries and Kleinwort Benson.

"Global Trader aggregates orders from many clients into prime brokers. We act as an outsourced sales force for these prime brokers," he said.

Global Trader is fully authorised and regulated by the Financial Services Authority of the United Kingdom and the Guernsey Financial Services Commission, he said.

"We are registered as a derivatives dealer with the Securities and Exchange Commission of Thailand, are a member of the London Stock Exchange and a derivatives dealer of the Johannesburg Stock Exchange in South Africa and have the necessary regulatory permissions and exemptions to provide our services to accredited investors in Canada," he added.