trading team

They can be bought or sold there at the current bond price. Bonds are not subject to exchange trading in most countries, so they do not have to be traded on the stock exchange. Over-the-counter (OTC) trading is possible.

There are various brokers for bond trading. As a rule, you can buy actual bonds from your stock broker. If you do not yet have a securities account, you must first open one with a broker. Then you can choose the right bond and buy or sell it through your broker.

Bond CFDs, on the other hand, can be traded with us. With our CFD offer, you can profit from the volatility of bond prices without having to buy the underlying asset. Over-the-counter trading is available with us, so you can trade fractions of a contract.

What is there to consider when trading?

A bond is a security that gives the investor (creditor) the right to payment of agreed interest and repayment of the investment amount.

Accordingly, the bond is a claim under the law of obligations to two things:

- Interest payment: payment of interest at a previously defined interest rate. This interest rate is specified in the coupon. The buyer of a bond receives the fixed interest in return for lending money during the term.

- Redemption: Repayment of the original investment amount at maturity.

The buyer of a bond thus grants a loan to a company or a state. It is therefore debt capital. Debt capital means that the capital comes from other capital providers (creditors). It refers to the debts, i.e. liabilities and provisions of a company. The opposite of debt capital is equity capital, which includes shares, for example. Equity capital is capital that comes from the company's own financial resources, for example from partners or shareholders (co-owners in a company).

In addition, fees are due for every trade in bonds.

How high are the fees for bond trading?

The fees depend on the broker. As a rule, the same fees apply as for share trading and trading in other securities. The order fees do not differentiate between the types of securities. In bond trading, order fees, trading venue fees and accrued interest are due.

Order fees

Order fees are charged for each purchase or sale of a security, i.e. per order. These fees usually consist of a basic fee and a percentage of the order volume. When choosing a broker, you should select one that offers a fixed-price model. Otherwise, the fees can be very high for larger investment amounts. For example, there are also brokers who offer trading free of charge.

Trading venue fees

Trading venue fees are external costs charged by the trading venue (the exchange). They depend on the respective trading centre. Most brokers like Singapore Exness charge trading venue fees in addition to order fees. On domestic exchanges, these are usually cheaper or even free of charge. On foreign exchanges they can be considerably higher.

trading with broker

Accrued interest

Accrued interest is payable on the purchase of bonds. They serve to settle the interest accrued to date between two interest dates. If the day of purchase falls on the interest date itself, no accrued interest is payable. The buyer therefore pays the seller compensation for the interest not yet paid out.

Accrued interest is calculated as follows:

Accrued interest = nominal value of the bond * interest rate (coupon rate) * interest days / 365 days.

Accrued interest using an example:

The interest date of a bond falls on 5 October. Max Mustermann buys the bond on 15 March. He has to pay the current price of the bond on the one hand and the interest accrued to date on the other. 23 weeks have passed since the last interest payment date. That gives 161 interest days.

We assume a nominal value of the bond of EUR 10,000 and an interest rate of 5%. The accrued interest is calculated as follows:

10,000 EUR * 0.05 * 161 interest days / 365 days = 220.55 EUR.

Max Mustermann must therefore pay 220.55 EUR accrued interest to the seller as compensation for the interest accrued to date.