Contract for Difference

(redirected from Contracts for difference)
Also found in: Wikipedia.

Contract for Difference

Also known as CFD. This is an agreement between buyer and seller to exchange the difference between the current value of the asset and the initial value of the asset when the contract is initiated. For example, suppose the initial price of share XYZ is $100 and a CFD for 1000 shares is exchanged. Both the buyer and seller must post some margin. If the price goes to $105, then the buyer gets $5,000 from the seller. If the price goes to $95, the buyer pays the seller $5,000. This contract avoids ownership of the stock and all the associated transactions issues (like stamp taxes). The contract also allows for leverage (typically 10:1) because the margin that must be posted is only a fraction of the value of the underlying asset. These contracts can also be on the difference of two assets' prices. They can also be on the difference of a single asset of different maturities (like a bond or futures contracts). CFDs are sometimes known as spread trading.
References in periodicals archive ?
The Opportunity Fund has disposed of all the contracts for difference it held with respect to the issuer.
Clients will be able to trade Contracts for Difference (CFDs) on over 350 markets using the industry leading desktop and app based platform.
As well as the UK Government s recent announcements on renewable support include early closure of the Renewables Obligations for onshore wind and solar PV projects, uncertainty around Contracts for Difference and most recently the drastic cuts to tariffs under the FITs scheme and the removal of FITS pre-accreditation.
10, 2015 /PRNewswire/ -- Online financial trading education site Independent Investor has said that it believes the rise in popularity of contracts for difference across markets over the last decade is the result of the heightened flexibility and leverage portion available to traders, making CFDs a more financially viable trading choice than other competing instruments.
In the succeeding sessions, women will have the opportunity to know more about contracts for difference (June 10) and foreign exchange (July 8).
And yesterday former Quinn Group CEO Liam McCaffrey revealed his boss initially refused to agree to the bank's plan to unwind his Contracts for Difference after the Anglo share price started dropping in 2007.
Berkeley Futures Limited is a UK, FSA regulated brokerage house that offers its clients the ability to trade a multitude of worldwide markets including Futures, Options, Contracts for Difference (CFDs), Equities, Bullion, and caters for both retail and professional clients.
Leading currency trading company, iForex, has announced that it will soon add coffee and sugar to the contracts for difference (CFD) that it offers.
The Android version quotes on 59 currency pairs, including spot gold and silver, as well as a dozen contracts for difference (CFDs) on commodities and major equity indices.
LMAX, a retail foreign exchange and contracts for difference (CFD) trading venue, today unveiled its LMAX Trader, a mobile dealing app for trading clients using iPhone and BlackBerry mobile devices.
Alpari (UK), a leading provider of online foreign exchange (FOREX, FX) trading services, has announced the launch of low commission Contracts for Difference (CFD) trading on the popular MetaTrader 4 platform for clients across the Middle East.

Full browser ?