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.

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References in periodicals archive

The 450 megawatt development received Contract for Difference consent in 2015 for a maximum of 75 turbines, which was then reduced to 53.

BiFab fear for share of project; RENEWABLES

is using oneZero's Liquidity Hub to deliver CFD (Contract For Difference) indices through MetaTrader 4 to Rakuten Securities Australia's customers, the company said.

Rakuten Securities utilizes oneZero platform to deliver CFD indices

He told the House of Commons they were willing to consider: | Taking a one third equity stake in the project, alongside investment from Hitachi and Government of Japan agencies and other strategic partners | Providing all of the required debt financing to complete construction | Providing a Contract for Difference with a guaranteed price for electricity paid by the Government (strike price) expected to be no more than PS75 per megawatt hour.

Government: our support was at the limit of what could be justified

All of these projects will sell power under Poland's Contract for Difference, or CFD, regime and are eligible for a 15-year guaranteed tariff.

ReneSola signs LOI to sell solar projects in Poland

MANAMA: Bahrain Institute of Banking and Finance (BIBF) has announced the launch of a comprehensive seven-week course aimed at educating existing and potential Contract for Difference (CFD) and Foreign Exchange (FX) traders in Bahrain on the mechanics and tactics of global markets.

New BIBF course

The project will benefit from a 15 year Contract for Difference of GBP 91.14 (2018 real, CPI indexed) and, once complete, will comprise 13 Vestas V112 turbines, restricted to 39.1mw connection capacity.

Greencoat UK Wind Acquires Tom nan Clach Wind Farm in Scotland

Regulatory support with Contract for Difference and Renewable Obligation Certificates (ROC) underpin predictable, inflation-linked cash flows until March 2027.

Fitch Ratings affirms Drax Group Holdings Limited IDR at 'BB+'

The Contract for Difference, or CFD, is one tool Hedgestone uses to bring the markets within reach.

Hedgestone Group Offers CFD Trading

A so-called contract for difference was signed in London by Business Secretary Greg Clark, Jean-Bernard Levy, chairman of French energy giant EDF, and He Yu, chairman of Chinese firm CGN which has a third stake in the scheme.

UK, France and China give Hinkley the go-ahead

In finance, a contract for difference (CFD) is a contract between two parties, typically described as "buyer" and "seller", stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time (If the difference is negative, then the buyer pays instead to the seller).

YOUR MONEY; Your money queries are answered by Trevor Clark, Director of Rutherford Wilkinson Ltd, Chartered Financial Planners