Contract for Difference


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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 advisory also discusses the red flags to watch for when considering a contract for difference and the steps investors can take to protect themselves.
The 450 megawatt development received Contract for Difference consent in 2015 for a maximum of 75 turbines, which was then reduced to 53.
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.
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.
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.
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.
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.
Regulatory support with Contract for Difference and Renewable Obligation Certificates (ROC) underpin predictable, inflation-linked cash flows until March 2027.
[UKPRwire, Wed Apr 26 2017] Hedgestone Group brings the Contract for Difference to online traders.
The Contract for Difference, or CFD, is one tool Hedgestone uses to bring the markets within reach.
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.
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).

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