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 Low Carbon Contracts Company and Electricity Settlements Company are government companies established in 2014 to help deliver Contracts for Difference and the Capacity Market.
THE CITY watchdog has confirmed that it will permanently crack down on selling contracts for difference (CFDs) to retail clients.
The Financial Conduct Authority (FCA) has made restrictions against the use of contracts for difference (CFDs) permanent, almost a year after European regulator Esma introduced tough time-limited rules.
And starting June 5, the company will update its Prohibited Financial Products and Services policy to no longer allow ads promoting contracts for difference, complex financial products that are often associated with predatory behavior.
These milestones are expected during second half 2020 if the project is successful in the next UK Contracts for Difference (CfD) auction, which is likely to take place in Q2 2019.
GAIN's businesses include global contracts for difference (CFD) and foreign exchange (FX) brands FOREX.com and City Index; and its futures group, which provides access to listed derivatives trading on over 30 global exchanges.
Plus500 is an international financial firm providing online trading services in contracts for difference, across more than 2,000 securities and multiple asset classes.
The loans were part of a scheme to unwind a secret 28% stake Cavan businessman Sean Quinn had built up using financial instruments called contracts for difference.
Fraudsters offering investments in binary options, contracts for difference (CFDs), forex and cryptocurrencies* often promote themselves online and via social media channels.
The firm said that Stater's wholly-owned subsidiary, Stater Global Markets, is a Financial Conduct Authority-regulated brokerage that facilitates market access across the spot FX, exchange traded futures and contracts for difference. Both parties agreed that a minority investment with dual board representation would allow us to immediately formalize our partnership while maintaining our respective autonomy, Long Blockchain CEO Shamyl Malik said in a written statement Slater Blockchain CEO Ramy Soliman said his firm seeks to provide value for shareholders through blockchain solutions.
Amwal is a Kuwait-listed investment firm whose primary investment includes a 51 percent stake in Noor Capital Markets, an online trading platform providing access to clients seeking to invest in CFDs (Contracts for Difference), futures, metals and currencies.
Amwal is a Kuwait-listed investment firm whose primary investment includes a 51 per cent stake in Noor Capital Markets, an online trading platform providing access to clients seeking to invest in CFDs (Contracts for Difference), Futures, Metals and Currencies.

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