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 ?
In June 2018, Google will update the Financial services policy to restrict the advertisement of Contracts for Difference, rolling spot forex, and financial spread betting.
The company holds itself out as a wealth and asset management firm and through the website provides a trading platform to the public which allows for trading of contracts for difference or CFD.
According to NKT, the FID decision is expected during Autumn 2018 and follows the success of Moray East in the recent UK allocation of Contracts For Difference (CfD).
Contracts for difference for Bitcoin and Litecoin became available in Libertex trading platform to the European traders starting from July 6th, 2017, the company said.
Sports Direct made a stock market announcement saying it holds the following indirect economic interests through contracts for difference with Monecor (London) Ltd.
Last month, the Financial Services and Markets Authority (FSMA) of Belgium banned the online distribution of over-the-counter forex, contracts for difference (CFDs), and binary options among Belgian retail clients.
No support is apparently accessible after the death of the Renewables Obligation in 2017; only plant large enough to be suitable for Contracts for Difference (CfD), much greater than 5MW, will be supported.
In the succeeding sessions, women will have the opportunity to know more about contracts for difference (June 10) and foreign exchange (July 8).
Contracts for Difference are exactly that - an agreement between two parties to exchange the difference between the opening price and closing price of a contract.
Leading currency trading company, iForex, has announced that it will soon add coffee and sugar to the contracts for difference (CFD) that it offers.
Chryson operates in Glasgow and London, focusing on providing discretionary contracts for difference (CFDs) programmes, as well as financial spread betting and equity platforms.
The products in question are over the counter currency derivatives, such as contracts for difference, FX forwards and rolling spot contracts, which offer gains based on exchange rate fluctuations.

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