What is CFD's own capital?
The Contract of the difference or Equity CFD is a contract between two parties that allows them to speculate on changes in stocks without owning shares. Two parties create a contract that states that the buyer pays the seller the overall difference between the value of the shares at the time the contract begins and its value at the time the contract ends. If the value drops, the seller must pay the buyer the difference. Stock CFDs are designed to be used by most frequent traders in the market, not long -term investors. The stock CFD is not a legal contract in all countries.
A stock CFD can be created either between two individual traders or between an individual and a contract for providers of differences. If offered by the Provider, it can associate with the transaction fees for brokerage. The terms of the contract are not standardized, even if they tend to share certain characteristics. CFDs are always traded on a margin, the janing one side must offer the other's collateral to cover the credit risk of the transaction.The life of the contract is usually not more than a day or two, and contracts generally receive a daily financial fee.
Equity CFD is a business opportunity available in many countries, including Great Britain, Australia and Canada, but is not available to traders in the United States. The US Securities and Exchange Commission has reduced direct trade with certain commodities, shares and bonds. Trading must be made on the exchange designed for this purpose, not directly between two parties. This type of direct trading is called over -the -counter trade and is strongly regulated in the United States.
The financial world generally provides credit for creating Equity CFD Brian Keelan and Jon Wood, who both worked for the global company UBS. Whether these men or not, Equity CFDS for the first time developed in London at the beginning of the 90's. One of the main advantages of CFD with its own capital was that they were not subject to a stamp of 0.5 percentAnd selected against stock exchange shops in London. Originally, its own capital CFD was used by the type of investment fund known as the Hedge Fund to protect its investments from losses. The use of CFD's own capital spreads rapidly throughout the financial sector.