| The History Of CFD Trading In Australia |
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| Written by Ben McGrath |
| Friday, 30 July 2010 12:18 |
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CFD means Contract for Difference, this is an agreement that is made between a buyer and seller. This agreement is to make good the profit or loss between when the CFD was bought and when it was sold. CFDs are common in Australia as well as in the United Kingdom. Typically CFDs are offered over shares, indices and foreign exchange contracts.
CFD means Contract for Difference, this is an agreement that is made between a buyer and seller. This agreement is to make good the profit or loss between when the CFD was bought and when it was sold. CFDs are common in Australia as well as in the United Kingdom. Typically CFDs are offered over shares, indices and foreign exchange contracts. CFDs were once known as SWAP contracts, this was in the early days in London. In 2001 CMC and IG Markets, two large spread betting firms made CFDs popular through actively marketing to retail investors. The popularity of CFDs grew quickly throughout London due to stamp duty exemptions. In early 2002 both CMC and IG Markets opened offices in Australia and started to actively promote CFDs. The popularity of CFDs peaked in 2007 at which point many international CFD providers saw potential in the Australian market and opened offices Down Under. Currently there are over 13 active CFD providers and and estimated 35,000 CFD traders in Australia. Recently CFDs have received much attention as a result of investors loosing money due to the leveraged nature of the product and market volatility. This negative publicity combined with the collapse of Sonray Capital Markets has led to increased scrutiny from ASIC, the Australian regulator. The scrutiny has primarily focused on how client money is managed. Although unconfirmed it is estimated that CFDs account for around 35% of turnover on the ASX. Aside from traditional share trading this makes them the most popular financial product in Australia. CFDs are mostly traded over the internet using a variety of trading platforms offered by the main CFD providers. Many of the CFD platforms used by CFD providers were originally developed for forex trading and later evolved into CFD trading platforms. As Australia has the highest proportion of share ownership in the world on a per capita basis it is not surprising that most CFD traders have experience trading shares online. The historical growth of the Australian share market has made share and CFD trading a popular pass-time for Australians. Before making the commitment to trade CFDs it is important that you are aware of their risks and benefits. It is important that you read the Product Disclosure Statement issued by your CFD provider which outlines CFDs in detail including the risks and rewards, only then should you consider whether CFDs are right for you. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Looking to find the best deal on CFDs, then visit www.icmarkets.com.au to find the best advice on CFD trading. |
| Last Updated on Wednesday, 04 August 2010 10:16 |