The History Of CFD Trading In Australia
Go to: Previous Article Next Article
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.
In the early days in London where CFDs began they were known as SWAP contracts. It was not until around 2001 that CFDs became accepted by retail investors. It was CMC Markets and IG Markets, two large spread betting businesses based in the UK that bought CFDs to the forefront in the retail trader's arsenal. CFDs suddenly grew to become widespread in the United kingdom as they did not attract any stamp duty.
In 2002 both CMC Markets and IG Markets opened offices in Australia and began to actively promote CFDs to Australian traders, the popularity of CFDs peaked in 2007. As a result of their popularity amongst Australian traders and investors many international CFD providers saw the potential in Australia and opened up offices. At present are over 13 CFD providers operating in Australia and an estimated 35,000 retail CFD traders.
The press has drawn CFDs to the spotlight in recent times as a result of investors loosing money due to the leveraged nature of the product. This combined with the recent collapse of Sonray Capital Markets has led to the Australian regulator paying close attention to CFDs. The regulators have been primarily interested as to how providers manage client money.
At present CFDs remain one of the most common financial products for retail traders in Australia, although unconfirmed it's estimated that CFD volumes account for around 35% of ASX exchange turnover. As CFDs are an over the counter product it is difficult to confirm this number.
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.
Article Source: Articlelogy.com
- Credit Cards A big selection of Cards in all flavors: Bad Credit Cards, Secured Cards, Prepaid Cards, Canada Cards, Low Interest Cards -
Word Count: 462
Reduce Your Debts Without Bankruptcy. See How Much You Can Save. Free Debt Analysis
