Contract for differences: Difference between revisions
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{{a|pb|}}For most purposes in these pages, a [[contract for differences]] (“'''[[CFD]]'''” is just another name for a [[synthetic equity swap]]. That product, so a googling will tell you, was invented in the 1990s by a couple of chaps from UBS Warburg. While their product morphed into today’s beloved [[delta-one]] [[equity derivative]], documented under an {{isdama}}, and is still, by old school types, for the new generation of [[Retail client|gullible millennials and Gen-Zers]], a CFD is a product offered by a number of retail brokers giving a commoditised exposure to pretty much anything you like. These retail products are still, technically, unfunded derivatives, you buy them on margin, and you can lose your shirt easily, so European regulators are taking an increasingly dim view of them, especially where offered to [[Retail client|gullible millennials and Ge-Zers]]. | {{a|pb|[[File:2319.jpg|450px|thumb|center|A full-scale [[CDA]] call-out, yesterday.]]}}For most purposes in these pages, a [[contract for differences]] (“'''[[CFD]]'''”) is just another name for a [[synthetic equity swap]]. That product, so a googling will tell you, was invented in the 1990s by a couple of chaps from UBS Warburg. While their product morphed into today’s beloved [[delta-one]] [[equity derivative]], documented under an {{isdama}}, and is still, by old school types, for the new generation of [[Retail client|gullible millennials and Gen-Zers]], a CFD is a product offered by a number of retail brokers giving a commoditised exposure to pretty much anything you like. These retail products are still, technically, unfunded derivatives, you buy them on margin, and you can lose your shirt easily, so European regulators are taking an increasingly dim view of them, especially where offered to [[Retail client|gullible millennials and Ge-Zers]]. | ||
You could imagine a [[UCITS]] fund confusing its regulator by referring to [[over-the-counter]] [[synthetic equity swap]] — a more refined, professionals-only sort of affair — as a “[[CFD]]”, triggering an unseemly [[twenty-three nineteen]] alert and full [[CDA]] call out. | You could imagine a [[UCITS]] fund confusing its regulator by referring to [[over-the-counter]] [[synthetic equity swap]] — a more refined, professionals-only sort of affair — as a “[[CFD]]”, triggering an unseemly [[twenty-three nineteen]] alert and full [[CDA]] call out. | ||
Revision as of 18:10, 13 January 2020
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Prime Brokerage Anatomy™
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For most purposes in these pages, a contract for differences (“CFD”) is just another name for a synthetic equity swap. That product, so a googling will tell you, was invented in the 1990s by a couple of chaps from UBS Warburg. While their product morphed into today’s beloved delta-one equity derivative, documented under an ISDA Master Agreement, and is still, by old school types, for the new generation of gullible millennials and Gen-Zers, a CFD is a product offered by a number of retail brokers giving a commoditised exposure to pretty much anything you like. These retail products are still, technically, unfunded derivatives, you buy them on margin, and you can lose your shirt easily, so European regulators are taking an increasingly dim view of them, especially where offered to gullible millennials and Ge-Zers.
You could imagine a UCITS fund confusing its regulator by referring to over-the-counter synthetic equity swap — a more refined, professionals-only sort of affair — as a “CFD”, triggering an unseemly twenty-three nineteen alert and full CDA call out.