Holders of 'contract for difference' packages should be required to disclose when they are selling their contracts in favour of buying the actual shares, the AITC is arguing.
CFDs allow the holder to effectively gamble against the price of a share going up (going short) or down (going long) – although they tend mainly to be used as a vehicle for hedging against share values falling – but the contract means only a fraction of the shares are actually held, in the region of 10-25% of a share. The AITC acknowledges in its response to an FSA consultation paper – asking about the use of CFDs – the contracts can often be held for short periods simply as a hedge against the prospect of falling shares and should not be affected by fresh regulation in those situations. ...
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