Topic: Why CFD are restricted in USA ? (Read 1546 times)
CFD's mostly have margin built into them so its like super charged gambling...why they have not been accepted in the US is a total mystery to me, perhaps the market maker (bookie) aspect of CFD's makes them to much like a game of chance and not enough like a derivative....in Australia some CFD's are actually market traded just like stocks but because there has to be someone on the other side of the trade it hasn't been a roaring success.
Most high end contracts take CPI into account, which is sort of like a CFD but without the negative possibilities. A CPI contract would never go below the original agreed upon contract price.
So if I if you agree to buy cars at $100 each, and the car price go up to $125, you must pay the $125, but if car price go down to $90, you must pay the $100 as agreed.
I do believe that some of the CPI's will allow a negative margins but they write in a profit margin to be maintained. So if they Cars went down to $90 dollars, you might be able to pay $92 instead of $100 depending on the profit margin of the contract holder.
CPI's are usually used in lease agreements. In commodities, it would be "not smart" to sign one. It would be like a PUT contract if the value fell. And they would PUT it to you.
Beside we have Options, just as good as CFD's if you like gambling.
So if I if you agree to buy cars at $100 each, and the car price go up to $125, you must pay the $125, but if car price go down to $90, you must pay the $100 as agreed.
I do believe that some of the CPI's will allow a negative margins but they write in a profit margin to be maintained. So if they Cars went down to $90 dollars, you might be able to pay $92 instead of $100 depending on the profit margin of the contract holder.
CPI's are usually used in lease agreements. In commodities, it would be "not smart" to sign one. It would be like a PUT contract if the value fell. And they would PUT it to you.
Beside we have Options, just as good as CFD's if you like gambling.
Jump to: