The origin of CFDs or Contracts for Difference makes for interesting reading. Though one would prefer to believe that it is the world wide web and easy option of information monetary transactions which have triggered the boom of various lending options that are now being traded on the many stock exchanges of the world on a daily basis, a large number of financial products have really been in existence for several decades as well as the futures market for instance dates back all the way to 1710. That was time the Japanese executed trading deals on rice.
As far as CFDs is concerned, credit to the launch goes to Smith New Court, which was actually a brokerage agency and sold this as a manufactured goods made it easier for their clients to go short on the market and also avoid stamp duty. Moreover, clients might also take advantage of the leverage it provided at very reasonable cost. This was in early 1990s.
The late 1990s experienced the technology boom as well as offered traders the opportunity to trade many volatile technology stocks together with one instrument that was perfect for such trading was Contracts for Difference. The sustained interest in CFDs and volumes in fact took off in the year 2000 when this product was made available to people and that intro was done by GNI Touch.
They made simple to use for traders to access the marketplace through their online trading terminal. In the next seven to eight years, the popularity on this product touched extreme heights and the business traded was growing at over 100% every year. Exploring the potential with this product, MF Global acquired GNI Touch and then started offering both futures along with CFDs to the public in 2002.
You thus have a number of major brokers like MF Global, IG Markets, Saxobank,, Macquarie Bank and numerous others who not just offer a variety of lending options for trade in the stock market but additionally offer interested traders exposure to many stock markets throughout the world. That’s possible with thanks to the reach in the internet wherein you can trade in a variety of products from the comfort of your home and many types of that you are required to do should be to open trading accounts with these brokers.
Contracts for Difference trading has become popular due to its resemblance of futures trading and the increased liquidity as well as leverage advantages accumulating to traders is what is attracting many into this way of trading.