contracts for difference
contracts for difference (CFDs)
An agreement between two parties to exchange the difference between the opening price and the closing price of the contract, at the close of the contract, multiplied by the number of shares specified within the contract. A CFD is a margin traded product, which allows investors to receive the benefits of ownership of an equity without having to own the physical equity, in the underlying company.
For UK corporation tax purposes, a contract for differences is a contract, the purpose or "pretended purpose" (that is, the aim that the parties are seeking to achieve) of which is to make a profit or avoid a loss by reference to fluctuations in the value or price of property described in the contract, or an index or other factor designated in the contract.
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Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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