CFD: why do amateurs shun it?

[in2uxs]

I think its the "betting" tag that frightens off most professionals. Most professionals work on behalf of banks or large investment institutions who are risking their clients money on various investments. Therefore they must play safe. Although professionals can reason why they use CFD's as an investment (no stamp duty, can hedge against current positions, plus receive dividends) they really have little argument when they tell farmer giles that they've lost all of his cash by spread betting on party poker going up ... doh!

 

[Jack o'Clubs]

I think its the "betting" tag that frightens off most professionals. Most professionals work on behalf of banks or large investment institutions who are risking their clients money on various investments. Therefore they must play safe. Although professionals can reason why they use CFD's as an investment (no stamp duty, can hedge against current positions, plus receive dividends) they really have little argument when they tell farmer giles that they've lost all of his cash by spread betting on party poker going up ... doh!

It's got nothing to do with that. Institutions use CFDs for two reasons: to avoid stamp duty, and to avoid disclosure, either when stake building, or when shorting (many companies get upset with funds that short their stock and cut them out of the IR loop accordingly). An investment bank's equity swap book (the name for 'professional' CFD trading) can hedge different client (ie fund) positions so they have no need, or at least a reduced need, to hold or borrow the underlying equity.

 

[moneyfool]

Can anyone recommend a CFD broker that covers NYSE & NASDAQ markets.

Thanks

 

[aspex]

moneyfool,
CMC seems to cover a good range.
Don't know about UK but the Australian site shows a range at:
http://www.cmcmarkets.com.au/help/docs/product_list.pdf

I can only assume this is the same one used in UK.