Contract for difference

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In finance, a contract for difference CFD is a contract between two parties, typically described as "buyer" and "seller", stipulating that the seller will pay to the buyer the difference between the h binar optionen handeln wikipedia value of an asset and its value at contract time if the difference is negative, then the buyer pays instead to the seller.

In effect, CFDs are financial derivatives that allow traders to take advantage of prices moving up long positions or prices moving down short positions on underlying financial instruments. They are often used to speculate on those markets. For example, when applied to equities, such a contract is an h binar optionen handeln wikipedia derivative that allows traders to speculate on share price movements, without the need for ownership of the underlying shares.

CFDs may be traded as stocksbondsfuturescommoditiesindicesor currencies. They are not permitted in a h binar optionen handeln wikipedia of other countries — most notably the United States, where, due to rules h binar optionen handeln wikipedia over the counter products, CFDs cannot be traded by retail investors unless on a registered exchange h binar optionen handeln wikipedia there are no exchanges in the US that offer CFDs.

CFDs h binar optionen handeln wikipedia originally developed in the early s in London as a type of equity swap that was traded on margin. They were initially used by hedge funds and institutional traders to cost-effectively hedge their exposure to stocks on the London Stock Exchangemainly because they required only a small margin and because no physical shares changed hands avoided the UK transaction tax known as stamp duty.

In the late s CFDs were introduced to retail traders. They were popularized by a number of UK companies, characterized by innovative online trading platforms that made it easy to see live prices and trade in real time. Aroundretail traders realized that the real benefit of trading CFDs was not the exemption from tax but the ability to leverage any underlying instrument. This was the start of the growth phase in the use of CFDs.

Trading index CFDs, such as the ones based on the major global indexes e. In the UK the CFD market mirrors the financial spread betting market and the products are in many ways the same. However unlike CFDs, which have been exported to a number of different countries, spread h binar optionen handeln wikipedia, inasmuch as it relies on a country-specific tax advantage, has remained primarily a UK and Irish phenomenon. As a result, a small percentage of CFDs were traded through the Australian exchange during this period.

The advantages and disadvantages of having an exchange traded CFD were similar for most financial products and meant reducing counterparty risk and increasing transparency but costs were higher. In OctoberLCH. Within Europe, any provider based in any member country can offer the products to all member countries under MiFID and many of the European financial regulators responded with new rules on CFDs after the warning. The majority of providers are based in either Cyprus or the UK and both countries' financial regulators were first to respond.

CySEC the Cyprus financial regulator, where many of the firms are registered, increased the regulations on CFDs by limiting the maximum leverage to The main risk is market riskas contract for difference trading is designed to pay the difference between the opening price and the closing price of the underlying asset.

CFDs are traded on margin, and the leveraging effect of this increases the risk significantly. It is this very risk that drives the use of CFDs, either to speculate on movements in financial markets or to hedge existing positions in other products.

Users typically deposit an amount of money with the CFD provider to cover the margin and can lose much more than this deposit if the market moves h binar optionen handeln wikipedia them. If prices move against open CFD position additional variation margin is required to maintain the margin level. The CFD provider may call upon the party to deposit additional sums to cover this, and in fast moving markets this may be at short notice. Counterparty risk is associated with the financial stability or solvency of the counterparty to a contract.

H binar optionen handeln wikipedia the context of CFD contracts, if the counterparty to a contract fails to meet their financial obligations, the CFD may have little or no value regardless of the underlying instrument.

This means that a CFD trader h binar optionen handeln wikipedia potentially incur severe losses, even if the underlying instrument moves in the desired direction. OTC CFD providers are required to segregate client funds h binar optionen handeln wikipedia client balances in event of company default, but cases such as that of MF Global remind us that guarantees can be broken. Exchange-traded contracts traded through a clearing house are generally believed to have less counterparty risk.

Ultimately, the degree of counterparty h binar optionen handeln wikipedia is defined by the credit risk of the counterparty, including the clearing house if applicable.

There are a number of different financial instruments that have been used in the past to speculate on financial markets. These range from trading in physical shares either directly or via margin lending, to using derivatives such as futures, options or covered warrants. A number of brokers have been actively promoting CFDs as alternatives h binar optionen handeln wikipedia all of these products.

The CFD market most resembles the futures and options market, the major differences being: Professionals prefer futures for indices and interest rate trading over CFDs as they are a mature product and are exchange traded.

The main advantages of CFDs, compared to futures, is that contract sizes are smaller making it more accessible for small trader and pricing is more transparent. Futures contracts tend to only converge near to the expiry date compared to the price of the underlying instrument which does not occur on the CFD as it never expires and simply mirrors the underlying instrument.

Futures are often used by the CFD providers to hedge their own positions and many CFDs are written over futures as futures prices are easily obtainable. The industry practice is for the CFD provider to ' roll ' the CFD position to the next future period when the liquidity starts to dry in the last few days before expiry, thus creating a rolling CFD contract.

Optionslike futures, h binar optionen handeln wikipedia an established product that are exchange traded, centrally cleared h binar optionen handeln wikipedia used by professionals. Options, like futures, can be used to hedge risk or to take on risk to speculate. CFDs are only comparable in the latter case. An important disadvantage is that a CFD cannot be allowed to lapse, unlike an option.

This means that the downside risk of a CFD is unlimited, whereas the most that can be lost on an option is the price of the option itself.

In addition, no margin calls are made on options if the market moves against the trader. Compared to CFDs, option pricing is complex and has price decay when nearing expiry while CFDs prices simply mirror the underlying instrument. CFDs cannot be used to reduce risk in the way that options can. Similar to options, covered warrants have become popular in recent years as a way of speculating cheaply on market movements. CFDs costs tend to be lower for short periods and have a much wider range of underlying products.

In markets such as Singapore, some brokers have been heavily promoting CFDs as alternatives to covered warrants, and may have been partially responsible for the decline in volume of covered warrant there. This is the traditional way to trade financial markets, this requires a relationship with a broker in each country, require paying broker fees and commissions and dealing with settlement process for that product.

With the advent of discount brokers, this has become easier and cheaper, but can still be challenging for retail traders particularly if trading in overseas markets. Without leverage this is capital intensive as all positions have to be fully funded. CFDs make it much easier to access global markets for much lower costs and much easier to move in and out of a position quickly. All forms of margin trading involve financing costs, in effect the cost of borrowing the money for the whole position.

Margin lendingh binar optionen handeln wikipedia known as margin buying or leveraged equitieshave all the same attributes as physical shares discussed earlier, but with the addition of leverage, h binar optionen handeln wikipedia means like CFDs, futures, and options much less capital is required, but risks are increased. The main benefits of CFD versus margin lending are that there are more underlying products, the margin rates are lower, and it is easy to go short. Even with the recent bans on short selling, CFD providers who have been able to hedge their book in other ways have allowed clients to continue to short sell those stocks.

Some financial commentators and regulators have expressed concern about the way that CFDs are marketed at new and inexperienced traders by the CFD providers. In particular the way that the potential gains are advertised h binar optionen handeln wikipedia a way that may not fully explain the risks involved.

For example, the UK FSA rules for CFD providers include that they must assess the suitability of CFDs for each new client based on their experience and must provide a risk warning document to all new clients, based on a general template devised by the FSA.

H binar optionen handeln wikipedia Australian financial regulator ASIC on its trader information site suggests that trading CFDs is riskier than gambling on horses or going to a casino.

There has also been concern that CFDs are little more than gambling implying that most traders lose money trading CFDs. There has also been some concern that CFD trading lacks transparency as it happens primarily over-the-counter and that there is no standard contract. This has led some to suggest that CFD providers could exploit their clients.

This topic appears regularly on trading forums, in particular when it comes to rules around executing stops, and liquidating positions in margin call. Although the h binar optionen handeln wikipedia of these types of discussions may be due to traders' psychology where it is hard to internalise a losing trade and instead they try to find external source to blame.

This is also something that the Australian Securities Exchange, promoting their Australian exchange traded CFD and some of the CFD providers, promoting direct market access products, have used to support their particular offering. They argue that their offering reduces this particular risk in some way.

If there were issues with one provider, clients could easily switch to another. Some of the criticism surrounding CFD trading is connected with the CFD brokers' unwillingness to inform their users about the psychology involved in this kind of high-risk trading. Factors such as the fear of losing that translates into neutral and even losing positions [24] become a reality when the users h binar optionen handeln wikipedia from a demonstration account to the real one.

This fact is not documented by the majority of CFD brokers. Criticism has also been expressed about the way that some CFD providers hedge their own exposure and the conflict of interest that this could cause when they define the terms under which the CFD is traded.

One article suggested that some CFD providers had been running positions against their clients based on client profiles, in the expectation that those clients would lose, and that this created a conflict of interest for the providers. A number of providers have begun offering CFDs tied to cryptocurrencies.

The volatility of the cryptocurrency markets and the leverage of CFDs has proved a step too far in some cases with Coindesk [27] reporting that UK based Trading was forced to suspend trading of Bitcoin Cash CFDs in November resulting in significant h binar optionen handeln wikipedia for some clients when trading recommenced and the market had moved against them. CFDs, when offered by providers under the market maker model, have been compared [28] to the bets sold by bucket shopswhich flourished in the United States at the turn of the 20th century.

These allowed speculators to place highly leveraged bets on stocks generally not backed or hedged by actual trades on an exchange, so the speculator was in h binar optionen handeln wikipedia betting against the house. Bucket shops, colourfully described in Jesse Livermore 's semi-autobiographical Reminiscences of a Stock Operatorare illegal in the United States according to criminal as well as securities law.

From Wikipedia, the free encyclopedia. This section possibly contains original research. Please improve h binar optionen handeln wikipedia by verifying the claims made and adding inline citations. Statements consisting only of original research should be removed. October Learn how and when to remove this template message. Retrieved March 15, The new trading h binar optionen handeln wikipedia a living: Archived from the original on Retrieved 17 January Archived from the original on 23 April Retrieved 30 March Archived from the original on 21 March Retrieved 18 November Archived from the original on 29 November Energy derivative Freight derivative Inflation derivative Property derivative Weather derivative.

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The UNIVAC I was the first American computer designed at the outset for business and administrative use with fast execution of relatively simple arithmetic and data transport operations, as opposed to the complex numerical calculations required of scientific computers. That shortcoming hindered sales to companies concerned about the high cost of manually converting large quantities of existing data stored on cards. As the election continued and it became clear it was correct all along, the announcer admitted their sleight of hand and the machine became famous.

The result was a greater public awareness of computing technology, [7] and from then on computerized predictions were a must-have part of election night broadcasts. The first contracts were with government agencies such as the Census Bureau , the U.

Air Force , and the U. Following the sale of Eckert—Mauchly Computer Corporation to Remington Rand, due to the cost overruns on the project, Remington Rand convinced Nielsen and Prudential to cancel their contracts.

The machine was not actually shipped until the following December, because, as the sole fully set-up model, it was needed for demonstration purposes, and the company was apprehensive about the difficulties of dismantling, transporting, and reassembling the delicate machine.

A total of 46 systems were eventually built and delivered. The Census Bureau used its two systems until , amounting to 12 and nine years of service, respectively. Sperry Rand itself used two systems in Buffalo, New York until The insurance company Life and Casualty of Tennessee used its system until , totaling over 13 years of service.

The Central Complex alone i. The complete system occupied more than The main memory consisted of words of 12 characters. When representing numbers, they were written as 11 decimal digits plus sign. The words of memory consisted of channels of word mercury delay line registers.

There are six channels of word mercury delay line registers as spares. With modified circuitry, seven more channels control the temperature of the seven mercury tanks, and one more channel is used for the 10 word "Y" register. Each mercury tank is divided into 18 mercury channels. Instructions were six alphanumeric characters, packed two instructions per word. The addition time was microseconds and the multiplication time was microseconds.

A non-standard modification called "Overdrive" did exist, that allowed for three four-character instructions per word under some circumstances. Digits were represented internally using excess-3 "XS3" binary coded decimal BCD arithmetic with six bits per digit using the same value as the digits of the alphanumeric character set and one parity bit per digit for error checking , allowing digit signed magnitude numbers.

But with the exception of one or two machine instructions, UNIVAC was considered by programmers to be a decimal machine, not a binary machine, and the binary representation of the characters was irrelevant. If a non-digit character was encountered in a position during an arithmetic operation the machine passed it unchanged to the output, and any carry into the non-digit was lost.

It used data density bits per inch with real transfer rate 7, characters per second on magnetically plated phosphor bronze tapes. Large volumes of data could be submitted as input via magnetic tapes created on offline card to tape system and made as output via a separate offline tape to printer system. The operators console had three columns of decimal coded switches that allowed any of the memory locations to be displayed on the oscilloscope.

Since the mercury delay line memory stored bits in a serial format, a programmer or operator could monitor any memory location continuously and with sufficient patience, decode its contents as displayed on the scope.

The on-line typewriter was typically used for announcing program breakpoints, checkpoints, and for memory dumps. The appropriate source and output data tapes would be mounted and the program started. Results tapes then went to the offline printer or typically for data processing into short term storage to be updated with the next set of data produced on the offline card to tape unit.

The mercury delay line memory tank temperature was very closely controlled as the speed of sound in mercury varies with temperature.

In the event of a power failure, many hours could elapse before the temperature stabilized. Eckert and Mauchly were uncertain about the reliability of digital logic circuits and little was known at the time. In practice, only failing components yielded comparison faults as their circuit designs were very reliable.

Tricks were used to manage the reliability of tubes. Prior to use in the machine, large lots of the predominant tube type 25L6 were burned in and carefully tested. Often half of a production lot would be thrown away.

Technicians installed a tested and burned in tube in an easily diagnosed location such as the memory recirculate amplifiers. Then when aged further, this "golden" tube was sent to stock to be used in a difficult to diagnose logic position. It took about 30 minutes to turn on the computer as all filament power supplies were stepped up to operating value over that time, to reduce in-rush current and thermal stress on the tubes.

As a result, uptimes MTBF of many days to weeks were obtained on the processor. These were a frequent source of failures. From Wikipedia, the free encyclopedia. This section needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. March Learn how and when to remove this template message. From Dits to Bits: A personal history of the electronic computer.

In Encyclopedia of computer science. The meeting involved 25 engineers, programmers, marketing representatives, and salesmen who were involved with the UNIVAC, as well as representatives from users such as General Electric, Arthur Andersen, and the U. A history of modern computing , MIT, The source notes that the list is compiled from a number of sources and does not include UNIVACs that were completed not delivered in the period — In some cases the dates are approximate. Depending on the definition of "installed" the order may be slightly different.

Retrieved from " https: Articles needing additional references from March All articles needing additional references Webarchive template wayback links. Views Read Edit View history. In other projects Wikimedia Commons. This page was last edited on 2 February , at By using this site, you agree to the Terms of Use and Privacy Policy. Census Bureau , Suitland, MD.