Editing Contract for difference (section)

===Retail trading===
In the late 1990s, CFDs were introduced to retail traders. They were popularized by a number of UK companies, characterized by innovative [[online trading platform]]s that made it easy to see live prices and trade in real-time. The first company to do this was GNI (originally known as Gerrard & National Intercommodities).

GNI provided retail stock traders with the opportunity to trade CFDs on LSE stocks through its innovative front-end [[electronic trading system]], GNI Touch, via a home computer connected to the Internet. GNI's retail service created the basis for retail stock traders to trade directly onto the Stock Exchange Electronic Trading Service (SETS) central limit order book at the LSE through a process known as [[direct market access]] (DMA). For example, if a retail trader sent an order to buy a stock CFD, GNI would sell the CFD to the trader and then buy the equivalent stock position from the marketplace as a full hedge.<ref name=":1">{{cite book|last=Norman|first=David J.|url=https://www.worldcat.org/oclc/921845679|title=CFDs : the definitive guide to contracts for difference|date=2009|isbn=978-0-85719-023-9|publisher=Harriman House|location=Petersfield|oclc=921845679}}</ref>

GNI and its CFD trading service GNI Touch was later acquired by [[MF Global]]. They were soon followed by [[IG Group|IG Markets]] and [[CMC Markets]], which started to popularize the service in 2000.<ref name=":1" /> Subsequently, European CFD providers such as [[Saxo Bank]] and Australian CFD providers such as [[Macquarie Group|Macquarie Bank]] and [[First Prudential Markets|Prudential]] made significant progress in establishing global CFD markets.

Around 2001, a number of the CFD providers realized that CFDs had the same economic effect as [[financial spread betting]] in the UK, except that spread betting profits<ref name=":2">{{cite news|last=Dunne|first=Eithne|title=Rookies roll the dice on high-risk trading|newspaper=[[The Times]]|url=https://www.thetimes.com/article/rookies-roll-the-dice-on-high-risk-trading-3xsqf20c8 |access-date=17 May 2022|issn=0140-0460}}</ref> were exempt from [[Capital gains tax in the United Kingdom|capital gains tax]]. Most CFD providers launched financial spread betting operations in parallel to their CFD offering. In the UK, the CFD market mirrors the financial spread betting market and the products are in many ways the same; the FCA defines spread betting as "a contract for differences that is a gaming contract".<ref>{{cite web|title=spread bet – FCA Handbook|url=https://www.handbook.fca.org.uk/handbook/glossary/G1118.html#|access-date=3 September 2024|website=[[Financial Conduct Authority]]|archive-url=http://web.archive.org/web/20240903192311/https://www.handbook.fca.org.uk/handbook/glossary/G1118.html|archive-date=3 September 2024}}</ref> However, unlike CFDs, which have been exported to a number of different countries, spread betting, which relies on a country-specific tax advantage, has remained primarily limited to the UK and Ireland.<ref name=":2"/>

CFD providers then started to expand to overseas markets, starting with Australia in July 2002 by [[IG Group|IG Markets]] (first CFD provider to be licensed by [[Australian Securities & Investments Commission#ASIC registers|ASIC]]) and [[CMC Markets]].<ref>{{cite journal|last=Skilton|first=David|title=Contracts for Difference – an Introduction for Planners|url=https://search.informit.org/doi/abs/10.3316/informit.974516750332488|journal=Australian Journal of Financial Planning|date=20 August 2020 |volume=3|issue=2|pages=45–48}}</ref> CFDs have since been introduced into a number of other countries. They are available in most European countries, as well as Australia, Canada, Israel, Japan, Singapore, South Africa, Turkey, and New Zealand, throughout South America and others. They are not permitted in a number of other countries – most notably the United States, where the [[Securities and Exchange Commission]] (SEC) and [[Commodity Futures Trading Commission]] (CFTC) prohibit CFDs from being listed on regulated exchanges and being traded on foreign or domestic trading platforms due to their high risk.<ref>{{cite web|title=The Laws That Govern the Securities Industry|url=https://www.sec.gov/answers/about-lawsshtml.html#secexact1934|publisher=U.S: Securities and Exchange Commission|date=1 October 2013}}</ref><ref>{{cite journal|last=Gazi|first=Sangita|date=26 November 2019|title=Reimagining a Centralized Cryptocurrency Regulation in the US: Looking through the Lens of Cryptoderivatives|url=https://papers.ssrn.com/abstract=3737947|location=Rochester, NY|doi=10.2139/ssrn.3737947|ssrn=3737947|s2cid=239435048|journal=[[Social Science Research Network]]|url-access=subscription}}</ref> At the same time, a number of trading apps with various usage scenarios operate on the market, including [[eToro]], [[Freetrade]], Fidelity Personal Investing (part of [[Fidelity Investments]]) and Trading212.<ref>{{cite web|last=Michael|first=Andrew|date=12 May 2022 |title=Best Investment Trading Apps UK 2022|url=https://www.forbes.com/uk/advisor/investing/best-investment-apps/|access-date=17 May 2022|editor=Pratt, Kevin|website=[[Forbes]] Advisor UK|archive-url=http://web.archive.org/web/20240903193224/https://www.forbes.com/uk/advisor/investing/best-investment-trading-apps-september-2024/|archive-date=3 September 2024}}</ref>

CFDs are treated as a gambling product in Hong Kong unless they have been permitted by the [[Securities and Futures Commission]] (SFC),<ref>{{Cite web|title=Hong Kong e-Legislation|url=https://www.elegislation.gov.hk/checkconfig/checkClientConfig.jsp?applicationId=RA001|access-date=2024-08-18|website=www.elegislation.gov.hk}}</ref> which treats CFDs, where the underlying is a security, as futures contracts, that must be exchange-traded, effectively precluding their being offered in Hong Kong. However, the SFC has a separate regulatory regime for rolling spot FX contracts, which it terms leverage foreign exchange contracts. These can be offered to retail clients as an over-the-counter derivative. Brokers in Hong Kong can also offer CFDs on the spot price of precious metals, which aren't regulated as securities, using prices derived from contracts trading on the [[Chinese Gold and Silver Exchange Society]].<ref>{{Cite web|date=2024-02-17|title=Is FX/CFD trading legal in Hong Kong? - TradeInformer|url=https://tradeinformer.com/fx-cfd-licensing/is-fx-cfd-trading-legal-in-hong-kong/|access-date=2024-08-18|language=en-US}}</ref>

In 2016 the [[European Securities and Markets Authority]] (ESMA) issued a warning on the sale of speculative products to retail investors that included the sale of CFDs.<ref name="auto">{{cite web|url=https://www.esma.europa.eu/press-news/esma-news/esma-issues-warning-sale-speculative-products-retail-investors|title=ESMA issues warning on sale of speculative products to retail investors|publisher=ESMA|date=25 July 2016}}</ref>