A contract for difference (or 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 current value of an asset and its value at contract time. (If the difference is negative, then the buyer pays instead to the seller.) For example, when applied to equities, such a contract is an equity derivative that allows investors to speculate on share price movements, without the need for ownership of the underlying shares
Exchange Traded CFDS are a new form of contract for difference that are traded through an exchange based mechanism. Current CFD providers focus on either the direct market access CFD or market maker models]. This new development was launched in November 2007 on the Australian Securities Exchange (ASX). There were originally 12 brokers offering ASX CFDs, which has now been reduced to the following four brokers - Morrisons, Bell Potter, Commonwealth Securities and Sentinel.