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Contracts for Difference
Contracts for Difference (or CFDs as they are sometimes called) can be a cost effective and tax-efficient way to invest in individual shares for certain experienced investors, due to the high risk attached with this type of investment.
CFDs may enable your organisation to profit on share price movements without actually buying or selling the shares. The advantage of this strategy is that as the margin is only a fraction of the value of the opening transaction, the gearing effect allows greater exposure than if you were to invest directly in the underlying securities.
It is possible to open both long and short positions, under current tax laws there is no stamp duty, this may change in the future, and the positions can be held indefinitely. However, as a result of the gearing effect, losses may be in excess of the initial amount deposited if prices move against the client.