Does CFD affect stock prices?

Hey Carlyn,

In theory, a Contract for Difference (CFD) is a derivative priced off the underlying stock, and changes in the share price will affect the leveraged price of the CFD.

With CFDs, positions have to be revealed in order for regulators to monitor important holdings. Instances where there’s high interest in a CFD can affect the underlying stock price because it impacts the technical features of the stock, affecting supply and demand as well.

For instance, if a stock has 50m shares and there’s a high amount of open CFD interest in additional 10m shares, the market may drive the price of the stock higher as a reaction to high demand.