Is CFD Illegal?

[John]

Hello, I am a new trader in Forex. That is why I have limited knowledge about this industry. I have heard that CFD is a useful technique for online trading. But no one helps me by providing real information about it. After making an analysis, I have come to know that CFD is illegal in some counties. Why is it illegal? Which countries have given embargoes on it? Can anyone share the history of it?

[Mila Radivojevic]

Hello John, thanks for asking the question.

Contracts for Difference (CFDs) are illegal in several countries, most notably in the United States.

First of all, CFDs are not permitted in the States because they go against the US securities law. Over the counter financial tools, like CFDs, are highly regulated through laws such as the Dodd-Frank Act and imposed by the SEC (Securities and Exchange Commission). Under Title VII of the Dodd-Frank Act, CFDs were characterized as a swap or securities-based swap, unless otherwise excluded.

It is not likely that CFDs will be allowed in the United States any time soon.

However, CFDs are currently available in OTC in other major countries including the United Kingdom, France, Spain, Germany, Switzerland, Australia and more.