CFDs under focus: Central Bank probe finds 75% suffered loss

Seven years after the market instruments known as Contracts for difference — or CFDs — helped destablise Anglo Irish Bank and added to the country’s huge losses from the fallout of the banking collapse, they are again causing the regulators here some concern.

The Central Bank yesterday warned ordinary investors to be aware of the “high risk” nature of CFDs, saying they are not suitable for people who cannot sustain big losses.

In a themed investigation of CFD transactions in the last two years, the Central Bank found three quarters of retail clients of Irish investment and broking firm selling CFDs made a loss. It found most of the nine brokers who sell CFDs in Ireland were warning their clients about the potential risks, and ordered those who were not complying to do so.