Since the introduction of the over-the-counter derivative transaction in 2016, in which investors need not to hold underlying assets such as stocks and bonds, but settle only on gains from sales, the use of the account has recently increased through a number of securities firms.
There are four main reasons why CFD is drawing attention. First, the leverage effect is higher than that of credit transactions, because it allows up to 10 times more leverage investment in stock investments. Second, it is advantageous to short salers who are limited in the number of eligible stocks and shares that can be sold without any restrictions. Third, CFD is a kind of TRS transaction and by a matter of classification, CFD is counted as a transaction of foreign investors, not individual investors. Finally, because there is no transfer tax, it is suitable for high-value asset owners.
This study analyzed the investment strategy and stock price forecasting abilities of CFD accounts from 2017 to 2020 for 3 years and 4 months. Through this study, we would like to present the current status of CFD, which is increasing its participation in the stock market and what needs to be considered in terms of financial authorities in the future.