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Bank warns over high risks of CFD investments

By Charlie Weston

Published 24/11/2015

CFDs allow investors to bet on the direction a share price will go in by only putting as little as 10% of the price of the shares
CFDs allow investors to bet on the direction a share price will go in by only putting as little as 10% of the price of the shares

Retail investors in the Republic have been warned about the risks of investing in contracts for difference (CFDs).

Ireland's Central Bank produced a report on CFDs which estimates up to 30,000 investors lost money investing in them through Irish stockbroking and investment houses.

CFDs were the instruments used by former billionaire Sean Quinn to put money into Anglo Irish Bank, causing him to come financially unstuck.

The Central Bank warned consumers that they need to be fully aware of the high risk.

CFDs allow investors to bet on the direction a share price will go in by only putting as little as 10% of the price of the shares.

If the bet goes wrong the CFD holder will be asked to provide money to cover the losses.

Director of consumer protection at the Central Bank Bernard Sheridan said: "It is our view that CFDs are unsuitable for investors with a low-risk appetite."

Belfast Telegraph

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