In short
- Retail leverage on shares: 5:1 (20% margin).
- Costs: commission or spread, overnight financing, dividend adjustments.
- No ownership, no stamp duty, gains subject to CGT.
How share CFDs work
You agree to exchange the difference in a share's price between opening and closing. Buy 100 CFDs on a £5 share and it rises to £5.50: you make £50 before costs. Margin at 5:1 would be £100.
Costs
- Commission — many brokers charge a percentage per trade on share CFDs, with a minimum
- Overnight financing on positions held past the close
- Dividend adjustments — credited on longs, debited on shorts
- Market data fees on some platforms for live share prices
Direct market access (DMA)
Some brokers offer DMA share CFDs, where your order is placed on the underlying exchange order book — for example via IG's L2 Dealer. DMA gives exchange prices and visibility of market depth.
Share CFDs vs owning shares
CFDs suit shorter-term trading and shorting. For long-term investing, owning shares (ideally in an ISA) avoids financing costs. Compare in spread betting vs buying shares.
Frequently asked questions
Do I pay stamp duty on share CFDs?
No. Stamp duty applies to buying UK shares outright, not to CFDs.
Can I short shares with CFDs?
Yes, if the broker can borrow the stock. Some shares may be unavailable to short.
CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading these products. You should consider whether you understand how they work and whether you can afford to take the high risk of losing your money.