Contracts for difference (CFD) allow people to speculate on price changes for an underlying asset, such as a common stock or an index. Dealers generally sell CFDs to their clients. When the clients sell the CFDs back to their dealer, they receive any appreciation in the underlying asset’s price between the time of purchase and sale (open and close) of the contract. If the underlying asset’s price drops over this interval, the client pays the dealer the difference.

1. Are contracts for difference derivative contracts?

2. Are contracts for difference based on copper prices cash settled or physically settled?