Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Contract for difference definition

What does Contract for difference mean? A contract for difference (CFD) is a derivative used to gain or hedge economic exposure to an underlying asset (such as shares or equity indices) without owning it. The parties agree to exchange cash equal to the difference between the asset’s price when the position is opened and when it is closed. CFDs are cash‑settled, leveraged, traded over the counter on margin and carry counterparty and close‑out risk. In the UK, CFDs fall within the statutory category “contracts for differences”, a specified investment under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. In Ireland they are...

From CfD Signature to Commissioning: Legal Guide to Milestones, Conditions Precedent, Capacity Adjustments, Termination Rights and AR1–AR7 Contract Changes

Published by a LexisNexis Energy expert

Practice notes

Practice Note

This Practice Note sits within our suite of comprehensive guidance on the key provisions of the standard form Contract for difference (CfD), issued to renewable electricity generators through the CfD allocation rounds run to date. The emphasis here is on the CfD terms that apply from signature up to the point a project is commissioned, when payments under the CfD commence.

Our other relevant Practice Notes in this series include:

Detailed guidance on the terms of the standard form Contract for Difference (CfD): from commissioning to expiry — offers Complementary guidance on the CfD provisions that apply once a project has been commissioned and subsidy payments have begun
Contracts for Difference (CfD) — key features — sets out a detailed overview of the CfD regime as a whole, including the pre‑contract legislative process for awarding standard form CfDs and the types and variants of standard and non‑standard CfDs awarded to date
Investment contracts — early contracts for difference (CfD) [Archived] — introduces the early CfD arrangements (known as ‘Investment Contracts’ or ‘Final Investment Decision (FID) Enabling for Renewables (FIDER) contracts’) issued in 2014 to certain low‑carbon generation projects

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Web page updated on 21/05/2026

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