Futures or CFDs? The comparison UK retail traders rarely get 

Two instruments do roughly the same job, and the difference that matters most is rarely in the comparison table. On a future you face a clearing house. On a CFD you face your broker. 

Whose failure would cost you money? 

Buy a FTSE 100 future and, moments after the trade prints, it is novated to a clearing house, which becomes counterparty to both sides, funded by margin from every member and a default fund built for exactly this event. Whoever took the other side of your trade stops being your concern. 

Buy a CFD on the same index and your counterparty is the firm you opened the account with, until you close. It may hedge, net you against another client, or carry the risk itself. FSCS cover of GBP 85,000 per client per firm sits behind that and is a genuine protection, but it is a backstop for a company failing rather than a structure built to make the company irrelevant. One firm’s solvency sits inside your position rather than beside it. 

Can you buy a third of a contract? 

Futures come in fixed lumps and the exchange defines the lump. As published by the exchanges, and worth confirming with the exchange before you act on any of them, the ICE Futures Europe FTSE 100 future is GBP 10 per index point and the mini GBP 2. CME’s E-mini S&P 500 is USD 50 per index point, several hundred thousand dollars of exposure in one contract, and the micro at USD 5 a point is still tens of thousands. Specifications get revised, so check first. 

Now the arithmetic the leverage objection tends to skip. At an index level of 9,000 the mini FTSE is roughly GBP 18,000 of exposure, and in a GBP 3,000 account that is about six to one, comfortably inside the FCA’s 20:1 cap for major indices. Equity would have to fall under about GBP 900 before one contract breached the cap. Granularity is the real barrier. That GBP 18,000 arrives in one indivisible piece, and an account wanting to express a GBP 800 view cannot, where a CFD runs continuously down to the broker’s minimum. That is the honest core of the sales pitch. 

What appears on the bill, and what never does 

On a future you pay commission per contract, an exchange fee and a clearing fee, each itemised, plus the spread you cross. What never arrives is a nightly financing charge. The cost of carrying to expiry already sits in the price you paid, in the gap between the future and the cash index, so carry is bought once and is visible before you deal rather than discovered afterwards. 

A CFD bills in instalments instead: the spread the broker sets around its own quote, commission on some account types, financing charged nightly against the exposure, and conversion charges where the instrument is not priced in sterling. Open and close inside a day and most of that never appears, which is why the industry selling it talks about days rather than months. 

Contract specifications are published by the exchanges and change without much notice, so treat the figures here as the shape of the comparison and confirm any individual specification with the exchange before acting on it. The third column holds UK retail account rules rather than properties of the instrument, so none of it follows you onto an exchange. 

Half of this comparison was measured and half was read off a page 

Those cost paragraphs need a note on provenance, because the two halves are different kinds of evidence. Independent reviewers now test these platforms with real deposits rather than reproducing fee schedules. One such exercise, a UK comparison of derivatives platforms, comes from a site that opens and funds live accounts with its own money to test UK trading platforms rather than compiling rankings from published fee schedules. 

There is no futures equivalent in that work, and that belongs here rather than in a footnote. A testing programme built on retail CFD, spread betting and share dealing accounts produces no measured figures for exchange-traded futures, which sit with clearing brokers and were never sampled. So the CFD costs above are a bill somebody paid and the futures costs are a specification, and in adjacent columns the specification borrows the authority of the bill. Notice which way that runs: the instrument sold hardest in Britain is the only one anybody funded an account to measure. 

Why is a roll better news than it sounds? 

A future has a stated death date. It settles in cash, or in some commodity contracts obliges you to handle delivery, which is why retail traders exit well before then. Staying in means rolling: close the near contract, open the next, cross the spread twice. 

A CFD never expires, which reads as the cleaner design and mostly is. The roll has a useful side effect, though. It is visible, it lands on a date you can see coming, and it makes you decide again whether you still want the position. Carry on a CFD arrives on a statement line most people never open and asks nothing. One design makes drifting into a long-held loser awkward. The other makes it the default. 

Does clearing protect a retail account? 

This is where the futures-are-obviously-better reading falls apart. A UK retail CFD account carries mandatory negative balance protection, so a Sunday night gap cannot leave you owing more than you deposited. It carries the 50% margin close-out rule and the FCA leverage ladder: 30:1 on major currency pairs, 20:1 on major indices and gold, 5:1 on shares. Those attach to the account, not to your competence. 

None of it attaches to a future. A clearing house protects the market from a defaulting member, superbly, and was never built to protect a retail client from a bad weekend, so a futures call can exceed the money in the account. Clearing protects you from your broker and the FCA regime protects you from your own position. A firm collapse is rare where a position going wrong is ordinary, which tells a small account which protection it will actually use. Some clearing brokers volunteer retail protections, and volunteer is doing heavy work there. 

What does it take to open each one? 

The CFD route is a form. The onboarding flow is designed to finish in one sitting and the product is advertised where people already are. 

Reaching a future takes more. You need a broker that clears on the exchange you want, market data arrangements, an account minimum set by a risk department rather than a marketing team, and enough familiarity with contract months to avoid buying the wrong one. None of it is exotic and all of it is friction, and friction shapes what British traders hold as much as merit does. 

Which question decides it for a small account? 

One multiplication, done before anything else. Take the point value of the smallest contract on the instrument you want and multiply it by where that market is trading. GBP 2 a point on an index at 9,000 is GBP 18,000. That figure is the smallest position the exchange will let you hold, and it does not negotiate. 

Then ask the question that settles it: would you place that size as a CFD tomorrow morning? If the answer is no, the contract specification has chosen for you, and no amount of comparing counterparty structures changes it. If it is yes, and you could absorb a margin call that stops at nothing in particular, the cleared route offers a price nobody sets for you and a counterparty built to outlive its members. Most accounts of a few thousand pounds get the first answer.