I wouldn't say it is not a derivative, CFD is for sure a derivative, you don't need any secondary market to be traded with CFDs to make it a derivative. So it is a derivative, only problem is, there are many companies issuing them and if they go bankrupt, you can lose your money. Most companies offer just a few of CFDs though, but some like ETX Capital for ...
CFD is not really a "derivative", although it is presented as such. There are no market makers. It is just an agreement between you as the client and a broker/dealer who can buy sell the underlying security for his own account. So it is just a legal construct to avoid Stamp Duty etc., not a traded security.
I might be wording this answer incorrectly so if some law expert wants to correct anything, please feel free.
It is my understanding that CFD are contracts you pass with your CFD broker. So, this contract has a value as long as your broker exists and hasn't decided not to pay you. So, in a sense, the price is just set by the agreement between you and him.
Usually the broker hedges 100% of the position
either he buys or sells the exact same position, it is for instance possible to buy or sell a CFD via Direct Market Access. In this case the client is sending the order to the broker who exactly replicate it.
either the broker has the same position in its inventory and simply moves it
You could imagine brokers ...
that only charges for my profits - do you understand how CFDs work?
For the sake of simplicity, there are four aspects to CFD trading:
(1) bid/offer spread - differs on whether you're doing OTC contract, or have DMA access
(2) margin requirements - usually tiered and each tier has % of required margin
(3) overnight funding
(4) commissions - there are ...