Private individuals spread betting in the uk on currency markets are playing a fast-growing role in the burgeoning global business of foreign exchange, which has skyrocketed to a spectacular £1.1 trillion worth of trades each day.
Moreover, according to the triennial survey of foreign exchange and derivatives markets by the Bank for International Settlements - which involved 52 central banks - more than half of all global daily trading occurred in the UK.
The bulk of the global jump - a 27% surge from £834bn in 2001 - can be put down to the greater number of foreign currency trades necessary in an increasingly globalised and interconnected world, along with a spike in the number of forex-betting hedge funds.
However, the role of spread betting uk punters has also continued to grow exponentially. James Parker, a forex trader with financial spread betting uk specialist City Index, said that while private-individual foreign currency bets ranged from around £3 to £1000 per punt, the quantity of bets had increased by more than 800% in the last 12 months alone.
The increase in interest in foreign exchange betting is massive. It began with the downturn of the Nasdaq bubble, when non-institutional shareholders started to drift out of the traditional equity markets. But there is also the point that people are able to bet on currencies easier now than ever before, particularly with spread betting uk Internet dealing and phone services available.  |
Parker added that uk spread betting "tends to increase when the currency markets are at their most volatile", and that the most common spread betting currency bets in the uk over the past year have been sterling/US dollar, followed closely by euro/dollar, dollar/ yen and dollar/Swiss franc.
Perhaps most startling, however, is the exponential growth in the number of traders in foreign currency options and derivatives, which some industry experts said increased by a factor of 25 over the past year. Parker said many private individuals now "seem to be acting on snippets of information about relations between countries".
According to the BIS study, foreign exchange market turnover in the UK increased by 49% between 2001 and 2004 to £418bn per day - with London maintaining its position as the world forex capital. The US increased its turnover 82% to $461bn (£257bn) .
The largest percentage growth - 94% - in the three-year period was in "outright forward transactions", the sale or purchase of foreign currency more than two business days after dealing. The next largest growth area was spot trading, which is the exchange of two currencies at a rate agreed on the date of the contract, which climbed 47%.
The study also noted outright forward trades accounted for 14% of total UK foreign exchange activity, compared with 11% in 2001. Electronic trading accounted for 55% of all foreign exchange activity.
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