Port – Spread Betting 2007: Experience becomes a priority under revised rules

Today’s FT has a special report on the Spread Betting industry. Some excellent articles.

Spread Betting firms might find it harder to get customers under the new regulatory scheme although the current market volatility is attracting plenty or rich people wanting to short the market and property stocks.

Anyone wanting to open a spread betting account for the first time will now face strict suitability checks and should be prepared to be turned away if they fail to meet the criteria brought in under Mifid last month.

Betting companies, however, have had to reject some newcomers. Tim Hughes, head of sales trading at IG Index, says: “Previously there were very informal requirements, but these have been elaborated and we can’t offer the product to people who have never done derivatives before.” He says he would be stunned if the company had not turned away someone. But he added that early indications suggested that Mifid had not been as disruptive as had been feared.

Applicants who do not have enough experience to spread bet are not necessarily shown the door, however. Some companies can offer guidance to help customers understand the process. IG, for example, has an online education program me in place that provides tutoring in spread betting before they tackle the real markets.

REPORT – Goldman stakes claim in goldrush

On Thursday November 22, one UK spread betting company had two reasons to celebrate. Not only had it just carried out its 50 millionth trade in eight years but it had also announced that one of the world’s leading investment banks was taking a 10 per cent stake in its business, and becoming a strategic partner “to grow the business over the coming years”. The spread betting firm was CMC Markets. The investment bank was Goldman Sachs. And the two announcements were no coincidence.

REPORT – Foreign exchange no longer an alien land

The strength of sterling against the US dollar is enticing hordes of UK Christmas shoppers to cross the Atlantic in pursuit of bargains. But it is not only those on the hunt for cheap iPods who have benefited from the pound’s latest currency movements.

In early November the dollar dropped to a 26-year low against the pound causing a surge of interest in US dollar-sterling trades from spread betters.

“When there is a lot of information in the news on a subject – like the $2 pound, or a spike in oil prices – this generates a lot of interest from spread betters, many of whom are retail investors,” says Joshua Raymond, sales trader at City Index.

Tags: spread betting

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