Survey: IG Index still Dominates, Cantor out of Big Four

According to latest research from market research specialist Investment Trends there are now some 83,000 active traders having a spread betting account in the UK and Ireland with another 18,000 trading contracts for differences.

However, the real number of spread betting account is very much higher as spread bettors tend to open separate spread betting account with different providers. The research indicates that the ‘churn’ (which measures investors’ willingness to switch between products) in the spread trading industry is high with 3 in 10 active spreadbetters changing their provider in 2008. This seems to imply that spread bettors don’t have much brand loyalty and most won’t hesitate to open a secondary account should they experience problems or find a better deal.

Most of the retail traders commented that they mainly use spread betting as it allows them to short assets (i.e. bet that a share or index will go down in value) and gives them access to a wide range of markets. Bets on indices remain popular; especially on the FTSE 100 with around 76% betting on indices, while 61% bet on foreign exchange moves.

The biggest spread betting company in the United Kingdom remains IG Index which dominates the market with 30% market share. CMC Markets follows with a 9% market share, followed by CityIndex and Capital Spreads with 8% and 6% respectively.

Note that the report was commissioned by major spread betting companies including IG Index and surveyed about 9000 investors. Investment Trends, which is based in Sydney, stated that this is the first comprehensive report of its kind about the spread betting and contracts for differences markets in the United Kingdom.

Interesting to see the extent to which IG Index still dominates the market and that Cantor Index is now excluded from the traditional big four spread betting providers. The research also serves to highlight the strong growth that Capital Spreads has experienced; the company now enjoys a 6% penetration rate achieved in just 6 years of being in business. Compare that to CityIndex which has 9% market share but has been operating for 25 years.

Tags: capital spreads, City Index, cityindex, CMC Markets, IG Index, igindex, research, spread betting growth

This entry was posted on Sunday, November 15th, 2009 at 3:05 pm and is filed under Industry News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.