Spread Betting No Fad

Spread betting volumes more than doubled in the first half of 2008, compared with a year earlier, even as share trading volumes fell, according to a survey of wealth managers by ComPeer, the industry analyst.

Trading volumes for the high-risk derivatives hit record levels during the stock market’s dismal first quarter, before coming off this high in the three months to the end of June.

By contrast, share trades by private investors fell 8 per cent to 2.2m quarter-on-quarter to the end of June, while the first-half figure was 15 per cent lower year on year. ‘Turbulent market conditions have hit direct share investment,’ said Roger Colletta, ComPeer managing director. “While spread betting is higher risk, it does at least offer the opportunity to make money in falling markets.’

Tim Hughes, head of sales trading at IG Index, the biggest spread betting firm, confirmed that market volatility had prompted an increase in “shorting” – trades aimed at profiting from price falls.

‘Whether it’s to hedge or speculate is unclear,’ he said.

However, in the three months to end-June, funds were the only investment category in the wealth management industry showing quarterly growth in transactions.

Tags: derivatives, spread betting, volatility

This entry was posted on Saturday, August 23rd, 2008 at 12:20 am 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.