Hedging tactics on the rise

Online broker E*TRADE has reported a 42 per cent increase in some types of derivatives trading among UK investors.

Derivatives such as contracts for difference (CFDs), futures and spreadbetting are growing in popularity among private investors based in the UK, according to E*Trade. It saw a 23 per cent rise in CFD usage over the past year. Futures trading and spreadbetting have become even more popular since quarter two of 2006, with a 42 per cent rise in each type.

Salim Sebbata, senior director of UK Retail at E*TRADE, said, ‘Derivatives are increasingly becoming a popular way of trading commodities, currencies and stock indices.’

He attributed the increased activity to a number of factors, including the direction of the US market, the softening of the UK housing market, and rising interest rates. Such issues contribute to potential volatility and so encourage investors to hedge, according to Sebbata.

Tags: etrade

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