Spread Betting continues to soar

Spread betting’s popularity continues to soar despite an ongoing probe by the FSA, with many spread betting firms confident that demand for their services will remain high.

The industry’s optimism has been boosted by the launch of two new financial spread betting services in the UK, allowing punters more choice to bet on movements in major world exchanges, indices and commodities markets. According to estimates, there are between 50,000 and 100,000 account holders in the UK with demand for spread betting – both sporting and financial – growing at a rate of 25% a year.

The industry says the internet has fuelled growth by making trading information rapidly available in the homes and on the laptops of a new global pool of punters. ‘Stocks and shares are no longer the playground of yuppies,’ says Will Armitage, senior quoting trader at IG Index.

Seizing on the online popularity is ETrade, the UK’s oldest internet-based stockbroker, which recently launched its spread betting service. ETrade has 3.5 million existing trading clients worldwide and is offering rolling daily and futures-style bets on financial markets covering UK and global shares, stock market indices, major currencies, commodities and fixed interest products such as corporate bonds, in line with that offered by most providers.

Interactive Investor, which has 1.4 million trading customers, has also joined the fray with the launch of its spread betting platform – white-labelled through Finspreads, a subsidiary of IFX. Interactive claims to have the lowest minimum bet size in the UK of just 50p.

The emergence of new competitors is a robust sign for an industry which less than eight months ago was told by the FSA that the risk warnings on some of its promotions were inadequate. With the FSA said to be keeping a close eye on the
sector, the new entrants are going to greater lengths to raise awareness of the risks involved in spread betting.

Interactive Investor is offering a free eight-week online course to educate new clients on aspects of spread betting – from how markets work to the mechanics of trading. The course, which has signed up 500 clients already, is an innovative
advance on the information evenings already held by other established firms. ETrade is also planning seminars for its new clients and says it emphasises that customers can place stop-loss facilities on their bets, which halts trading at
pre-set points.

‘We understand fully why the FSA is doing what they are doing,’ says James Elias, head of UK retail at ETrade. ‘With every communication that goes out we highlight very clearly the risks associated with spread betting.’

This entry was posted on Thursday, March 17th, 2005 at 10:19 pm and is filed under Uncategorized. 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.