SPREADBETTING IS THE NAME OF THE GAME
31 July 2009
134 percent surge reported
Spreadbetting is the name of the game, it appeared this
week as newly released figures showed a 134 percent
increase in the number of trades.
According to a
UK Wealth Management Industry report produced by ComPeer,
a research company, there was also a dramatic increase
in the number of spread betting accounts opened. The
total grew by almost two and a half times from 7 427 at
the end of 2007 to 18 012 a year later. At the beginning
of 2006 there were fewer than 1 500 accounts.
Among execution-only stockbrokers, which allow traders
to make their own decisions without advice, 1.4 million
spreadbet trades were transacted in 2008, over double
2007's volume of just under 600 000.
Spreadbetting has become increasingly popular in recent
years as traders take advantage of tax-free gains, lack
of stamp duty and the fact that, by comparison with
traditional share trading, smaller stakes are needed to
make large gains.
"During the last three years,
spreadbetting has emerged and thrived among clients of
execution-only stockbrokers," the report said.
"Investors have been attracted by their characteristics
– no direct commission or stamp duty, the ability to
profit on markets going down as well as up, freedom from
capital gains tax and the ability to deposit only a
proportion of the contract value – especially given
recent market volatility."
Trading in contracts
for difference, another type of "leveraged" trading that
allows large profits to be made from small stakes, also
rose. The number of trades increased by 30.5 percent
last year and by 12.3 percent year-on-year in the first
three months of 2009, the report found.
It added
that since the start of 2007 the number of CFD accounts
had risen in every quarter. Between the end of 2007 and
the end of 2008, the number of CFD accounts increased by
22.3 percent to just under 14 000. The trend continued
in the first quarter of this year.
The figures
reflect the boom in the online "day trading" phenomenon:
individuals, often former City professionals, buying and
selling at home using broadband Internet connections.
"With over 60 percent of households having
access to the Internet and with execution-only firms
offering cheap, fast and content rich trading
facilities, online trading has become by far the most
popular trading medium, well ahead of telephone and
postal dealing," ComPeer said.
"In 2008, 7.7
million execution-only trades were transacted online. To
put the rise of online trading into perspective, in
2000, when trading reached its peak, there were 2.7
million online trades."
Online Casino News Courtesy of
Infopowa
More news here.
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