Investors switch between spread betting providers

By Alice Ross

Published: November 10 2009 18:08 | Last updated: November 10 2009 18:08

Spread betters have little brand loyalty and often have more than one account, according to a new report.

Thereare currently 83,000 people in the UK with a spread betting account,according to the report from research organisation Investment Trends. Afurther 18,000 trade contracts for difference (CFDs).

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Butthe number of accounts is much higher, as traders are likely to holdmore than two accounts with different spread betting firms.

“Activespread betters will not hesitate to change providers if they experienceproblems or find a superior offer,” said the report.

This meansthat the “churn” in the industry – how much investors switch betweenproducts – is quite high, with three in 10 active spread bettersswitching their provider in 2008.

Most of the investors questionedsaid they used spread betting accounts as they allow shortingtechniques – betting that an index or stock will go down in value -along with access to a wider range of markets.

Trading on indicessuch as the FTSE 100 was popular with spread betters, with 76 per centtaking bets on indices, while 61 per cent said they bet on currencymoves.

The largest spread betting provider in the UK is IG Index,with 30 per cent of market share. CMC Markets has 9 per cent marketshare, followed by City Index and Capital Spreads with 8 and 6 per centrespectively, the report stated.

The report was commissioned by major spread betting providers including IG Index. It surveyed almost 9,000 investors.

InvestmentTrends, which is based in Sydney, said that its report, entitled “2009UK Spread Betting and CFD Report” was the first comprehensive study ofspread betting and CFD markets in the UK.

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