The Rise of Financial Spread Betting

LONDON, January 27, 2011 /PRNewswire-FirstCall/ -- Many traders consider financial spread betting to be a recent trading phenomenon, but it actually came about in the 1970s. The popularity of spread betting has snowballed ever since, particularly following the introduction of online and mobile trading platforms. Here, spread betting provider City Index (http://www.cityindex.co.uk/) takes a look at some key stages in the rise of financial spread betting.

1970s: Conception

Financial spread betting (http://www.cityindex.co.uk/spread-betting/) was introduced in 1974, the brainchild of unemployed stock broker Stuart Wheeler. He came up with the idea of an index that would allow his friends to trade on the price movements of gold without ever having to actually own the expensive commodity at any point. Wheeler set a 'sell' price and a 'buy' price and invited his friends to speculate on whether the index will go up or down over the following week. Word soon spread and the furore of interest in financial spread betting convinced Wheeler to expand his idea into a spread betting company and introduce a wider selection of financial markets for traders to spread bet on.

1980s: Growth

The economic boom paved the way for more spread betting providers, the first of which was City Index in 1983. While spread betting was still growing, however, it was still a very niche form of trading. Only a very small percentage of the population had embraced it. This was partly because the financial spread betting companies were only setting prices for commodities, currencies, options and indices, whereas the public at the time were used to investing in familiar stocks and bonds. Another drawback was the lack of technology available at the time; a deficiency detrimental to both trader and spread betting provider.

1990s: Mainstream

With the 1990s came the beginning of the technology boom and spread betting would never be the same again. Dotcom shares flew upwards and global market activity became front page news. All of this helped financial spread betting to draw a more computer-focused, younger generation of traders. Over time, spread betting went on to reach across every financial market, from shares to futures. With high market volatility at the time, spread betting offered an attractive and shorter-term alternative to physically buying and selling shares, cementing its place in the trading mainstream.

2000s: Advancement

Faster computers and online trading platforms came about around the time of the turn of the century. These allowed financial spread betting providers to cover more markets, more data and more competitive spreads and real-time prices. This made spread betting available to the average investor and sparked another boom for the industry. Spread betting providers such as City Index have since launched live iPhone(TM) spread betting ( http://www.cityindex.co.uk/trading-platform/iphone-trading-platform.aspx) and other mobile trading platforms, turning trading into something that one can carry everywhere.

How spread betting will evolve over the next decade is anybody's guess. To be a part of it and find out for yourself, just visit

http://www.cityindex.co.uk/.

For more on the mobile trading platforms available at City Index, visit http://www.cityindex.co.uk/trading-platform/mobile-trading-platform.aspx.

About City Index:

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

As a group, we transact in excess of 1.5 million trades every month for individuals in over 50 countries worldwide. We provide access to a wide range of instruments including margined foreign exchange, contracts for differences (CFDs) and, in the UK, spread betting.

We constantly look to widen the range of assets we offer, improve the performance of our platforms and expand the range of services we provide. The result is that our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer service and support.

Spread betting and CFD trading (http://www.cityindex.co.uk/cfd-trading/) are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.

* Spread betting and CFD trading are exempt from UK stamp duty. Spread betting is also exempt from UK Capital Gains Tax. However, tax laws are subject to change and depend on individual circumstances. Please seek independent advice if necessary.

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SOURCE City Index