Spread Co

Advantages of Spread Betting

Spread Betting provides you with a way of trading a wide range of financial instruments without needing to pay the full price of owning the actual instrument. It is also a way for you to sell (or "go short") if you expect an instrument to fall in value, as well as buying ("going long") in the expectation of an increase in value (which is all you can do in normal share trading).

We have described below some of the other benefits of online Spread Betting with us versus many other trading options:

Access to world markets and wide selection of financial instruments

You can trade a wide range of equities, currencies, bullion, commodities and indices with us, all in real time. Our Market information contains a list of instruments available for trading with us.

Leverage

Spread Betting is traded on margin. This means you can spread your capital more efficiently over a larger portfolio. These margins are referred to in Spread Betting as the ‘Notional Trading Requirement’ or ‘NTR’.

Margins for foreign exchange and index trading are based on a fixed cost per currency unit per point (e.g. GBP 30 for a GBP 1 per point trade on the FTSE100), whilst margins for equity trading depend on the equity and might range between 5 and 20%.

Transparent prices

Spot Spread Betting prices reflect the prices of their underlying instruments very closely, which means that it is easy to see the price that you are trading at. This is in contrast to warrants, futures and options prices which don’t mimic the prices of the underlying instrument, may have leverage which is difficult to predict and may also include forward interest.

Gives you control of your trading

Our trading system shows you the prices that you are trading at. You can place orders or can decide to trade immediately. With our system, you really are in control of your own trading.

Extended hours for you to trade

We give you longer trading hours on many Spread Bets, which means you have more opportunity to trade. You can trade many underlying instruments at any time between 10pm on Sunday evening (London Time) and 10pm on Friday evening (London Time) 24 hours a day. For example, we may quote Tesco and HSBC Spread Bets even after the London Stock Exchange has closed for the day.

Instant execution of trades

Your trades with us will be confirmed almost as soon as you press the buy / sell button on our trading system (provided that your order or trade volume is inside the permitted sizes and that the instrument is priced correctly.) You should only have to wait a few seconds at most for your prices to be confirmed, unless there are unusual market circumstances.

Tax Free Profits*

There is no income tax or capital gains tax for you to pay on any profits you make if you Spread Bet in the UK and are a UK resident, because your profits are classed as the winnings of a "bet". This is different to profits from CFD trading, on which Capital Gains Tax is payable for UK residents.

No stamp duty on Individual Share transactions*

There is no stamp duty for you to pay if you Spread Bet on individual shares in the UK. This means that Spread Betting may be a cheaper way for you to get exposed to equities than trading physical shares.

*Please note UK tax law can, of course, be changed.

Opportunity to go short as well as long

Spread Betting gives you way of going short on any instrument, in addition to going long. Going short means selling a Spread Bet on an instrument that you do not own, in order to buy this back at a later date, in the expectation that the price will have fallen between the date that you sell and the date that you buy. In contrast, going long means buying a Spread Bet on an instrument, in order to sell this at a later date, in the expectation that the price will have risen between the date that you buy and the date that you sell.

Potential interest on short positions

When you go short, and sell a financial instrument, you are treated as a lender of the asset. If you hold this short position open overnight, the borrower of the asset (i.e. us) may pay you interest. The amount of interest that you may receive depends on the underlying currency interest rates.

No physical settlement

Physical settlement of Spread Betting is never needed. Spread Trades are always just settled in cash. For example, you will never have to buy physical shares or deliver physical gold to settle your Spread Trade. This contrasts with many warrants, futures and options, which must be physically settled.

Risk Warning

Spread Betting carries above average risk and is not for everyone, so please ensure you understand the risks.

Trading on margin, whilst allowing you to maximise potential gains, also maximises potential losses and a relatively small movement in a currency can have a disproportionately dramatic effect on your trade. If the movement is in your favour, you may achieve a good profit, but an equally small adverse movement can not only quickly result in the loss of your entire deposit, but may also expose you to a large additional loss unless you enter a limited liability contract (place a guaranteed stop loss) with us, where we offer such facility.

You may be called upon to deposit substantial additional margin, at short notice, to maintain your trade. If you do not provide such additional funds within the time required, your trade may be closed at a loss and you will be liable for any resulting deficit.

You should not engage in Spread Betting unless you understand the nature of the transaction you are entering into, the risks involved and the true extent of your exposure to the risk of loss. Please read the Risk Warning to make sure you are familiar with the relevant risks.