There are a large number of spread betting companies available today, each offering a different set of products, markets and spreads. When evaluating which spread betting company is best for you, you need to take into consideration a number of factors. What markets and instruments does the company offer? How tight are their spreads? What are their margin requirements? What is their minimum stake size? Do they offer guaranteed stop losses?
This article looks at a small selection of spread betting companies and compares these features.
IG Index
IG Index is the oldest of the spread betting firms and promote themselves as the world leader. Our experience tells us that ‘oldest’ or ‘biggest’ doesn’t necessarily mean ‘best’.
- They offer an incredibly wide selection of markets and instruments that even includes UK house prices.
- 1 point spread on Rolling Daily FTSE 100 and typically 2 points on GBP/USD Spot Daily.
- Long Rolling Daily FTSE 100 @ £1 a point at 5,500 with a 100 point stop has a margin requirement of £110
- Margin requirements take your stop orders into consideration.
- Rolling Daily FTSE has a minimum stake of £2/€3 and GBP/USD Spot Daily is 50p.
- Guaranteed stop losses are available.
IG Index of the world’s leading financial spreadbetting companies and has been in business for over 30 years. The company has a history on innovation, pioneering 24-hour trading and spreadbetting on individual shares. Most recently IG Index launched a brand new internet dealing platform for its clients. IG is a subsidiary of IG Group plc, a public company listed on the London Stock Exchange, and is regulated by the FCA. On the downside I’ve found that their customer services people can be indifferent and arrogant at times and IG being the biggest means that they can get away with charging clients bigger spreads and margins.
Ayondo
Ayondo is a recent entrant to the spread betting and CFD marketplace but it is also a pioneer in social trading. The company has german pedigree but is also regulated by the Financial Conduct Authority. It offers some of the fairest terms for trading with them including:
- Tight and competitive spreads on thousands of markets.
- Financing is charged at just LIBOR +/- 2.5% for holding overnight positions.
- Financing fees are only charged on the ‘borrowed’ amount (unlike other providers who charge you on the full amount including the amount you put up as margin).
- Ayondo pass on 100% of the announced dividends net of withholding tax (unlike other providers who may pay just 80% of dividends).
- No negative balance policy meaning clients can never risk losing more than the amount they deposit.
Ayondo are also covering client deposit accounts with a free insurance policy that protects personal accounts up to £500,000 and thereby goes far beyond the existing Financial Services Compensation Scheme (FSCS) guaranteed capital threshold.
Capital Spreads
This company is the spreadbetting division of London Capital Group, a well-established broking and proprietary trading company based in the City of London. London Capital Group is a privately owned organisation active in many world financial markets.
They claim that the Capital Spreads web trading platform provides a new perspective on spreadbetting and has been launched with the purpose of providing better value spread prices and speed of transaction. You can spreadbet on all the major indices, foreign exchanges, commodities, bonds, interest rates and individual shares. Their trading systems allow clients enter stop loss orders, limit orders while their unique computer generated customer account management system (CAMS) will control the margin on clients account so that any losses will be capped to the original deposit made when a spread trader opens his position. Unfortunately, after new management has come in I feel this company has started going down a spiral and I’ve seen a fair amount of complaints about them recently. Even employees seem to hate working at London Capital Group.
CMC Markets
Formerly known as Deal4Free. This company is wholly owned by CMC Group plc, which was established in 1989. Regulated by the FCA. Well known for its commitment to offering the narrowest spreads in the market. CMC started out specializing in currency trading. They now offer spread betting, CFDs and Forex.
- Wide selection of markets that includes all the indices, sectors, shares, forex, commodities and bonds that you would expect.
- 1 point spreads on FTSE 100 Rolling Daily and 3 points on GBP/USD Rolling Daily.
- Long Rolling Daily FTSE @ £1 a point at 5,500 with a 100 point stop has a margin requirement of £50.
- Margin requirements depend on the underlying instrument. Some (like indices) use a notional trading requirement, others (like equities) use a percentage of the underlying.
- Minimum stake is £1.
- Guaranteed stop losses are available.
Finspreads
Finspreads has been offering online interactive spread betting since 1999. They offer reduced minimum stake sizes and an online course for novice traders, so represent a good company to learn to spread bet with.
- Wide selection of markets that includes the indices, shares, forex, commodities and bonds that you would expect.
- 1 point spreads on Rolling Daily FTSE 100 and 3 points on GBP/USD Rolling Daily.
- Long Rolling Daily FTSE 100 @ £1 a point at 5,500 with a 100 point stop has a margin requirement of £100.
- Margin factors vary from instrument to instrument and do not account for stop loss positions.
- Minimum stake is 50p on some instruments but 10p whilst enrolled on the novice trader training.
- Guaranteed stops available.
Launched in April 1999 to concentrate exclusively on offering a new, innovative financial spread betting service. Financial Spreads were acquired by City Index some years back. The company feels it provides a thoroughly professional and friendly service to those familiar with spread betting, and also to newcomers who might prefer to limit their exposure.
City Index
Established in 1983 City Index is a world leader in financial spread betting. The company forms part of the Intercapital private group of companies. Regulated by the FCA. Key offerings to clients include: – Market leading trading platform, and you can trade on published prices live via the internet. Low deposit requirements and very good range of global markets to choose from.
ETX Capital
Financial spreadbetting made easy. In spread betting, ETX Capital is one obvious choice. Easy to use, its simplicity starts with registration. Open an account within 24 hours, minimum deposit of £100 and start trading with £1 a tick on all major markets. The only problem with ETX is that if you tend to hold positions overnight this can be costly as they charge 4.5% in overnight financing fees.
It is beyond the scope of this brief article to examine all of the possible spread betting companies. When you are evaluating spread betting companies for yourself, these are the features you should examine.