Spread Betting Shares Tank As Proposed Clampdown Imminent
Spread betting firms in the UK took a major hit of over £1.3 billion after a surprise crackdown by the City Watchdog. The Financial Conduct Authority (FCA) announced yesterday that they will be clamping down on contract for difference (CFD) bets. The dramatic announcement came as reports of over 4000,000 customers losing huge amounts of money.
The idea behind spread betting is to give the man in the street the chance to be on commodities much like City traders. According to the FCA 8 in 10 customers are losing money and have vowed to protect vulnerable customers. The large publicly listed player IG Group plummeted 38.4 percent to 485.1p which knocked off £1.1 billion of its value with CMC Markets losing £200m.
According to figures released there are over 520,000 customers in the UK and abroad being served by spread betting firms with 80 percent of them losing money each year.
Executive director of strategy and competition for the FCA , Christopher Woolard said,” We have serious concerns that an increasing number of retail clients are trading in CFD products without an adequate understanding of the risks involved, and as a result can incur rapid, large and unexpected losses.”