Investors power spread betting boom

PRIVATE investors worried about the economic downturn and wobbly stock markets are trading many fewer shares than last year but are spread betting much more. Estimates published by independent website Onewaybet.com suggest that financial spread betting volumes in 2001 will be the highest ever and about 25% above last year's.

In contrast, conventional share trading by private investors is running well below record levels reached during the dotcom boom of late 1999 and early 2000.

Figures from the Association of Private Client Investment Managers and Stockbrokers show a fall of nearly 30% in private investor share trading volumes over the first three quarters of 2001 compared with the same period of 2000.

Spread betting has thrived in this year's bear market because it enables traders to go 'short' as well as 'long' of shares and stock indices.

The number of financial spread bookies has risen from five to seven in 2001 and more than 50,000 private investors now hold accounts.

Peter Martin, at IG Index, the largest spread bookmaker, said clients this autumn have been taking almost as many short positions in shares as long positions. A year ago the ratio was about 80-20. Brian Mairs at Apcims said private-client share trades were down to 40,000 a day in August but since 11 September they have stabilised at 50,000 a day.