There is a common misconception that Spread bets and Contracts for Difference (CFDs) are immune from the laws that govern insider trading. This is simply not the case. Anyone who is investing in spread bets or CFDs should be doing this because of their opinion on the market, and not through some privileged information.
Insider trading covers all types of trading on financial derivatives, and not simply the trading of the underlying shares as is commonly believed. This has meant that there have been a string of prosecutions of insider dealers who have engaged in insider trading.
As contracts for difference and spread bets are traded off a stock exchange then it can be harder to spot spikes or sudden dips in a share’s value as the prices of the contracts and bets are not published. However there is an indirect effect on a share price as markets tend to equalise, and sudden movements can still be seen.
Companies that provide contracts for difference and spread betting exchanges can often lose money on insider trades, and so tend to be quite zealous in prosecuting insider traders. Authorities used to be more lenient on insider trading on off market exchanges, although as it is commonly recognised that this can affect the share prices on the exchanges this is no longer the case.