It was in 1974 when spread betting has begun. The primary purpose why this was set up was in order to avoid the strict controls on prices in United Kingdom that time. During that time, the government declares speculation on gold as illegal. Consequently, retail investors got the idea to create a mechanism that will allow them to bet on the movement of the prices of the gold without the need for them to physically hold the said underlying instrument or asset.
Furthermore, also during those times, there is a weekly meeting held at the office of Rothschild, one of today’s biggest financial groups around the world, in order to determine the price of the gold for the coming week. Retails investors were then offered to put a buy bet if they think that the price will be above the predicted level. On the other hand, those investors who think that the actual price will be below the predicted can put a sell bet. These bets were then termed as the Investors Gold Index, which is now popularly known as the IG Index.
Since then, the development of spread betting has been continuous. In 1985, the IG index opened its doors for financial spread bets, specifically on FTSE. Two years after that, City Index entered the industry then the CMC Market was then established two years after that.
The Time Has Changed
Through time, the size of the industry has changed significantly as well as the different markets where spread better can make and post their positions. During the early years of the development of spread betting, the instruments that can be traded are only limited to commodities as well as indices and options like the S&P500 and FTSE100. However, these are the instruments that are not well known by the average traders out there. Hence, with the demands then and the changes of time, these are already among the most popular financial instruments.
Shares Trading in Foreign Exchange
Furthermore, with years of developments and innovations, shares trading on foreign exchange joined the other financial instruments that can be traded along with spread betting indices like gold and silver. As a matter of fact, Forex trading has dominated the market in the past years since the appetite of investors for this kind of instrument increased significantly. Aside from that, there had been so many opportunities that were found from trading shares and foreign exchanges.