Financial Betting: UK Traders Play to Win

December 6, 2005

Abstract

Paris, France December 6, 2005

Celent projects that financial betting will grow 26% per year through 2010 with strong growth from Asia and continental Europe.

While spread betting, contract for difference (CFD) trading, and binary betting get quite a lot of press, Celent estimates that there are currently only 125,000 active financial bettors, and 425,000 individuals with financial betting accounts globally—90% of whom are based in the UK. However, Celent estimates that financial betting will experience explosive growth in Asia, and CFD trading, in particular, will become much more common in continental Europe.

As the table below shows, the financial betting industry is poised to grow at a CAGR of 26.33% between 2005 and 2006:

In a new report, , Celent provides an overview and analysis of key trends affecting the industry, identifies leading industry players, and discusses the future direction of this niche segment of the global retail brokerage market.

"One of the main drivers of growth is the lack of volatility in the traditional financial markets—with financial betting instruments such as binary bets, active traders can create a volatile situation with constantly changing prices and odds, even if the underlying market only moves slightly," says Lauren Bender, senior analyst in Celent’s Securities and Investments group and author of the report.

"However, the upcoming MiFID regulation in Europe has several articles that pose a threat to the business models practised by some financial betting firms today; firms will need to clarify and modify their business models in order to make MiFID work in their favor both in the UK and in continental Europe, "she adds.

Even in the current regulatory environment, Celent expects to see impressive growth in the industry, as firms are rushing to set up in Singapore and Australia to take advantage of the regulatory environments there.

Leading providers covered include CMC Markets, IG Index, City Index, Finspreads, Cantor Index, Man Spread Trading, E*Trade, Betfair, and Ladbrokes.

The primary geographic areas covered in the report are The United Kingdom, Australia, and Chinese-speaking Asia.

The 52-page report contains 12 charts and 8 tables. A table of contents is available online.

of Celent's Retail Securities & Investments and Retail Banking research services can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.

        

Send mail to info@celent.com with questions or comments about this Web site.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

Paris, France December 6,  2005

Financial Betting: UK Traders  Play to Win

Return to report Abstract

Executive Summary 4
Market Overview 5
  Financial Betting Instruments 5
  Exponential Growth 5
  UK-Centric 9
Financial Betting Primer, Part I: Bookmaking vs. Matching Platforms 14
Financial Betting Primer, Part I: The Investment Products 16
  Financial Spread Betting 16
  Contracts For Difference 18
  Binary Betting 20
  Product Usage 22
  Instruments Traded 22
  The Tools 23
The "Investors" 24
  Profile 24
  Lifecycle 25
  Educate, Educate, Educate 25
The Dealers 26
  IG Index 28
  CMC Markets 29
  City Index 30
  Finspreads 31
  Cantor Index 32
  E*Trade 33
  Man Spread Trading 33
  Betfair & Ladbrokes 34
  Ireland 34
  Australia & Singapore 34
  Other 35
  Product Offerings 36
Taking a Gamble on the Future 39
  Geographic Expansion 39
  Active Traders 42
Conclusion 44
  Fad or Trend Question 44
  Regulation in the Equation 44
Appendix A: Financial Bet Examples 45
Appendix B: Financial Bet Examples 48
Objectivity and Methodology 51

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