Spread Betting Firms - Comparison

Comparative data on spread betting firms costs and charges.
Snapshot of a sample of firms and a sample of instruments, looking at daily or rolling daily prices.

July 2008

	Spread width (difference between bid and ask)							Overnight funding cost
	BP	IMI	FTSE100	DJIA	Gold	GBP/USD	USD/JPY	Stocks - long
CMC Markets	1.29	1.6	2	4	0.5	0	0.03	LIBOR + 3.0
IG Index	1.5	2.0	2	4	0.5	0	0.03	LIBOR + 2.5
Tradefair Spreads	1.1	1.6	1	4	0.5	0	0.02	BASE + 2.0
City Index	1.5	2.0	2	4	0.5	0	0.03	LIBOR + 2.5
ETrade Spreadbetting	1.1	1.6	1	4	0.5	0	0.02	BASE + 2.0
Capital Spreads	1.1	1.6	1	4	0.5	0	0.02	BASE + 2.0
Instrument Price	529	400	5140	10860	986	2.01	104.25
Best Spread as % of Price	0.20	0.40	0.02	0.04	0.05	0.02	0.02
Worst Spread as % of Price	0.28	0.50	0.04	0.04	0.05	0.02	0.03

Assessment

These figures suggest that it pays to shop around for the best spreads and charges

Comments on notes and figures

BP

Example of a FTSE 100 stock Spread between bid and ask ranged from 1.1 to 1.5, at time of sample underlying yellow strip was 0.5 The 3 firms with the smallest spread typically add 0.05% either side of the underlying spread, CMCMarkets add 0.075% to the underlying share mid price, CityIndex add 0.1% either side for the top 10 capitalised FTSE100 stocks (0.15% on other FTSE100 stocks) and the others add 0.25% either side.

IMI

Example of a FTSE250 stock CMCMarkets add 0.075% to the underlying share mid price, the other 3 firms with the same size spread add 0.125% either side of the underlying spread (which at the time of the sample was 1.0) the others add 0.25% either side.

Other

Note that the size of spreads as a percentage of underlying price is much high for stocks compared with the indices currencies and commodities selected for the sample. DJIA and Gold spreads were the same for all the companies sampled, FTSE100 spreads were either 1 or 2, the benchmark for sterling dollar is 0.0003, and the spreads on Dollar Yen varied between 0.02 and 0.03.

Funding

Funding for longs varied from +2 to +3 over Base or LIBOR, which equates currently to between 7% and 8% p.a.