Australian-based spread betting broker Pepperstone has announced the addition of a range of leading UK equities to its Spread Betting operations. Pepperstone is best known as a margin FX broker and as one of the biggest users of MT4 in the world. So it’s no surprise that the bets in UK shares will be available to clients via Metaquotes multi-asset platform MT5.
Despite having a UK operation since 2017 Pepperstone is a relatively recent entrant into the spread betting market, that delay can be explained by the fact that the firm has global ambitions and a global outlook, and of course, spread betting is very much a regional product that offers tax advantages over other forms of trading, to individual UK taxpayers.
Profits made from Spread Betting by individual UK taxpayers incur no income tax or GCT under current legislation. However, though they pay no taxes on Spread Betting profits UK taxpayers cannot offset Spread Betting losses against capital gains made elsewhere, a distinction that creates an a-symmetry for retail clients.
Forex broker Pepperstone is adding a range of UK blue-chip stocks including Lloyds Banking Group, IAG, AstraZeneca, Vodafone and Barclays, which join the existing list of leading US, German and Australian equities on the Spread Betting Platform.
The UK equities are likely to be margined at 20% or a ratio of 5:1 and will trade on a pounds per point basis. Pepperstone will not charge a commission on Spread Bets over UK equities but will instead quote a bid-offer spread on the stock, in line with market convention.
Spread Betting has enjoyed a resurgence over the last year as lockdown encouraged those with time on their hands into financial speculation. The market was invented and popularised by IG Group who remain its leading exponent.
Spread Betting was originally designed to allow UK investors to speculate on changes in the price of Gold, in a period when foreign exchange controls effectively prevented them from owning the yellow metal.
Today the market is an alternative to trading CFDs or other on-exchange derivatives for UK clients. Spread Bets differ from CFDs in that they usually have a fixed expiry date and the cost of carry or financing charge if any is built into the initial two-way quote.