Another FOREX broker has thrown it’s hat into the spread betting market. This time OANDA, who provide FOREX trading as well as physical currency conversions has launched a spread betting product.
Spread betting is one of the most competitive retail financial markets in the UK. The biggest broker, IG claims about 100,000 active clients and is already diversifying into stockbroking and ETF investments. City Index has also been bought by Gain Capital and promptly shut down GFT Markets.
So, have OANDA done their research and discovered that the market is not saturated and not consolidating? There are a plethora of spread betting brokers for UK customers to choose from, one of the best brokers ETX Capital is constantly nipping at the heals of market leader IG, by offering new clients tight spreads, a deposit bonus of up to £5,000 and a range of trading platforms. It will be interesting to see how OANDA perform in the market.
Despite spread bet traders being well catered for in terms of choice of brokers and trading platforms, a retail broker that does not offer spread betting in the UK will always be at a disadvantage when trying to win new business.
The tax free nature of profits from spread betting on financial markets mean that it is a low administrative way to have exposure to financial speculation. This caters for lost clients that don’t quite have enough cash on hand to be tax efficient when trading. So anyone punting with less than £100,000 needs to consider the accountancy fess at the end of the year if they opt for CFD trading. A key factor in any broker offering spread betting as a service is product coverage.
In the UK brokers who want to capture a large portion of the 100,000 active clients need to offer the service to be competitive. So in OANDA’s case it seems they didn’t really have any choice if they wanted to be taken seriously in the UK as a private client retail FOREX broker.
Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.