Spread betting is a means for traders to speculate on the price direction of a wide range of financial markets. As the trader never owns the underlying asset, financial spread betting is described as a derivative-based product which allows trading on thousands of different markets such as forex, shares, indices, commodities and bonds. Invented in the US in the 1940s, financial spread betting gained traction in London from the 1970s on, where it is now one of the primary trading vehicles for retail and institutional investors. In recent years the advent of sophisticated online trading platforms has enabled spread betting to flourish.
Unlike buying shares in a company, in spread betting the participant never owns the underlying instrument. Instead they speculate on the direction of prices quoted by the broker. Spread betting is offered as a derivative-based trading product across forex, commodities, indices, equities and bonds.