TRADING INSIGHT FINANCIAL TIMES SPECIAL REPORT | Friday June 17 2011

www.ft.com/trading­insight­jun2011 | twitter.com/ftreports Turn a drop in gold Inside Investor base Women and minorities are still to your advantage under­represented in investing circles Page 5 Anti­corruption Technology has become key in the fight against match fixers Page 6 Football Why Uefa’s financial rule changes threaten the future of clubs across Europe Page 7 Political indices The tempo is quickening for spread betters as the US heads towards an election Page 8 Boxing The sport’s contribution to spread betting is feast or famine – there is much interest in the Haye vs Klitschko fight Page 9 US currency The US dollar has seen a return to strength but is its popularity set to last? Page 10 Portfolio advice Investors should vary their investments and stick to what they know Page 10 Asset classes Contracts for difference are becoming popular with retail clients Page 10 ALSO INSIDE Android takes up the running in mobile deal making, Page 2 PLUS Why big IPOs are not a one­way bet, Page 4 2 FINANCIAL TIMES FRIDAY JUNE 17 2011 FINANCIAL TIMES FRIDAY JUNE 17 2011 3 Trading Insight Trading Insight

Hold the phone: as mobile to gauge liquidity and general profile of the tradi- Capital Spreads sees a London, but Manchester, data processing capabilities where any significant buy tional London-based CFD/ more even split. Mr Camp- Birmingham, Glasgow, improve, so will the trading or sell orders may be lurk- financial spreads trader,” bell says almost half of the Leeds, Edinburgh, Sheffield Android takes up tools available Alamy ing. They can then use the says Mr Inkster. “These cli- client base is located out- and Bristol accounted for app to place orders directly ents are also, generally side London and the south seven of the top 10 spread- tem. “The iPhone remains on to the London Stock speaking, depositing more east. “A good indication betting locations. Traders the most popular, but Exchange’s order book cash – with the average that our clients are not the from Milton Keynes Android is fast catching while on the move. cash on deposit for non- traditional City of London appeared the most dedi- up,” says Mr Campbell at As a result of these London based clients being user base is that the major- cated overall, spending 17 the running as Capital Spreads. mobile facilities, the loca- about 63 per cent higher ity of them have a salary of minutes online per visit. IG Index used to provide tion and character of retail than the average for clients up to £35,000, so way below Spreadex marketing com- an optimised log-in page for traders is starting to residing in London. We the average for City remu- munications manager Andy Android users who accessed change. “Looking more have also seen a healthy neration,” he says. MacKenzie says: “More peo- its trading platform via closely at the client base, proportion of clients trading When Spreadex, the ple are realising you can clients go mobile mobile phone web browsers. we see that 56 per cent of further north, with the Mid- financial and sports spread trade from home and don’t Its new Android app will clients trading on the lands, Newcastle and Scot- betting firm, profiled a mil- need to be at a hedge fund enable users to share in the iPhone live outside the land all featuring heavily as lion of the visits to its or a stockbrokers to try and iPhone. However, Tim Again, the growth has been range of functionality that Greater London area, and areas where active clients online platform, it found make money from financial Agenda Hughes, managing director rapid. “Forex.com’s mobile iPhone users currently do not necessarily fit the reside.” 420,000 originated in central market movements.” of IG Index, believes boom- trading volume increased enjoy, such as Reuters Companies are ing sales of Android phones 418 per cent in Q1 2011 com- news, automatically updat- developing apps as will see more trades pared with the same period ing charts, and at-a-touch migrate to these devices. last year,” says Samantha execution of trades, stop traders desert their “Before the iPhone was Roady, chief marketing losses and limit orders. desktops, says launched, we did have officer at Gain Capital. Hav- Forex.com is on the sec- mobile trading platforms ing launched its Android ond version of its Android Matthew Vincent available for Nokia, Black- app just two months ago, app, which is available in Berry and other smart Forex.com believes just as three languages – English, n Android mobile phones – and these had many trades will now be Russian and Japanese – and phone in Milton been available for a number executed via Google pow- features more charting Keynes can now of years,” he recalls. “But ered handsets. tools, extra research con- rival a computer since our iPhone launch, At specialist UK spread tent and a “Learn” section. Ascreen in EC3 for trading mobile trading volumes betting providers, mobile As mobile data processing foreign exchange, contracts have more than doubled trading is confined to a capabilities improve, so will for difference and financial and now about 10 per cent small but growing minority. the trading tools available spread bets, according to of trades across all plat- “Currently, mobile trades to retail clients, providers the latest customer activity forms come from an iPhone. still account for less than 10 say. Last month, IG issued data from retail derivatives It was only last summer we per cent Capital Spreads’ the latest version of its providers. Volumes of launched the iPhone App trading volumes but the iPhone trading app incorpo- trades being made on smart for spread betting clients number is growing quickly rating direct market access phones and mobile devices and the response has been – and the launch of the (DMA), or Level 2, function- are continuing to rise, and phenomenal. We are expect- iPhone and Android apps is ality. Previously, IG Mar- prompting the development ing a similar impact for the fairly recent,” reports kets clients had been able of apps for the latest gener- Android app.” Angus Campbell, head of with hundreds of them now use of the hardware’s larger But it is the potential to trade only on an over- ation of such devices. Forex.com, the online cur- sales at the betting firm. ‘Time is money trading through this chan- screen and ability to render reach and power of Android the-counter (OTC) basis or IG Index, which this week rency trading platform “That said, the number of and our iPad app nel,” says head of product high-resolution graphics. devices on which many directly into the market is scheduled to launch an operated by Gain Capital Android app downloads has Paul Inkster, who notes the Shai Heffetz, head of trading providers are focus- from a PC. With its latest app for phones using Holdings, has experienced a been impressive as, makes it quicker iPhone app was launched financial spread betting and ing. Figures from research innovation, clients gain this Google’s Android operating similar shift. A quarter of between the beginning of for customers’ only at the start of the year. CFDs at InterTrader firm Gartner show Android- same functionality on an system, reports 25 per cent its retail customers now April and the beginning of Apps for the iPad have explains: “We work from powered mobile devices iPhone. So, via a mobile of its clients now trade on a trade on mobile phones – June, we’ve seen a rise of quickly followed. In March, the premise that ‘time is accounted for 36 per cent of handset, traders can get mobile device as well as a and they make 51 per cent over 200 per cent.” (CFDs)/financial spread InterTrader.com claimed to money’ and our iPad app worldwide smartphone details of the precise PC. Much of the initial more trades on both Barclays Stockbrokers trading platform now come have produced the first ded- makes it easier and quicker sales in the first quarter, up number of shares being growth in these mobile mobiles and desktop PCs, says about 8 per cent of via its iPhone app. “We icated financial spread bet- for customers to react to from 9 per cent from a year offered into, or requested volumes was driven by the compared with when they total trades booked on its have seen a healthy pick-up ting app for Apple’s tablet, breaking news and events ago, making it the top-sell- from, the market at any popularity of Apple’s trade on desktops alone. contracts for difference in client trading activity with a design that makes when on the move.” ing mobile operating sys- given time, allowing them

Contributors Matthew Vincent Silver and other FT Personal Finance Editor precious metals have also Lucy Warwick­Ching Gold’s future hangs in the balance attracted interest FT Online Money Editor cious metals are being Elaine Moore lot of investor attention,” either to buy an exchange (£5 x 2 x 10). With gold, dle Eastern instability, in driven by a whole host of Personal Finance Reporter Precious metals says Paul Inkster, head of traded commodity (ETC), most firms permit gearing troubled times, gold has his- factors: low interest rates, Tanya Powley product at Barclays Stock- which is designed to closely of up to 20 times the initial torically been seen as a safe high inflation, sovereign Personal Finance Reporter Traders need to brokers. “This has been due track the underlying price stake. The flipside of lever- store of wealth. This is debt crises and a weak dol- think further ahead to their price strength but of the metal, or to spread age is that potential losses because gold does not fade lar,” says Simon Denham, Huw Richards in recent weeks silver espe- bet on the metal’s price. are also not limited to your away, disintegrate or chief executive of London FT Contributor than the next few cially has suffered a sharp There are two main meth- stake. degrade.” Capital Group. “Inflation is months, says Lucy pullback.” ods of spread betting on The big concern for trad- Third, Asian respect for high but probably not going Sean Smith He says the commodity gold. Long-term traders ers is gold’s future perform- gold is a key the driving much higher, interest rates FT Companies Reporter Warwick­Ching markets have always tend to place bets on ance. Alastair McCaig, mar- force. “Do not discount the at ProSpreads, says: “Silver are possibly on the cusp of Adam Jezard appealed to retail execution- futures contracts, which ket analyst at World- attitudes of the Chinese, has stolen the spotlight in turning and the dollar is Commissioning Editor only investors who have have a set expiration date. Spreads, gives four reasons Japanese and especially the past few weeks with a struggling to hit new lows. s gold losing its glis- confidence using those mar- Those looking to take a for why he believes the Indians to gold,” he says. dramatic increase in trad- Added to this is the fact the Steven Bird ter? That is the ques- kets for hedging or specula- short-term view usually price of gold will continue “These countries do huge ing margins catalysing a US may be about to turn off Designer tion at the forefront of tion as part of their short- place bets on gold’s rolling to rise. The first is quantita- business with America so cataclysmic liquidating the printing presses and traders’ minds after term investment strategy spot price. One benefit of tive easing (QE), the proc- their profits are tightly exercise, precipitating a 30 calling a halt to QE.” Andy Mears I faltering economic growth and also deploy them as a spreadbetting on gold is the ess of printing US dollars, dependent on the value of per cent drop in its price Kathleen Brookes, Picture Editor in May contributed to the diversification tool in a mid ability to deal at just about which he says has dimin- the dollar. They see gold as since the beginning of this research director at biggest mining company to long-term strategy. any time of the day, as it is ished the currency’s intrin- the perfect hedge against its month. Forex.com, adds that on a For advertising details, sell-off for two years. But, There are various ways a 24-hour market. sic value and pushed up the devaluation. When the dol- “That would normally longer-term basis the attrac- contact: while a fall in the price of that investors can gain Many spread betting value of dollar-denominated lar devalues, the value of suggest a sector downgrade tion of gold is only good if Rachel Padhiar on +44 gold negatively affects investment exposure to firms calculate gold trades goods. their gold increases.” driving other precious met- you have confidence people (0) 20 7873 3564 those invested directly in these commodities. One at 0.1 basis points per US “By definition everything Finally, Mr McCraig adds, als lower, but for those who will want to buy it in or email: the physical metal, traders way is to invest in compa- dollar, which means that priced in dollars rises in traders like gold because fail to find a haven invest- future. “It yields nothing [email protected], or can play the price falls to nies closely linked to the for every dollar you move value and gold is quoted in they are familiar with it. ment in uncertain times, and isn’t widely used [by George Duckworth on their advantage. metals, such as mining you would either make or dollars, as are most com- Some experts say gold has then maybe silver positions industry], so its rise in the +44 (0) 20 7775 6533, “Precious metals have firms, or to invest in a man- lose 10 times your stake. So modities,” he says. become unlinked from will be rolled into gold.” past 10 months is mostly or email: been particularly popular aged fund focused on natu- if you buy £5 worth of He also adds that “tur- other precious metals, pos- But traders in gold need based on investor senti- [email protected] over recent months, with ral resources. But one of points and gold moves up moil boosts gold. Be it Euro- sibly to its benefit. Simon to think further ahead than ment, and we all know how gold and silver attracting a the most direct ways is $2, you would make £100 pean sovereign debt or Mid- Brown, managing director the next few months. “Pre- capricious that can be.” 4 FINANCIAL TIMES FRIDAY JUNE 17 2011 FINANCIAL TIMES FRIDAY JUNE 17 2011 5 Trading Insight Trading Insight Share launches improve but are no one­way bet Women and minorities remain rare timing becomes critical,” IPOs says Mr Jones. tle of the party atmosphere “I don’t know what it very strong correlation in bear markets by spread female clients, increasing at “The first trade was at Investor base on show from competing would take to attract the growth of new accounts betting, by going short or a similar rate to before the Spread betters who 100 per cent premium to the online poker sites, where more women – and it from women traders to bull selling prices, women global financial crisis spot the direction IPO price. Only the brave or Providers must women make up a higher is a shame they don’t bet and bear markets. appear to be more risk- started. foolish would think it had work harder to proportion of customers. more, because the figures Between 2001 and 2007 the averse then men, and this It could, he says, indicate of stock movements further to run. As the price Prof Brady’s report show that they have a more firm saw an increase of 124 may be why we saw a fall women are more strategic can reap rewards, ticks higher, if you move widen their appeal, claimed that the number of disciplined approach in gen- per cent, year-on-year, of in the amount of new in their planning than into the market too late, by says Elaine Moore retired spread betters was eral than men,” says Mr new women traders. women traders between men. Ivan Glasenberg, chief says Tanya Powley the end of the day you also likely to increase, Jones. But from 2007 until early 2007 and March 2009, a time But even if companies executive of Glencore, could be nursing a loss.” thanks in no small part to Joshua Raymond, market 2009 this fell by 71 per cent. when the FTSE 100 lost 48 do start to attract the at the company’s The recent initial public Mr Jones points out that the demographics of Brit- strategist at City Index, “This appears to indicate per cent.” interest of new groups, listing in Hong Kong offerings of Glencore, the much has been written on n 2006 a study by Cass ain’s ageing population. says that over the past dec- that despite the fact you Since March, the com- retaining them is another last month Getty world’s largest commodities IPOs and the propensity for Business School, part From a 5 per cent share it ade City Index has seen a can make money from pany has seen an upturn in matter. trader, and LinkedIn, the shares to show an overreac- of London’s City could rise considerably if business focused social net- tion, followed by a mean University, estimated older people were targeted. work, look set to end the reversion. Therefore some Ithat if spread betting was They have the time, money trend of difficult. and in of the best opportunities for more heavily advertised to and skills to become serious some cases failed, flotations a spread better in an IPO women, the elderly and spread betters, he said. on the big stock exchanges. could be to try and pick the members of ethnic minori- “We were all assuming The multibillion-dollar top of the overreaction and ties, then by 2011 the they [over 50s] would have listing of Glencore last go short from there. number of people with an grown but the per cent month is the largest IPO in However, this will not account could reach 1m. hasn’t moved. Of course, London and the third larg- always be the case, as seen With the hindsight of five due to the growth of spread est in Europe, raising with Glencore. The trader’s years it appears the advice betting the absolute num- around $10bn. Meanwhile, debut as a public company went largely unheeded. bers will have increased for LinkedIn’s Wall Street has been criticised as lack- The profile of the average both over 50s and women debut has seen a rush of lustre so far, trading below spread better remains but it is still clearly a 25-45 other social media compa- the IPO price of 530p. white, male, middle-aged year-old and male-domi- nies looking to list in the According to World- and professional. nated environment,” says coming months. Spreads, the majority of cli- Although IG Index says David Jones, chief market These launches are ents who traded Glencore that 3,000 people open an strategist at IG Group. expected to improve confi- on day one, May 19, bought account with them each The same goes for dence in IPOs, which has positions but as the low month, spread betting is women. In 2006 women suffered since the credit cri- trade on that day was 530p, still not a mainstream accounted for about 10 per sis and was hit more after a they found themselves activity. cent of the industry. Half a number of companies slightly on the wrong side. The Investment Trends decade on and although the pulled listings. While IPOs But Glencore remains one survey at the end of last overall number of women can provide an opportunity of the top five traded equi- year reported there were with a spreadbetting for spread betters, experts ties on the WorldSpreads about 83,000 active traders account has increased, their say recent listings have in the industry. proportional representation shown the difficulty in trad- ”I don’t think that the remains just 10 per cent. ing this market. ‘One will most likely firms have failed, they just There is evidence to sug- “New IPOs can be risky be basing research haven’t tried,” says Chris gest that women enjoy and are by no means a cer- Brady, dean of BPP Busi- researching trades and are tain one-way bet,” says on fundamentals, ness School, and co-author in fact better performers on Joshua Raymond, market which may not of the original report. average than their male strategist at City Index. He ”It’s interesting because counterparts, but they have says recent listings have be everyone’s the research we did showed not become a mainstay of shown how volatile IPOs that women, ethnic minori- the industry. can be and that timing can expertise’ ties and older people were Neither have the coun- be everything. all prepared to bet but try’s ethnic minorities. Spread betters that pick platform today, says no spread betting company The reason for this, the right direction in an Alastair McCaig, market had looked into any clever according to Prof Brady, is early trade can be rewarded analyst at the spread better. marketing to attract them. largely down to advertising. handsomely, however. For Craig Inglis, product man- And they still haven’t. In order to shift its profile example, traders that betted ager at CMC Markets, says The marketing around now away from a complex, high- shares in Super Group, the short-term rises and falls in isn’t so different from risk and high-end product fashion retailer and owner both directions are not what it was around 10 years the industry would require of the Super Dry brand, uncommon. “No IPO is ago.” an increase in providers, would continue to surge guaranteed success, even if In order to appeal to which has occurred, and after its IPO last March it is listed on the FTSE 100, broader markets, the report a more populace-friendly could have gained a profit. a sharp move lower in the suggested providers should advertising campaign, The group launched at a stock or commodities mar- offer a pared-down version which has not. price of 502p in March 2010 kets in general would result of their products and Many of those who work but by February this year in Glencore drifting in sym- try out a new kind of adver- in the spreadbetting indus- share prices hit a high of pathy,” says Mr Inglis. tising. try still believe it will 1898p, rallying some 278 per Experts also say it can be But websites of the larg- become more female-fo- cent in the space of just 11 difficult to trade recent est spread betting firms in cused, but when this will months trading as a pub- IPOs as there is no historic the UK are still mostly seri- occur is unclear. licly listed company. price performance to meas- ous affairs boasting charts Mr Jones says that However, Super Group’s ure or analyse. Mr Ray- a n d although only about 8 per example also shows the vol- mond says: “This means graphs. cent of clients are women, atility of IPOs, says Mr Ray- that one will most likely be There approximately 15 per cent mond. Its share price has basing research on funda- is lit- of those considering open- since fallen by some 45 per mentals, which may not ing a spreadbetting account cent after its February necessarily be everyone’s are women. This, he sug- highs. expertise.” gests, means that the A similar case occurred Spread betting providers number of female traders with LinkedIn’s listing last say that in spite of the hype should increase over time. month. The shares listed at over recent IPOs, interest But the alternative sug- $45, traded as high as $121 from traders has largely gestion is that women are before settling back at $94 been limited. This has seen initially interested but are by the close, says David the opportunities for grey put off by the actualities. Jones of IG Index. market trading, the possi- “While there were clear bility to make pre-float Women account for profit opportunities to be spread bets, dwindle. But just 8% of traders had, the first trades for the spread betting providers share in the physical mar- may offer grey markets ket appear to have been again depending on demand around the $90 level and for future large IPOs. 6 FINANCIAL TIMES FRIDAY JUNE 17 2011 FINANCIAL TIMES FRIDAY JUNE 17 2011 7 Trading Insight Trading Insight

Uefa Financial rule changes threaten to put clubs out of their leagues Technology key to catching fixers As the transfer window opens for another season, clubs at period, Chelsea have consistently posted a multimillion the top of the biggest leagues in Europe are counting their pound loss in their annual accounts – ranging from £44.4m pennies because, by the end of the 2011­12 season, they to £140m – which has been paid off by Mr Abramovich. must balance the books if they want to play in Europe. Last year, 11 clubs had a wage bill that was more than 75 erning body for a match in authority in 2003. The company appeal but this failed. patterns, they hand over the Under Uefa’s club licensing and fair play rules a team is per cent of turnover, while two clubs – Manchester City, Anti­corruption which a “fake” international guards the details behind its Betfair is not alone in look- evidence, and that is often the not allowed to record a deficit of more than €45m (£40.1m) bankrolled by Sheikh Mansour bin Zayed Al Nahyan of Abu team was fielded. It was the betting integrity system ing to a mixture of technology last time they hear about it.” a season for the next two years. After that they must break Dhabi, and Blackburn Rovers – actually spent more on Sports bodies are fact that the net which has intensely, but the Financial and collaboration. Since 2008, In the UK, which as one of even or face a ban from all Uefa competitions. Losing a players’ wages than they earned. working with the been cast across the betting Times understands the system many European bookmakers the biggest consumers of gam- place in the Champions League through financial laxity could And salaries remain on an upward spiral. Deloitte’s last industry to catch suspicious uses a combination of vigilance have signed up to the Euro- bling with the most relaxed cost a club upwards of £50m, a devastating sanction. Annual Review of Football Finance showed that in the industry to deter betting patterns seems to be by trained analysts, tip-offs pean Sports Security Associa- gambling laws in the world and Based on their most recent published accounts, 2009­10 season Premier League revenues increased by 2 cheats, reports Sean working. from customers, an electronic tion (ESSA), which monitors is at the forefront of combating Manchester United, Barcelona, Chelsea, Liverpool and per cent to £2.03bn, and are expected to breach £2.2bn in Unlike many previous bet- warning system, forensic com- irregular betting patterns wrongdoing, the government Manchester City are among the European elite that would 2010­11, but total wage costs rose 5 per cent, or £64m, to Smith ting scandals, Fifa would prob- puting and a network of sports across the continent and set up a Sports Betting Integ- fall foul of the regulations. However, unlike their English £1.4bn, accounting for an average of 68 per cent of ably have been monitoring the authorities that can access reports suspect activities to the rity Panel to monitor progress rivals, Spanish teams Barcelona and Real Madrid are unlikely revenues, a rise of 1 per cent from 2009­10. nother quarter, betting activity in real-time Betmon remotely. appropriate authorities. made in eradicating illegal to have problems balancing the books. El Clásico has a Clubs looking to find ways to trim their losses under the another betting scan- thanks to technology it shares “From the bookies’ point of gambling and to push for number of fiscal advantages over Premier League financial fair play rules do have get­out clauses. Expenditure dal. This time a Fifa with betting companies. view, they are trying to protect changes. It is expected to issue counterparts. First, the pair can negotiate TV rights such as youth development, stadium infrastructure and football referee has Immediately after the match, ‘The problems are themselves from anything sus- a report at the end of this individually rather than as a packaged league. This has cost community development is excluded, as is depreciation on Abeen accused of wrongdoing Fifa said: “This match between picious. But a lot of the prob- month, but since its last report other clubs in Spain, but has helped Real Madrid and tangible fixed assets. In the case of Chelsea, for instance, coming from inside after suspicious betting in an Nigeria and Argentina was one lems are coming from inside in 2009 the online betting world Barcelona overtake Man United to become the two largest analysts estimate about £10.2m a year is spent on a youth international friendly between that we had an active interest sports – players and sports – players and officials has grown, and continues to clubs in the world by turnover. Last year Real Madrid set­up, while another £9.1m can be set aside for Nigeria and Argentina this in, and forms part of a wider officials linked to that linked to that particular sport,” move towards becoming bigger generated £72.7m more revenue than Manchester United. depreciation on tangible fixed assets. month. ongoing Fifa investigation.” Khalid Ali, secretary-general of than all other forms of taking Spanish clubs also do not need to pay their players as As the rules take three seasons to kick in, the betting The international football One of those pieces of tech- particular sport’ the ESSA says. bets, including high street much. Players there pay about 22 per cent tax on earnings, markets for next year’s association is investigating nology, Betmon, was developed “The main reason is that stores and telephone bets. rather than about 50 per cent in the UK. Champions League have a after it was alerted to a huge by Betfair, and used by more there has never been a major Last year, for example, Wil- Italian clubs will have difficulties with the rules. In general, familiar feel. Winners swing in odds for a fifth goal than 40 sports organisations From this, Betfair and the focus on tackling corruption in liam Hill recorded revenue the Italian football business model has been based around Barcelona are strong 2/1 towards the end of the game, globally to track suspicious sporting authorities can iden- these sports,” he adds. online of £251.5m, just under a one generous benefactor per club and clubs such as AC favourites behind Real with the score at 4-0 to Nigeria. betting patterns. The software tify wrongdoing in cases like Bureaucracy continues to be quarter of all revenue across Milan will no longer be in a position to compete on the Madrid (5/1), while the four Five minutes of added time allows real-time access to see that of jockey Dean McKeown a stumbling block in clearing the business. Net revenue in European stage. English clubs – Man Utd went up on the fourth official’s online betting activity in each who was banned from riding up match and game fixing, online sports betting grew 95 Juventus, however, are an exception. Ironically, it was a (7/1), Man City (12/1), board, but the referee added sport, letting sporting authori- for four and a half years in both at sporting authority and per cent year-on-year. corruption scandal in 2006 that has helped them comply Arsenal (9/1) and more time and awarded a ties to monitor bets on specific 2008. governmental level. The next test will be the with the changes. That scandal led to relegation and a Chelsea (20/1) – take disputed penalty to Argentina. events. He was banned after an One betting industry insider Olympics in London, which has the front of highlighting the Games. But it would be naive A friendly between complete overhaul of the club that leaves them in profit. up the next four places. The most pointed aspect of Betfair has been at the heart investigation into suspicious told the FT: “The biggest con- already been raised as a con- problem of illegal betting. to say this could not happen at Nigeria and Argentina Big spending benefactors are a concern in England, too. the incident was not the of the fight against illegal betting practices found the cern is that betting companies cern by Jacques Rogge, presi- “We had monitoring in Van- the London Olympics. Of sparked a probe into a Since Roman Abramovich bought Chelsea in June 2003, the Barcelona player decision by a referee, Ibrahim online betting since it signed jockey had conspired to lose are getting very little feedback dent of the International Olym- couver [2010] and in Beijing course, I am worried it could referee’s behaviour club’s net spend on transfers has been £388.2m. In this Lionel Messi Chaibou, already under investi- its first memorandum of under- races. He has since tried to lift from sporting authorities. pic Committee, a sporting [2008] and there was no sign of happen. We have to be ready,” Getty gation by football’s world gov- standing with a sporting the ban with a High Court “They find suspicious betting organisation that has been at illegal betting in either of those Mr Rogge said recently. 8 FINANCIAL TIMES FRIDAY JUNE 17 2011 FINANCIAL TIMES FRIDAY JUNE 17 2011 9 Trading Insight Trading Insight The ring brings punters feast or famine

driver of spread action – hides behind it and doesn’t And he will also need to by the end of the year. Mr Bignell reckons his next Boxing publicity. Mr Scott says: get hit very often.” beat the giant Ukrainian In his absence Mr Bignell fight, against Zab Judah for “The good thing from our The challenge for Haye is, inside the distance: “He rates Carl Froch, who two of the welterweight Interest is high for point of view is that the as Mr Bignell adds, easy to won’t get a points decision recently raised his profile world titles, will do serious Haye vs Klitschko hype will look after itself. It explain and hard to do: “He over Klitschko in Hamburg by reaching the final of business: “It’s in Las Vegas, will be all over Sky, you’ll has to get inside the jab. if it goes 12 rounds.” Showtime’s Super Six super which adds to the hype and heavyweight bout, have the weigh-in and all That’s tough, but not For a market that trades middleweight tournament – it is a unification fight, says Huw Richards the preliminaries and while impossible. The last two on charisma and still where he will fight which increases interest. it does not help that it will men to beat him, Corrie misses Ricky Hatton, the unbeaten American Andre Khan is popular when he is be on PPV, we find that Sanders and Lamon Brews- Mancunian welterweight Ward – as best for business. fighting world-class oppo- Suitably for a sport that people who are willing to ter, were similar in style to who last fought in May Former Olympic cham- nents. It is against some of often deals in extremes of spend £15 to see an event Haye, but Haye is much 2009, the bad news is pion Amir Khan has yet to the others that his popular- emotion and experience, on television are often keen quicker.” that Haye plans to retire make the same impact, but ity seems to suffer.” boxing’s contribution to to have a bet on it as well.” spreadbetting markets is a Markets focus on boxing’s matter of feast or famine. relatively small number of There is no regular pro- clearly definable elements – gramme of fixtures in the the winner, the method of manner of football or their victory and the length cricket. Only a limited of the fight. Until recently number of markets can be bets could only be laid pre- offered, and the biggest fight, but Sporting Index events are usually confined has recently added in-run- to the aficionado ghetto of ning markets. It means Pay-Per-View television. Haye vs Klitchsko will be But as Jeremy Scott, tough and tense for Mr sports spokesman for Bignell as he adjusts mar- Extrabet.com, points out: kets round-by-round: “The “What it does do really well challenge is working out is the one-off event that cre- how the judges are seeing ates a lot of interest.” Not it,” he says. much this year will come Punters can back a bigger than the heavy- fighter on a 25-point index weight title fight between to win by a particular Britain’s David Haye and method (Haye on points Vladimir Klitschko of traded at 1-2.5 at the time of Ukraine in Hamburg on writing) or on a 100-point July 2. index to win in a particular Each is recognised as a round (Haye in the fifth, world champion – Haye by 6-8). These all have follow- the World Boxing Associa- ers, but given the spread tion, Klitschko by the better’s love of volatility, it World Boxing Organisation is hardly surprising that and the International Box- the most popular markets Observers say eliminating Osama bin Laden was a big plus for US President Barack Obama’s chances of re­election, strengthening him on national security issues AP ing Federation. are on the minutes the fight Such proliferation is com- lasts (anything from one to mon in a world of multiple 36 for a 12-round fight) and sanctioning bodies. But the 10 plus three, with 10 while both will carry belts points for the winner plus into the ring, most fans will three points for every round see Haye as a challenger, before the end of the 12th Tempo of election race quickens seeking to displace that the fight finishes. So if Klitschko as the world’s top Klitschko wins on points he heavyweight, a de facto pays out at 10, while Haye correctly in 2004 and 48 of them would have been at 16 to 17.5 a can happen between now and the the field for some time, but he is standing given substance is -10. A Haye win in the US political indices (with the happy coincidence that few months ago, now he is at election.” not very popular with the Repub- by possession of the title first would pay out 46 the two that just missed had 18.5-20, a pretty substantial lead. At the same time Mr Obama, lican rightwing. awarded by Ring magazine, points to him, with -46 to Obama is riding high exactly the same number of elec- His polling numbers are good and rather like Bill Clinton in 1996, As Mr Taylor points out: “He and to break the strangle- Klitschko, so huge volatility but a lot can happen toral votes, and fell one on each his approval ratings are back to appears to have the advantage of introduced healthcare legislation hold he and older brother is possible. Klitschko was side, so that the Electoral College where they were when he was an unimpressive crop of possible quite like the Obama scheme Vitali have exerted on the favoured by 2.5 to 5.5 on before election day, result was bang on). elected.” opponents. Evidence of Republi- when he was governor of Massa- division since the retire- Spreadex at the time of writes Huw Richards Meanwhile, on the British side Intrade runs on 100 point indi- can weakness was the bubble chusetts.” ment of Lennox Lewis in writing. of the Irish Sea, spread betting ces – paying at 100 when an event around Donald Trump before he Next in line is Minnesota gover- 2004. Haye vs Klitschko also company Sporting Index has happens, zero if it does not. Mr declared he was not running. “We nor Tim Pawlenty, of whom Mr It also helps that Haye offers real uncertainty. launched its own 2012 markets. Wolfenden describes an intriguing had a lot of interest in Trump and Wolfenden says: “He’s a solid can- has the glamour that Chris Loud, boxing trader he exact date for the start One opinion is universally he got as high as 9.1 per cent on didate, but he seems to be excites spread punters in for Spreadex, says: “They of the 2012 US presidential shared. There is very little chance our Republican nominee market,” unlucky – he was due to make a every sport. Adam Bignell, have contrasting styles and election is a matter for of another election like 2008, a ‘Barack Obama’s says Mr Wolfenden. major speech on the day Osama boxing trader for Sport- you can make a case for some debate, with plausi- once-in-a-lifetime epic with no polling numbers are Trump shares with 2008 vice- was shot, and that isn’t the first ing Index, says: “He’s either of them. Klitschko is Tble candidates varying from the incumbent candidates, two wild presidential nominee Sarah Palin time that sort of thing has hap- British, he’s excit- favourite but not by a moment when polls closed in 2008 party nomination races and a his- good and his approval the advantages of celebrity. Mr pened to him.” ing to watch, he’s huge margin.” to the one early next year when toric final outcome: “Pretty much ratings are back to Wolfenden has no doubt Ms Traders can look forward to good-looking and As Mr Bignell points the Iowa caucus initiates the for- the perfect storm,” as Mr Palin’s capacity for getting more than a year of mounting he seems like a out, Klitschko has an mal part of proceedings. Wolfenden says. where they were when noticed and polarising opinion is interest, but a rather slower burn nice guy.” established, formidably But whether one considers the Two questions predominate, Mr good for business. on British politics, where the next And the event efficient modus operandi: race virtual or real, with more Wolfenden says: “They are who he was elected’ “She’s brilliant for us – we’ve election may not be until 2015. will excite “He’s got the best jab in than 16 months still to go to poll- gets the Republican nomination, traded three times as much on her That is a date of particular inter- the other the business. He ing day there is no doubt the and whether it is a Republican or trajectory for Mr Obama’s num- as we have on Mitt Romney, even est to Sporting Index, which has tempo has quickened in recent Obama who wins in 2012.” bers post-Osama: “He was run- though he is the favourite,” he an index on the date of the next British boxer weeks. “We’ve seen a real uptick Most serious observers reckoned ning fairly steadily at 58-60, then says. general election, paying out 50 David Haye in interest,” says Carl Wolfenden, that eliminating Osama bin Laden there was a spike that took him as Ms Palin was trading at 7 per points for 2015, 30 for 2014, 20 for Getty who sets politics markets for Ire- was a big plus for President high as 69.9, but it came down cent for the Republican nomina- 2013, 10 for 2012 and 5 for 2011. land-based predictions firm Barack Obama’s chances, again quickly and he was trading tion at the time of writing, Mr Taylor explains: “We have Intrade. That also means more strengthening him on the national just above 60 in the first week in although Wolfenden expects her done big business on this. observers and players of the US security issues on which Republi- June.” to rise a few points if she chooses “A lot of people bought at 25 to political process starting to pay cans are likely to attack. Sporting That return to the status quo to run, a decision that in itself 28, we saw repeat buys as big as serious attention to Intrade, Index’s politics specialist Zak Tay- ante is, he suggests, a reflection of inspired enough interest among £100 at 28 to 29. It is still going up, whose markets have gained a for- lor, who modelled prices on its underlying worries: “There are Intrade clients to be worth a mar- and people are still buying at 32, midable reputation for getting 25-point index and launched it still concerns about the economy ket of its own. although we are now at last see- results right – calling all 50 states this month, says: “Mr Obama and unemployment, and a lot Romney (29 per cent) has led ing sellers.” 10 FINANCIAL TIMES FRIDAY JUNE 17 2011 FINANCIAL TIMES FRIDAY JUNE 17 2011 11 Trading Insight Trading Insight

“The US dollar may have term”, argues David Jones, lighted on June 7 when the gold in the past six months. unsustainable fiscal ways of value. He says the situation had some respite from its chief market strategist at dollar dropped to a one- He says Mexico bought 100 the peripheral nations. will become more transpar- Doubts cast on strength of dollar bounce prolonged slide against IG Index. month low due to fears over tonnes of gold while Russia “This is a huge task and ent as attention turns from other major league curren- He adds the fundamentals the strength of the US sold some of its reserves. it seems to have fallen off European sovereign debt to cies, but there is doubt as to around the US economy recovery following weaker Kathleen Brooks, the rails as the first bail-out the enormous deficit levels The dollar has experienced month lows against the lar’s short-term corrective says Mr Davis. “The nega- whether its recent bounce give little reason to believe than expected jobs data. research director at given to Athens has not of many US states. US currency a small rebound in recent euro and pound in April. move will unfold over the tive correlation between in value is of the dead cat the market is going to see a Mr Jones says there are Forex.com says that, with solved any of Greece’s prob- For Mr Jones, the first months as concerns over Concerns about the euro, next two months. The commodities and the US variety,” says Mr Brown. return to dollar strength in many fundamentals that an election in the US next lems,” says Ms Brooks. step for longer term Tanya Powley the European debt crisis following bail-out talks with recent increase in margin dollar indicates that this With medium to long- the medium term. threaten further dollar year, she does not believe a “But essentially Greece is a improvement in the dollar asks whether the and a volatile commodity Greece and Portugal, have requirements for silver and may present the scope for term dollar trends still Mr Davis agrees and strength, ranging from how divided congress will be manageable economy, the depends on congress agree- market drove investors into increased the dollar’s popu- crude oil that has flushed additional short-term gains ‘The US dollar may downward, experts say points out that should US the US government decides able to agree on a sustaina- US’s gargantuan debt is ing to a lifting of the debt greenback’s recent haven asset classes. larity as a defensive short- out some speculative long in the US dollar.” have had some there is little concrete evi- economic data point toward to navigate its way out of ble long-term solution to not. Who could bail it out limit and big spending cuts. popularity can last Worries about the US run- term investment, according positions in commodity According to Simon dence of a bullish reversal a soft spot or moderation in the huge deficit to foreign the debt crisis. “That holds without devaluing the He adds: “But a sharp ning a double-digit fiscal to Neil Looker, chief foreign markets is also likely to be Brown, managing director respite from its beginning. Despite the “tor- the recovery in future, and/ appetite for dollar debt. the key to a dollar rebound dollar?” increase in tax reve- deficit, the inability of the exchange dealer at City a factor in bolstering the at ProSpreads, traders have prolonged slide rid state of European or there is a lack of a reso- Alastair McCaig, market in my opinion,” she says. Mr McCaig says the dollar nues ... is likely to be criti- US Congress to agree on a Index. greenback, says Mr Davis. generally made short bets finances, there is little to lution on the US budget analyst with World Spreads, She adds that while the has benefited more from cal if the dollar wants to budget, and a possible fed- George Davis, managing “We believe this correc- on the US dollar and he against other major suggest spread betters are problems, the dollar could says several countries have euro remains vulnerable, it worries over problems in find lasting support, [and] eral government shut down director at RBC Capital tion may have further to says there are no signs this going to start backing the be subject to downward sold some dollar reserves is trying to deal with its Europe than from any in turn remaining the saw the currency fall to 16- Markets, believes the dol- run over the short term,” is about to change. league currencies’ dollar over the longer pressure. This was high- and used the money to buy debt issues and change the intrinsic increase in its reserve currency of choice.” Experts extol virtues of diversified portfolios

all of your eggs in one bas- thing in one sector, inves- umbrella manufacturer.” Spread betting ket. If you pick the right tors should look instead to The same can be said for market movement then gain exposure to a range of trading the financial mar- Investors advised there can be high rewards. things that are not inter- kets, where there are natu- to hedge their bets, But the issue is when that linked. The aim is to have ral hedges. Here, Mr Ray- asset class or sector goes investments that are not mond gives the example of reports Lucy against your prediction; you strongly positively corre- the price of the US dollar Warwick­Ching could accumulate big losses lated or are maybe even and dollar-denominated fairly quickly,” says Joshua negatively correlated, so commodities. “There has Raymond, market strategist you can hedge against been a fairly strong inverse rofessional traders at City Index. “This is why losses elsewhere. correlation between the have always special- some of the best traders in Mr Raymond at City price of crude oil, copper ised in single asset the world always look to Index gives the example of and other dollar-denomi- classes; becoming diversify their portfolios, investing in a ice-cream nated commodities to the Peither a bond trader, a com- taking in a range of asset stand. “If you invest in a price of the US dollar index. against diversifying too moment when you know ing expertise, sources and Eggs in one basket: if you modities traders or a forex classes to help diversify van, then the van is likely This is because the more much. Simon Brown, man- something is going to hap- insights into sectors and invest in ice­cream, it could trader – and amateur trad- their trading risk. There is to make most money when expensive the dollar is, the aging director at pen. “Gut feeling is some- companies. It is when trad- pay to also sell umbrellas ers are told to follow the no difference whether you the sun is shining. How- more costly it becomes for Prospreads, says: “The rea- thing that traders probably ers divide their time on the side Alamy same strategy. But experts are physically investing in ever, should it rain, reve- non-holders of dollars to son that most spread bet- should not ignore but often between two highly special- warn that this approach is the market or spread bet- nues are likely to be down buy these commodities, and ters limit their portfolio to a only comes with experience ised areas that they risk los- ments? Absolutely, but best not sensible for individuals ting and CFD trading.” as consumers are unlikely vice versa,” he says. couple of products is that if of focusing on a particular ing their focus and eroding advice when trading new who are risking their own Experts say the way to to want to buy ice-creams “Therefore, should you you watch a product day in, product for a long time.” their edge.” asset classes is to do exten- “book”. look at a spread betting when they are drenched in have a large long position day out you get a feel for And Alastair McCaig, One of the biggest mis- sive research first and learn Instead of just trading the account is that it is your rain,” says Mr Raymond. “A in, say, crude oil, it can be how it trades, how it moves, market analyst at World- takes that customers make about technical analysis, FTSE or commodities, they own personal hedge fund. typical hedge against this hedged effectively by going even how it breathes. So Spreads, recommends that in spread betting or CFD especially if looking at indi- argue there is a case for You can trade a variety of would be to diversify your long US dollars, as any fall whether you follow charts investors stick with what trading is to tackle new ces, commodities and for- treating a spread betting or markets in both directions investment and invest in an in crude is likely to be or fundamentals, the longer they know. “The more balls markets with no experi- eign exchange.” Contracts for Difference using leverage, but you umbrella company. picked up by dollar gains.” you trade a product the you have in the air the ence. Ryan O’Doherty, prod- The conclusion of experts (CFD) account like an should still pay attention to “That way, when it rains, But while there are many more you spot its idiosyn- more chance you’ll eventu- uct manager at CMC Mar- seems to be that it is sensi- investment portfolio and some basic risk-manage- any losses made in the good reasons for diversify- cratic behaviour.” ally drop one,” he warns. kets says. “Should custom- ble to diversify but only if diversifying. ment principles. Rather ice-cream van are likely ing a portfolio or trade, He says this is often what “Those who trade equities ers broaden their horizons you know the markets you “It can be risky putting than simply buying every- to be offset by the some experts also warn brings on “gut feeling”; that have their own correspond- in regards to their invest- are investing in.

your winnings back into ‘People who have sterling would be worth less Investors are beginning to spot the difference experience of than when you started the trade. trading shares A factor that does affect Contracts for difference money from rising or fall- CFDs are liable to capital Another difference is the are almost exactly the same tend to find the people’s choices is that Asset classes (CFDs) are becoming popu- ing markets. Traders either gains tax at the investor’s way trades are placed. A as it makes no difference to CFDs, by pure definition, lar with retail investors, speculate on how the price marginal tax rate after the spread better is betting a your counterparty which concept of CFDs look a much more profes- CFDs are growing with 40 per cent more trad- will move, as in spread bets, annual allowance, currently certain amount of money instrument you trade,” says easier to pick up’ sional trading product. in popularity, ers using them in 2010 than or enter into a contract to £10,100, has been surpassed, per point on any given mar- Mr Denham. James Daly, investor centre the year before, and further buy at one price and sell at while gains from spread ket. CFD traders will trade “This is a slight variation representative at TD Water- reports Lucy growth of about 36 per cent another, paying out the dif- bets are tax-free. “This a certain number of shares in some markets, however, CFD trades are monetised house, says: “People who Warwick­Ching expected this year, accord- ference, with CFDs. remains one of the single or lots, just as in conven- where the price of a spread in the base currency of the have substantial experience ing to Investment Trends, Simon Denham, chief most important factors tional share trading. bet will have all the cost underlying market. As Mr of trading shares tend to the wealth research com- executive at London Capital behind spread betting’s pop- Choosing between the included in the quote while Raymond points out: “For find the concept of CFDs pany. Group says: “The funda- ularity over CFD trading two investments can be a a CFD may have a small this reason, CFD trades can easier to pick up than With both CFDs and mental differences between among retail traders,” says matter of personal prefer- commission fee applied. In be subject to currency fluc- spread betting.” spread bets, investors can CFDs and spread bets are Joshua Raymond, market ence. Some clients prefer to the end, however, this rep- tuations.” One option is for traders make money if they are often hard to quantify ... as strategist at City Index. pay the provider a little resents pretty much the He explains that if you to open an account that right about movements in a most people interested in This cuts both ways, how- more for shares, for exam- same cost for both.” are making $500 in a trade allows them to trade both. share price, commodity or retail derivative trading ever, as losses incurred ple, while others prefer to Investors keen to trade on Google, but the sterling Some providers allow inves- index. Both present prices focus on the tax-free ele- through spread bets cannot pay commission. forex often opt for spread rallies 5 per cent against tors to trade both products as “bid” and “offer” and ment to spread bets to the be offset against future “In the main, the price betting because trades are the US dollar, then the through the same platform allow investors to go long detriment of other factors.” profits for tax purposes but that you trade at when only monetised in the inves- amount of profit you have so many clients trade both or short, letting them make The main difference is CFD losses can. using a spread bet or CFD tor’s base currency, while made when you transfer within their portfolio.