Products & Services

What is a Spread Bet?

A Spread Bet allows you to bet per stake movement on a wide variety of financial instruments which mirror the performance of the underlying, without the added cost of stamp duty and you pay only a financing cost and basic commission rate usually quoted as part of our spread. Spread Betting in the UK is capital gains tax free under current UK tax legislation.

Main Characteristics

Directional Trading: One of the main advantages of Spread Betting is the ease with which our clients can trade Long or Short to take advantage of market movements either Up or Down.

Cost Effective: No stamp duty or Capital Gains Tax are incurred when trading a Spread Bet as you do not physically buy or sell the underlying instrument. Instead, you are issued with an open-ended contract for the trade.

Open-Ended: The long/short Spread Bet position can be held indefinitely, as it is an open-ended contract with no settlement date.

Geared: Holders of a long/short Spread Bet position need only deposit a margin percentage as collateral, rather than pay the full underlying value of the underlying.

Benefits of Using Spread Betting

Professional Trading: You may be able to take the opportunity to go Short if you are the holder of the physical underlying stock. Selling a Spread Bet will hedge your risk against a short term correction on the downside, as protection for your profits.

Equity Release: If you wish to release funds tied up in Equities you can transfer their position into a Spread bet, releasing for example, 80% of funds which can be used for reinvestment.

Financing: Holding a long Spread Bet position will make you liable to overnight financing charges on the position. Going short on a Spread Bet means you receive finance on the position.

High Business Turnover: It is easier to trade larger amounts, and more often, if you do not have the capital layout, and Day Trading becomes much more attractive as the relative percentage returns are higher.

Instant Closure: You have the ability to close out positions instantly, releasing any profits and an instant return on margins.

Corporate Actions: You receive dividends on the ex- dividend date, rather than the pay date. Bonus issues and stock splits are also realised on Spread bet positions, even though you are not the physical owner of the underlying.

Realised Profit & Losses: As prices are marked to market daily, any profits/losses are realised daily.

Risk Warning

Spread Betting, CFDs and Forex are leveraged products and carry a high degree of risk to your capital and it is possible to lose more than your initial investment. Only speculate with money you can afford to lose. These products may not be suitable for all investors, therefore ensure you fully understand the risks involved, and seek independent advice if necessary. Religare Hichens Harrison Plc. are authorised and regulated by the Financial Services Authority. Tax law can be changed or may differ if you pay tax in a jurisdiction outside the UK.