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Many believe that the speed with which spread betting companies have embraced the web has caught some stockbrokers on the hop. The significant investments spread betting companies have made in IT systems has enabled them to offer betters real-time trades and numerous trading strategies.


The response from stockbrokers has been to follow suit. Several established stockbroking firms, from Brewin Dolphin and Barclays to TD Waterhouse and Etrade, have launched spread betting services for their customers by teaming up with the established spread betting companies.

"Stockbrokers have woken up to the fact that derivatives are not going to go away," says David Buik at Cantor Index.

This expansion is benefiting spread betting companies in two ways. For those that are providing the engine for these services it is allowing them to access a new array of customers. But the arrival of established stockbrokers on to the spread betting scene is also giving this industry an added layer of respectability.

With the spread betting industry experiencing such strong growth, the key challenge for most is how best to respond. One solution is to secure a tie-up with stockbrokers. Another is to merge.

Last year City Index took over Finspreads and there is already talk of further consolidation this year in this sector. "It is inevitable that as the industry becomes more competitive [more companies] will look to merge and acquire others," argues Angus Campbell, head of UK sales at City Index.

Some are spreading their wings internationally. Spurred on by the stellar growth at home, many are looking abroad for new opportunities. City Index has a solid presence in Australia, an office in Singapore and a presence in Germany.

All pretty good news, as it gives investors more options to make money and to deal with a higher diversity of trading aspects.