Spread Betting Regulation

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Written by Justin Grossbard

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Within The United Kingdom, spread betting and CFD trading (forex trading) are regulated by the same regulatory body. We look into how both trading and betting are regulated and the restrictions this puts in place for individuals in the UK.

CONTENTS

When choosing a spread betting broker, to ensure the broker is legit and your funds are safe, it is imperative to choose a broker that is regulated. We look at some of the aspects of regulation that you need to know.

Regulation in the spread betting industry

1. Regulation For Spread Betting Brokers

Yes, all UK-based spread betting firms operating from within the UK are fully regulated by the Financial Conduct Authority (FCA). The FCA’s main responsibility is to maintain confidence in the financial system and to secure an appropriate degree of protection for consumers.

Be careful, though, as some spread betting firms are based in places like Malta or Cyprus. Our list of the best UK forex trading platforms only lists FCA regulated brokers due to the trust and features the regulator offers UK residences.

2. Regulation Around Providing Advice

The FCA’s regulation of spread bet firms prohibits them from offering or pushing financial advice. So, the brokers are not allowed to recommend a trade or advise a client to take profits at a certain level etc.

However, if a client wants or needs advice on the most suitable style of spread bet for their trading view, this is allowed. For example –

  • If a client is bullish on Vodafone but is unsure of which bet is the best for his trading view, the daily or the weekly market, the broker can certainly offer advice
  • More information on the different kinds of spread bet markets

3. Regulation For Segregated Spread Betting Accounts

The FCA requires all spread betting firms to hold their client funds in a bank account which is segregated from the spread betting firm’s main business account.

Also, the FCA’s compensation scheme means that any cash up to £85,000 held with a broker is insured should the firm fail or have serious financial problems.

4. Regulation For Leverage Limits

Retail traders (also known as retail bettors) are limited by the FCA in terms of leverage. This is up to 30:1 when betting on major currencies, bonds or while shares and commodities can be lower such as 20:1. Some brokers will offer leverage lower than the maximum allowed. The only way to get a higher leverage of up to 500:1 is to qualify as a professional trader.

When you request a spread betting platform to be treated as a professional they will ask a series of questions and require proof of funds, trading history etc.

Choosing a Spread Betting Broker

There are good spread bet brokers, and there are bad ones. Having a good broker won’t guarantee you profits, but a bad broker will probably lead to losses as a combination of their gamesmanship and suspect software takes its financial toll.

If you’re new to trading, then we recommend selecting one of our shortlisted beginner spread betting brokers in the UK.

About the author:

Justin Grossbard

Having traded since 1998, Justin is the CEO and Co-Founded Spread-Bet.co.uk in 2004. Justin has published over 100 finance articles from Forbes, Kiplinger to Finance Magnates. He has a Masters and Commerce degree and has an active role in the fintech community. He has also published a book in 2023 on on investing and trading.

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