Spread your bets October 2006

A number of UK-based spread-betting companies offer investors an opportunity to bet on which way they think a market index or a single stock will move.

For every point upwards, or downwards, you stand to gain - or lose - an amount equivalent to the sum you initially placed.

Regular spread-betters swear that it is a highly entertaining way of punting, as well as holding out the promise of a tidy profit. But is it possible for expatriates to use a British spread-betting company?

The rules are pretty murky for those outside the UK. Spread-betting within the UK is exempt from capital gains tax or stamp duty, like other forms of betting.
Abroad, the rules governing spread-betting differ depending on which country you live in and which country you pay tax in.

Vincent Stanzione, a spread-betting expert, said: "There's no problem in opening an account from abroad, but expats have to check with their local authorities as to what taxes will apply to them."

As most firms are based in the UK, they are regulated by the UK's financial watchdog, the FSA (Financial Services Authority). The identification process on opening an account is generally to send a photocopy of your passport along with a utility bill to the firm.

For those that enjoy looking at the small print of the contract, there are ample warnings of the risky nature of the bets you will be making due to the volatility of shares, indices or what ever it is you have decided to punt on.

Look before you leap

Stanzione said: "People come to me who had made some ludicrous mistakes. You have to educate yourself about these bets and markets. You don't just become a heart surgeon just because you've read a book, and the same applies to investing."

The basic premise behind spread-betting is that an investor bets that an index will move up or down over a set time period, usually a minimum of five minutes and a maximum of three months.

Bets can be placed in euros, pounds or dollars. For example, With tradindex.com you can invest a minimum of £1 per point movement in a company to up to £100 per point movement in the FTSE.

You are 'leveraging' your money, which essentially means that you gain greater exposure to a particular market without having to lay out the full amount you would have to if you were buying stock and shares outright.
The range of bets you can make is almost endless, with money being taken on indices, commodities, currencies oil – and most offer sports bets on top of all that.

Although spread-betting is mainly aimed at the UK market, its popularity is increasing among international investors.

Chris Spark at Finspreads, said: "The internet has really made it easier for expats. It cuts down on paperwork and saves time. The international market is really in its infancy but its growth is a formality rather than a possibility."
Spread-betting is probably to be avoided if you really haven't a clue what you're doing. But there are ways to educate yourself, and once you feel confident you know the procedures and risks involved then it could be worth a shot.