The rise of financial spread betting is down in no small part to a significant tax advantage and comparatively lower trading costs.

Spread betting has been seen as a major growth sector of the financial services industry, with an unprecedented explosion in popularity over the first part of the 21st century amongst both private and institutional traders.

However, with an inherent tax advantage over other trading mediums, and cost-effective leveraging of returns, some commentators have suggested that spread betting is flourishing on fertile regulatory ground.

Independent Investor suggested that the favourable climate for spread betting has had a significant impact on the recent growth in new spread betting accounts.

“Financial spread betting has been growing consistently in the UK for around 30 years, and its popularity today seems greater than ever. With the rise of the Internet, spread betting has become even more accessible to private traders, and the degree of growth seen in the last decade has taken the markets by storm. At independentinvestor.com, it’s our belief that this isn’t a result of sheer chance, and particularly given the benefits of financial spread betting over other trading styles, we suggest the trend can be at least partially accounted for.

“Aside from the initial tax savings on Capital Gains and Stamp Duty, the competitiveness of the financial spread betting industry means, with the right broker, you can trade on razor-slim spreads to preserve the maximum profit portion from each trade.  When compared to the less cost-efficient, less highly leveraged methods of traditional trading, the lure of financial spread betting seems significant, and the advantages it brings well worth considering.”

With rising demand in the spread betting industry, an increased number of spread betting brokers have emerged, enhancing competition between providers and prompting slimmer spreads on a wider variety of markets as rival brokers strive to win market share.

In addition to a tax advantage of as much as 20+% on cash trading, and high degrees of leverage at no marginal cost, spread betting often represents a more cost-effective way to trade the markets.

independentinvestor.com provides at-a-glance comparisons between the leading spread betting brokers on a number of key criteria, including typical spreads, to provide a comprehensive picture of the costs of trading with a particular broker.