Spread betting shares hit by EU proposals

SHARES in UK spread betting firms have plunged after the European markets watchdog threatened to block parts of the market so that amateur investors do not make risky bets.

The European Securities and Markets Authority (Esma) said late on Friday that it was considering banning the sale of so-called binary options – which involve betting on what will happen to the price of a stock or commodity in a matter of minutes – to retail investors. It also warned that it might restrict contracts for difference (CFD) trading, which allows people to speculate on price movements without owning the under- lying asset. It proposed a guaranteed limit on how much a client can lose in these trades amid concerns inexperienced punters were blind to the risks involved.

IG Group, which controls 40pc of the UK spread betting market, said the re- strictions were “dispropor- tionate”, adding that they “go beyond what is needed to protect consumers from poor outcomes”.

Shares in IG Group fell by 9.3pc. Its rivals CMC Mar- kets and Plus500 plummeted a respective 12.5pc and 10.8pc. Esma will conclude its consultation in January.