Cantor Fitzgerald moves into UK spread betting

The large American broker Cantor Fitzgerald is to set up a financial spread betting division in an attempt to capitalise on UK investors' passion for the stock market.

The large American broker Cantor Fitzgerald is to set up a financial spread betting division in an attempt to capitalise on UK investors' passion for the stock market.

The New York-based bond brokerage company is poised to announce the launch of Cantor Index, a bookmaker which will allow customers to bet on UK and US equities and indexes.

Sources close to Cantor Fitzgerald say the US group has spent around £5m setting up the spread betting unit and is backing it with the marketing firepower to compete with established rivals such as IG Index, City Index and Financial Spreads.

Spread betting is a highly leveraged form of betting where punters gamble on the movement of share prices outside a bracket, or "spread", chosen by the bookmaker. Unlike the traditional form of share dealing, spread betting does not incur stamp duty and enables punters to "short" stocks - selling shares they do not own - and trade on margin.

The popularity of spread betting has soared over the past few months as thousands of retail investors have attempted to make a fortune on the stock market.

Insiders believe Cantor Index will initially offer phone-based betting but will provide an online service by the Autumn. The firm is likely to make spreads on most of the 350 largest stocks in the UK, the biggest US stocks and on the leading indexes in both markets.

Cantor Index is understood to have poached two former City Index executives to head up the operation. Lewis Findlay, the former head of City Index's financial spread betting division, is set to become Cantor's managing director, while David Buik, a former marketing manager at City, has been named the head of marketing.

The two will head a team of around 20 traders, recruited from rival firms and City finance houses.

Cantor's internal projections show that the firm is intending to capture about 600 customers within days of its launch and around 10,000 after a year.

The market leader in the spread betting industry at the moment is IG Index, which claims to have around 30,000 accounts, followed by City Index and Financial Spreads, which is part of the sports bookmaking operation, Sporting Index.