Dublin entrepreneurs Delta Index has established a new financial spread betting website for people with deep pockets and an appetite for risk.
Operating on the premise that money can still be made in a declining market, the company has been set up to enable market watchers to take a punt on the performance of shares, currencies and share indices such as the ISEQ, FTSE, Dow Jones or Nasdaq.
Funded by personal and private investors, the company has been established by actuary Conor O’Neill and technologist Michael O’Shea. O’Neill was a founding director of Dublin actuarial and life assurance consultancy, Life Strategies, which was sold in 2000 for €5m to Marlborough Stirling. Dermot O’Donoghue, former head of treasury and current non-executive chairman of AIB, has also been identified as an investor in the company.
O’Neill describes financial spread betting as not for the faint-hearted, nor for widows or orphans, as spread betting is a high-risk activity. “It does, however, appeal to a growing number of young professionals, or Young Turks, with an appetite for risk and playing the markets, as well as plenty of disposable income,” he says.
Financial spread betting is treated in the same way as gambling, which means there is no income tax, capital gains tax or stamp duty involved. Also there are no commissions, so transaction costs are considerably less than buying and selling shares with traditional stockbrokers.
According to O’Neill, retail investors can bet either through the internet at www.deltaindex.com or by telephone. A deposit of approximately 5pc to 20pc, depending on the type of investment instrument, is required as security to cover the potential losses. Minimum bets on shares start at €1 per point movement.
O’Neill says that the democratisation of financial information through the internet and TV has helped grow the market for financial spread betting.
Financial spread betting began in the Seventies in London and was initially supported by city trader types. In the late Nineties, however, the market grew to a point at which today over 80pc of all financial spread betters are ordinary retail investors.
By John Kennedy