Toys for boys who play the markets

Twelve years ago, on a rainy afternoon when nothing much else seemed to be happening, I abandoned my desk in Canary Wharf for a few hours in order to track down a new and obscure betting operation somewhere off the Mile End Road. The managing director was a large, florid man in his late forties. He smoked a succession of fat cigars and looked the picture of ill-health. No medically-minded betting man would have offered better than evens on his survival into the new millennium.

The business he ran belied his appearance however. The office, in a quiet cul-de-sac, was newly fitted out and spotlessly clean. The trading screens were impressively up-to-date and there was a buzz of excitement. It all pointed to the presence of serious money behind the operation — which, so my host hinted more than once, there was.

I had alighted on a spread-betting firm, whose primary function was to offer its clients — then mainly City professionals — the opportunity to make leveraged bets on movements in financial markets. All deals were done over the phone — no deadbeats cluttering the hallway here. The clientele, I remember, included a surprisingly high proportion of South Africans. ‘What you’re seeing here,’ Mr Unhealthy insisted, uncorking another bottle of Chablis, ‘is the start of something big. Spread betting is the way all smart people are going to trade in the future.’

Having long since lost that bet on his own life expectancy, my host is not around to see the day, but his prediction was pretty much spot on. Spread betting and its posh-sounding sister, trading contracts for differences (CFDs), have become the medium of choice for many 21st-century financial punters. So much so that IG Index, the largest spread betting firm, boasts a market capitalisation of £890 million, ranking it as the 240th most valuable company on the London Stock Exchange.