The origins of spread betting

It is fair to say that most people have not necessarily heard of spread betting and many that have heard of it believe that it is some sort of advanced gambling method, but where did it come from?

Spread betting, or spread trading as those who make their money in this arena prefer to call it, is claimed to have been started not too many decades ago, in just 1975. This idea of ‘spread betting’ was thought of by a gentleman by the name of Stewart Wheeler, who started making a market to a close circle of friends betting on the price of gold.

At that time, merchant bankers would meet every week to set the prices for buying and selling gold by companies that dealt in fold. Once they had agreed the prices for that week they would make an announcement to the market and gold would be traded upon that basis for the next week.

Wheeler set himself a ‘buy’ and ‘sell’ price where he felt the next price would be set and his friends would make a bet based on how wrong they thought he would be. So, if they felt the price would be higher than Wheeler’s price they’d place a ‘buy’ net and if they thought the price would be lower they’d place a ‘sell’ bet. This innovative way of trading generated much interest and encouraged Wheeler to start setting his buy and sell prices on other areas and eventually this led Stewart Wheeler to found IG Index (International Gold), a company that is still a large spread betting company today.