GAMBLING ON THE MARGIN
The Sunday Business Post relates a cautionary tale of an unnamed Irish finance director in a leading international financial services company who is now calling for stricter regulation on spread betting after losing $750,000 “on bets that went spectacularly wrong”.
“The chartered accountant, who lost money making bets on the direction of the euro, said losing such a large sum of money in the space of two years felt like a bereavement,” the newspaper reports. “His wife was ‘absolutely devastated’ when he informed her of the scale of his losses.”
The accountant acknowledged his personal responsibility for losing his entire savings from “five very productive years in a great job” but claimed some spread betting companies were breaching their own rules on trading limits and taking higher margins than the punters realised.
Spread betters trade on margin, which means they put up a small amount of the money they are gambling and borrow the rest from the spread betting company. If the bet goes south, they have to put up more money – known as a margin call.