Why the new confidence on the spread markets?

While all main focus has been on the US elections there’s been a quiet move to the Tories on the spread betting markets on the number of seats the parties will get at the general election.

This is the form of betting where you “trade” on the seat numbers and where, if you predict it right, you can make short-term profits to pocket now even though it is at least a year away from the general election. It is also a form of betting where with two of the three main operators you can arrange it so that don’t have to put any cash up front now.

We last looked at the prices two days before “Super Tuesday” in early February and then things appeared a bit brighter for Brown’s government. The spreads on February 3rd were CON 292-298: LAB 274-280: LD 47-50. To secure a majority a party will need 325 seats or more.

What is interesting is that there hasn’t been much of a change in the polls in the intervening period. The latest polls from YouGov and ICM are down on what they were at the start of February – ComRes, Populus and Ipsos-MORI are up.

I don’t see much value either way in the current markets and have little at stake.

The biggest developing in the betting has been a drastic move by Spreadfair to stop political punters being able to trade on credit. This was introduced with very little notice and punters were told to put up a lot of cash simply to maintain existing long-term bets. The firm’s markets always had a liquidity problem – now there is no real reason to trade with them.

Mike Smithson