24 January 2017

Paternalism for traders

The government is proposing to restrict spread betting on financials, which will primarily affect small investors.

This is wrong:
a) because paternalism is immoral,
b) because speculators (particularly small players) increase the efficiency of markets.

IG Index gives the following example of what will happen.

Even for experienced traders, the margin requirement (the amount of cash you need to deposit with IG) will go up from £345 to £1725, a factor of five. It’s hard to see this as anything other than a way of prohibiting trading, without making it outright illegal.

The vast majority of small traders, argues the consultation document, lose money – but so what? If that is how they want to spend their hard-earned pay, they should have that choice.

To express your views on the proposed legislation, fill in the online response form here.