Welcome to the zero point spread

Competition in the spread betting market has been driving down bid to offer spreads (the gap between the buying and selling prices offered by your broker) for years. Many contracts at the bigger firms on say the FTSE 100 index or some currencies are already down to just one or two points. But one spread betting broker has gone a step further.

As Jessica Mead points out on City AM you can now place selected bets through WorldSpreads with a zero spread. It is introducing this "spread to beat all spreads" across ten of its most popular markets including the FTSE 100, the ten-year gilt, and the euro-dollar exchange rate. What's more, this is supposedly no marketing gimmick to hoover up new business: "we intend to offer this in the long-term," says chief executive Conor Foley.

To qualify, you need at least £5,000 in one of the firm's Platinum accounts, although the offer may be extended, depending on its popularity. The firm estimates that the offer will save a typical client 10-12% a year. If you day trade one of the ten contracts, your dealing costs will be zero. Those who run positions overnight will incur a small interest charge.

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Quite how Worldspreads intends to make money from the offer (there is no separate commission on a spread bet) is something of a mystery. The hope must be that clients will also trade other markets offered by the firm where spreads are wider. It's certainly a move designed to put pressure on rivals. As such, it's more good news for retail spread betters. (see worldspreads.com for more).