LONDON, June 29, 2012 /PRNewswire/ --
Following a fine of £290 million for 'manipulating interest rates' in order to 'benefit their traders and financial status', Prime Minister David Cameron said that Barclays Bank has some 'serious questions' to answer.
Barclays share price fell significantly in trading on Thursday 28 June as a result, leaving many Barclays shareholders at a loss.
Below, we show you how you could profit from a falling market with financial spread betting provider City Index.
Barclays Fined £290 million
An investigation into claims that Barclays manipulated the rate at which they lend to each other lead to the fine on Wednesday (27 June) with Barclays stating that their actions had 'fell well short of standards' and Chief Executive Bob Diamond foregoing his bonus.
The investigation by the Financial Services Authority (FSA), US Commodity Futures Trading Commission (CFTC) and the US Department of Justice Fraud Section (DOJ), showed Barclays' traders lied to make the bank appear more secure during the financial crisis and - on occasion - worked with traders from other banks with the aim of profiting.
The fine could be one of several in the UK as the FSA investigate the actions of other banks. Overseas, the Department of Justice in the US said criminal investigations into 'other financial institutions and individuals are going on'.
How can I profit from this fall?
For those trading Barclays shares, the steep fall in its share price on Thursday (28 June 2012) - which were trading down by 17% at one point - would have seen them incur a significant loss.
Following not only the FSA fine, but comments from Prime Minister David Cameron saying the bank had some 'serious questions' to answer, investors fled and sold their shares in the bank due to the uncertainty of the consequences of the fine as well as the security of CEO Bob Diamonds position amidst calls for his resignation.
However, for those going short and selling Barclays shares through a financial spread betting account - they'd have had the potential to profit significantly from the decline as the market moved in favour of their positions.
Spread Betting on a Falling Market
As an alternative to traditional trading, spread betting enables traders to profit from a falling market by going short and selling.
In turn, traders can profit in line with each point or penny that market falls.
Alternatively, if a market is set to rise - a trader can go long and buy the market and profit in line with each point that market rises.
Whilst spread betting opens up multiple opportunities for trading the financial markets, it does present significant risks; if the market moves against your position, you could lose more than your initial deposit.
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If you found this article helpful, you may want to read more just like this. You can access a range of free spread betting tips, guides and articles through the City Index website.
About City Index:
Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.
As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting.
We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk/ for details.
SOURCE City Index