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Can Spread Bets be used to trade Penny shares
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Last update : March 2010
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| This all depends on the definition of a penny share.
Some say a penny share is a company whose share price is quoted in pennies alongside a very small market capitalisation, say under £10million.
Others call a penny share any company whose share price trades under 25p regardless of market capitalisation.
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| The more traditional definition is the first one, a small capitalised company with a share price under 25p, and normally under 10p.
Spread betting firms will normally make a market in any share as long as -
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a) the market capitalisation is above £30million (alongside a reasonable amount daily trading in the shares), and
b) the client is going to trade a decent position, ie not £2 a point.
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So using these prerequisites I would think it would be unlikely that any broker would make a market on most penny shares including those traded on the PLUS market (the new name for the OFEX market).
But I could be wrong so call up your broker and ask them if they'll offer you a dealing price - they can only say no.
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