What's the difference between CFDs and spread betting?

CFDs and spread betting are often compared directly because they have a number of key similarities - namely that both are highly leveraged and can as a result return significant sums from incremental market movements. But while they may have some practical similarities, they also have key differences. Spread betting for many professional traders has something of a stigma attached - it is considered little more than a gambling activity. While that's not strictly the case, spread betting does bear little resemblance to the underlying market price, whereas CFDs are at least more notionally traded on the basis of underlying prices.

While spread betting is seen as an extra-market transaction, CFDs are seen as part of the market and more of a financial transaction than financial spread betting. While there are practical differences, both instruments are of course useful for investing in a range of markets with highly leveraged positions.