Barclays Spread Betting Shares drop after a £290 million penalty
After an embarrassing penalty of £290 million for apparently manoeuvering interest rates so that traders will better benefit in financial status, Britain’s Prime Minister David Cameron mentioned in a press conference that Barclays Bank will have to answer to some serious allegations regarding interest anomalies in the bank’s interest rates. Following the controversial accusations Barclays share price dropped significantly in the trading district on Thursday on June 28 as an effect that left many shareholders of the bank at a substantial loss.
Barclays to pay a £290 million penalty.
In a follow-up investigation claiming that Barclays intentionally influenced the interest rates at which they lend to each other resulted in the largest fine on Wednesday June 27 which Barclays in defence saying that their exploitative actions had fallen to the conduct of the bank’s professional standards which will lead to Barclays Chief Executive Bob Diamond’s bonus to be withheld until further notice.
Furthermore, a separate investigation by the Financial Services Authority or the FSA, the US Department of Justice Fraud section (DOJ) and US commodity Futures Trading Commission (CFTC) reveal that Barclays’ merchants fraudulently made remarks in order to make the bank appear more stable during the Eurozone crisis and on several occasions made secret agreements with other traders from other banks with the goal of profiting from their actions. The said penalty could possibly be of several in the UK as the FSA investigated the actions of other banks who connived with Barclays’ anomalies in their interest schemes. Moreover the Department of Justice in the United States said that they have already started investigating other banks and individuals allegedly connected with the said controversy.
How to profit from this loss
After the FSA fine, comments from the Prime Minister David Cameron mentioned that the bank had some severe questions to answer facing the apparent fleeing of investors after selling their shares in the bank because of the doubtful consequences of the penalty as well as the security of CEO Bob Diamond’s position despite the calls for a resignation from his position. Conversely for traders who sold short positions in Barclays shares through spread betting will have the potential to earn substantial profit from the decrease in favour of their position.
Spread Betting on an unstable market.
As a substitute to traditional trading, the use of spread betting allows traders to profit from an unsteady market by going short selling of shares. In turn, investors can profit for each point whenever the market falls. Then again, if a market is set to climb up again investors can opt to go long and purchase the market to profit from each point it rises.