The schoolboy bookie who turned into a spread betting evangelist

JONATHAN Hufford has always had an appetite for betting, from running his school bookmaker to trading yen derivatives in the 1990s. But his biggest gamble took place 10 years ago this month when he left his job in the City to open up spread betting provider Spreadex<br /><br />He entered the then fledgling spread betting industry without much direct experience. &ldquo;I suspect we paid a fairly heavy price for this in the first year,&rdquo; he says. &ldquo;A lot of mistakes were made but hopefully one learns from one&rsquo;s mistakes and we&rsquo;re still here.&rdquo; And like his demeanour, this is somewhat understated. In 2008 the business&rsquo;s turnover was nearly &pound;28m and it made &pound;12m in pre-tax profit; the company has seen persistent growth in profits for the past nine years.<br /><br />For Hufford, who entered the industry with the aim of softening technical and intimidating City jargon and expanding its geographical reach, offering access to markets for a whole range of people is one of the most important aspects of spread betting.<br /><br />&ldquo;I do think, making the case for the industry, we offer an outlet for the guy in the street to have a view on, say, an American stock. Where else would you open an account to express your view apart from at a spread betting company?&rdquo;<br /><br />But while the industry has come a long way since the mid-1990s, Hufford believes it needs to go further. &ldquo;I am constantly disappointed by the number of people who don&rsquo;t know about us and who don&rsquo;t seem willing to try to understand it better. Often one speaks to people who are very financially literate, who understand the markets and are playing them and have heard of financial spread betting but have decided not to enquire any further. And I think shame for them, but also shame for us.&rdquo;<br /><br />One of the keys to improving the industry&rsquo;s reach is changing its image. &ldquo;If you went into any spread betting company, it would be a sleek City trading office, employing a lot of bright, capable young people, and yet I suspect the general public&rsquo;s perception is still a betting shop on the corner,&rdquo; he says.<br /><br />&nbsp; <!--StartFragment--> <strong>FLOURISHING COMPANY</strong><br />Despite the image problems, and the ongoing attempts to get women to spread bet (only 5 per cent of the industry&rsquo;s clients are female, something which makes all spread bet providers scratch their heads) the company is flourishing. It has 85 employees and despite a challenging year, expansion has continued. Last November saw the launch of sister platform Shorts &amp; Longs, which is aimed at entry-level punters. (The cheeky ads to accompany the launch, which showed a man in a limo with two women, drew the attention of the Advertising Standards Agency, which said it &ldquo;glamorised gambling&rdquo;, something the company denied).<br /><br />Spreadex is currently looking to launch contracts for difference trading in mainland Europe and &nbsp;Ireland and plans to expand its sports offering &ndash; which provides 35 per cent of revenue &ndash; to include binary betting.<br /><br />It is commonly said that recent market volatility has attracted punters towards indices and foreign exchange, but more than 50 per cent of Spreadex clients are trading individual equities, and in particular the smaller-cap stocks.<br /><br /> <!--StartFragment--> <strong>THE BIG WIN</strong><br />&ldquo;I think people are looking for the big win and they think they&rsquo;ve found the pharmaceutical company that may have found the cure to some terrible disease,&rdquo; Hufford explains. While he would like everyone to be dealing in the likes of BP and Shell, his job is to try to meet client demand. &ldquo;Some of our competitors may have moved away from smaller stocks but as long as we are comfortable that the client has the collateral and they accept they are trading in a volatile stock, then who is it for me to stop them?&rdquo;<br /><br />While he is happy to let clients do as they choose, he admits that sometimes they need to be protected. Hufford says that when markets were at their choppiest last year, Spreadex should have increased margins and enforced risk-management to protect both his company and customers (who might be put off by big losses and decide not to spread bet again). &ldquo;I have not lived through anything like what we have been through in the past few months so any experience I have had was either inappropriate or wrong,&rdquo; he says. &ldquo;But one of the problems is that as a spread betting company is that you are dealing with private clients who are acting as principals. We are not advising them so we are almost prey to their decision. I&rsquo;m not blaming the client but probably Spreadex possibly should have done more.&rdquo;<br /><br />As for the current situation, he doesn&rsquo;t see an end any time soon although he insists that he&rsquo;s a glass half-full man. &ldquo;I regret to say that I am a bear,&rdquo; he laughs. &ldquo;I do feel we are in a false dawn with the present stock market bounce. I really think the country is in a mess and it&rsquo;s not obvious to me that we are on the way to changing that.&rdquo;<br /><br />&ldquo;I cannot see that the banks will ever lend money in the way they have in the past, we don&rsquo;t manufacture anything at the moment and our City, which was an enormous exporter of services and generator of income and profits for the country, has been decimated.&rdquo;<br /><br />This positive CEO, who was one of the last to go straight into the City from school, has spent the last 20 years trading, betting, and taking risks. But however gloomy he might be about the current recession, Spreadex is well poised to grow and to take advantage. Hufford&rsquo;s biggest bet, so far at least, is in the money.<br /><br /><br /><strong>CV </strong> JONATHAN HUFFORD<br /><br /><strong>Age: </strong>47<br /><strong>Family:</strong> Married with one son<br /><strong>Car:</strong> Range Rover<br /><strong>Hobbies:</strong> Golf &ndash; he has a handicap of five.<br /><strong>Career:</strong> After school Hufford worked in the back office for the foreign exchange department at private bank Brown Shipley before being offered a money broking role. He moved into foreign exchange trading before trading derivatives such as interest rate swaps and forward rate agreements in the 1990s. He founded Spreadex in 1999.<br />