Talk the talk

Dermot O’Donoghue, managing director of Irish spread-betting firm Delta Index, talks to David Clerkin.

I understand you’re a former treasury executive at AIB. How did you get into this business?

Delta Index was founded in 2001 by two UCC graduates, actuary Conor O’Neill and technology specialist Michael O’Shea. They approached me shortly afterwards because they felt they needed someone to harness their enthusiasm and focus on the opportunity to change the way people think about investment.

Tell us about spread betting and how it differs from conventional betting.

We offer the opportunity to trade on a wide range of shares, indices, currencies, commodities and interest rate investments. Rather than buying a share, an investor stakes an amount per point (up or down) that the price will move. The profit or loss from the trade is based on how much the price moves, multiplied by the stake. The position can be closed at any time.

What are the advantages of spread betting, ahead of buying the underlying share?

All winnings are free from tax. Investors can just as easily bet on a share price falling as rising, which opens up another world of investment. The costs of spread betting are significantly lower than conventional methods of investment. Most importantly, the funds required to spread bet are a small percentage of what would be required to buy these assets outright. You are investing on a leveraged basis.

How easy is it to get started? Can I bet by phone or internet?

You can open an account by either logging onto www.deltaindex.ie or phoning 1850 88 20 20.

Which markets are most popular? Which shares or commodities do customers bet on most?

The euro/dollar rate is very popular, as are commodities such as oil and gold as well as Irish and international shares.

Please describe your typical client. How sophisticated do you need to be to get involved?

Typically our clients have a view of the world. That view might be that the Irish banks will have a good year or that Ryanair is undervalued. It could be that oil has had a great run and is going to come off, or that the dollar is going to weaken. Our clients are generally financially aware and enjoy taking a risk.

How risky is it?

It can be risky if you want it to be. But if you understand what you are doing and control your risk, it is just another way of investing.

I understand you run training workshops to help get potential customers up to speed. What goes on?

We run workshops to explain the basics. We discuss the power and the danger of leveraged investment and give an online demonstration of how to make trades on our system and we give a few basic tips on good trading habits.

How big can your client base become?

In the tradition of all good Bond villains, nothing short of world domination will satisfy us.