Some very interesting developments this week here in the UK as many of the top spreadbetting and CFD providers have announced this week that they are raising their margin rates in the light of the current credit crisis.

What does this mean for traders like myself who place spread bets on a regular basis?

Well I personally haven't been too affected because I use IG Index and they've only increased margins slightly on specific sectors and indices. However, some companies have raised margins to 75% and 90% for certain stocks, with little notice, which will immediately liquidate a lot of traders.

The result of all this is that it will ultimately create even more volatility in the markets just at a time when we need some stability.

So could this mean the end for shorting if margin rates are increasing dramatically?

Well it could lead to a temporary drop in shorting activity, particularly on smaller stocks that will be most affected, but I think margin rates will probably come down again in a few months.

What would be interesting is if the government look at ways of regulating the market more and maybe looking at regulating who can short the market, particularly stock they don't already own. This would put an end to blatant shorting attacks on certain stocks and would reduce volatility but I think this is unlikely to happen, at least in the immediate future.