FCA concerns on Spreadbetting

This is a discussion on FCA concerns on Spreadbetting within the Spread Betting & CFDs forums, part of the Commercial category; Today's news is that the FCA are not happy that so many particularly inexperienced retail punters are losing money on ...

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Old Dec 6, 2016, 10:41am   #1
Joined Jul 2008
FCA concerns on Spreadbetting

Today's news is that the FCA are not happy that so many particularly inexperienced retail punters are losing money on spreadbetting and CFD's.

They are asking for leverage limits particularly for inexperienced clients, no more opening bonuses, and greater emphasis on the risks involved.

As an experienced spreadbetter I trust none of the changes being proposed will have any affect on those of us who are like myself. However, I do also feel, given what the FCA are saying, that there should be greater restrictions on new accounts - especially where persons have no experience trading any margined instruments (including spreadbets). It is too easy, after all, for someone with no experience to 'blow their load' again and again, and to keep the FCA content (at least) surely more needs to be done.

Perhaps spreadbet companies should think of offering a limited risk account, with substantially reduced leverage, for *all* new account openers - *unless* they can prove prior experience with any margined products. Until now, as long as one accepted a disclaimer a newcomer can have the same exposure as any experienced client, and we all know what happens to most newcomers when that happens...

It might well be better for everyone that inexperienced clients should have their trading exposure restricted until they have garnered enough experience, which could e.g., at least be for the first six months to a year. Then and only then will they be able to join the rest of us - again on full understanding and acceptance of the risks involved.

Or does anyone have a better suggestion? Restricting newcomers to demo accounts only, just wouldn't be realistic. But it's clear that the FCA are demanding that something has to be done, to protect the most vulnerable, when a quoted 82% of retail clients lose money.

PS The fact that so many fund managers lose money too, is (..ahem) of course, another day's work altogether...

Last edited by peakoil; Dec 6, 2016 at 10:53am.
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Old Dec 6, 2016, 2:59pm   #2
Joined Oct 2003
https://www.fca.org.uk/news/press-re...rence-products

It's disappointing that the FCA think that most people losing is a problem. This is not investing, it's speculation. That's how it works. It's competitive. Only the best can win. You don't see sports regulators worrying because most people don't win. Fairness is what matters. That is what the regulators are there to enforce.

However, the proposed leverage limits look reasonable and I hope the newbies will still be able to lose their money fast enough to keep the retail firms in business. I don't want to have to put down a huge deposit and start paying commissions, platform fees, etc.
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Old Dec 6, 2016, 4:37pm   #3
Joined Jul 2008
peakoil started this thread @timm - absolutely agree. Albeit, I'm still hopeful that because these are 'proposals', they will be open to further debate; Not least because, the industry itself and at least a few of the successful 18%, will no doubt want to add to this debate too.

While overseeing a fair playing field is always to be welcomed, it makes no sense that a retail client with many years of experience suddenly needs to be 'protected' in some of the ways being proposed - such as by arbitrarily increasing the leverage requirements in such a heavy-handed manner.

A maximum of 50:1 leverage will, in some cases, effectively triple the margin required to take a position on the FTSE 100. As someone with many years experience, such a proposal does not help me in the slightest.

Anyway, let's hope that sense will ultimately prevail.
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Old Dec 6, 2016, 8:22pm   #4
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It's simple, don't spread bet.
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Old Dec 6, 2016, 11:15pm   #5
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peakoil started this thread @ forker well maybe this isn't the thread for you, but spreadbetting still has a considerable fan base. According to Forbes, the failure rate for new business startups is even greater than that which concerns the retail spreadbetting market. Or, to put it another way - statistically speaking, with all other things being equal it could be argued that a person's chances of succeeding ultimately at spreadbetting, are greater than the 90% failure rate which Forbes reported is the reality of new business startups these days. Perhaps they should also look into curtailing adults' attempts at setting up any new businesses from now on, especially given the logic behind the above!

And what's more, you might have noticed that this is ultimately about *both* CFDs *and* spreadbetting.

Nonetheless, if a person develops the skill, over time, to do well at either, then you might even accept that there are not enough reasons why he should wish to cease using that skill.
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Old Dec 6, 2016, 11:27pm   #6
 
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Quote:
Originally Posted by forker View Post
It's simple, don't spread bet.
10 years ago maybe! the market is too competitive now. spread betting firms having nothing to win by ****ing over their clients.
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Old Dec 7, 2016, 12:03am   #7
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Originally Posted by ffsear View Post
10 years ago maybe! the market is too competitive now. spread betting firms having nothing to win by ****ing over their clients.

Agreed. Successful traders won't fail if they switch to SB, unsuccessful traders won't succeed if they switch to direct access.
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Old Dec 7, 2016, 6:37am   #8
Joined Nov 2001
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Originally Posted by forker View Post
It's simple, don't spread bet.
That is a simplistic answer and not everyone is like you and me, My circumstances are the only ones that I can speak for. I've been around a long time, doing several spreadbet trades per day. I have good days and bad but am a speculator/trader and cannot foresee myself ever going broke doing this.

As someone has, already, posted, what is needed is a watchdog that watches. I am not sure that we have one. There are lots of dodgy firms around,

If we can let people vote for a Brexit and other referendums on a whim, because it is their right to do so, then those same people should not need protection when spreadbetting.
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