Capital Spreads profit down 46%

[Umbrella]

I just read this press release from Reuters. CS's profit is down 46% and is replacing the CEO. Does this mean a few of us small time traders made money from them last year?

http://uk.reuters.com/article/idUKSGE61O08O20100225

 

[Jack Hughes]

Maybe it means they should concentrate on making one platform work, rather than having ten white labels?

 

[Umbrella]

Hey Jack - I'd been off this forum for a couple of months only - how on earth did you get in 325 posts?! mate that's impressive!! :clap:

The press release cites 'high costs' i wonder if it refers to the DMA platform cost? or could it be hedging cost?? You'd think SB firms are in the win-win position wouldn't you?

 

[Jack Hughes]

Hey Jack - I'd been off this forum for a couple of months only - how on earth did you get in 325 posts?! mate that's impressive!! :clap:

Actually, it's only 1.5 posts per day, but you're right, I should try to get out more.

 

[montmorencyt2w]

What is the status of the respective White Label Partners actually?


As I understand it, they are totally separate companies/corporations, who happen to use the CS/LCG platform, but in all other respects are distinct.

Or does the revenue of LCG/CS depend on the revenue of the WL partners?

 

[Masquerade]

I stopped using them about a year or so ago. I guess that explains it.

 

[Umbrella]

I believe the phrase 'white label' simply refers to branding - for example, CS gives Etrade customers a spread betting product under the 'Etrade' brand, but if you read the small print it will say 'Etrade blah blah is a trading name of London Capital Group authorized by the FSA blah blah'. Therefore CS carries all trades done by white label customers, hence the position risk. I would be shocked if any technology related costs can drive their profit down 46%. Their traders must have screwed up on some positions...

 

[Jack Hughes]

Wonder if taking over Futures Betting was a good move?

 

[Umbrella]

DK about that - unlike Lloyds CS didn't have to take over any rubbish firm!! I recall IG's UK growth last year was about 4%. SB firms will have to expand to overseas to maintain the good old 40% plus annual growth. CS's portfolio is pure UK I believe. High cost, low growth and occasional bad trades - what can one expect?!

 

[montmorencyt2w]

I believe the phrase 'white label' simply refers to branding - for example, CS gives Etrade customers a spread betting product under the 'Etrade' brand, but if you read the small print it will say 'Etrade blah blah is a trading name of London Capital Group authorized by the FSA blah blah'. Therefore CS carries all trades done by white label customers, hence the position risk. I would be shocked if any technology related costs can drive their profit down 46%. Their traders must have screwed up on some positions...

However Tradefair is a subsidiary of Betfair, and as far as I could see, makes no reference to LCG in its small print, and they have different addresses. However, LCG refers to Tradefair as being a White Label Partner.

Prospreads has the same address as LCG.

 

[Umbrella]

I think Tradefair is one of those deals where CS leases the platform technology to a 3rd party partner that already has license to conduct their own SB business such as Betfair. Straightly speaking this is a lease arrangement not a white label. Prospreads is just another brand held by CS.

 

[Jack Hughes]

However Tradefair is a subsidiary of Betfair, and as far as I could see, makes no reference to LCG in its small print, and they have different addresses. However, LCG refers to Tradefair as being a White Label Partner.

Prospreads has the same address as LCG.

Tradefair home page:

'Tradefair® Spreads is a trading name of London Capital Group Ltd (LCG)'

 

[Umbrella]

Great spot!!

 

[montmorencyt2w]

Tradefair home page:

'Tradefair® Spreads is a trading name of London Capital Group Ltd (LCG)'

On the other hand, here:

http://www.londoncapitalgroup.co.uk/partnerships_cs.html

White Label Solutions

LCG's expertise in developing online spread betting and derivative trading products is helping some of the world's most trusted brands to offer a new range of services to their existing customer base.

Our White Label products give partners a low cost route to market that removes the need for investment in technology and infrastructure and provides a seamless customer experience under their own brand.

Typically LCG manages all aspects of the service, paying an ongoing commission to partners. Clients then have access to over 2,000 global financial instruments including equities, indices, currencies and commodities. The most popular traded products in the UK are the FTSE and Dow Jones indices, major FX pairs (e.g. Euro/$) and commodities such as Oil (Brent Crude) and Gold.

We take a flexible approach to our partnerships and can accept clients from most jurisdictions around the world. As well as full White Label solutions, we offer tailor-made joint venture arrangements such as platform, pricing and risk management solutions. Some of the brands that have trusted LCG to deliver for their customers include E*TRADE, PaddyPower, Saxo Bank, and Tradefair.

"their customers" implies to me that they are other entities, i.e. other companies (or parts of other companies).

 

[Jack Hughes]

Maybe we should all pool our funds and get LCG to set up a white label? 'Fatspreads', anyone?