Best Thread Capital Spreads

[brutusdog]

So much misinformation written it is difficult to know where to start.

Our Price Error definition (and there is a very precise definition in our terms) works both ways. We cannot stop a client out on an incorrect print either (or if we do we must refund him) in the same way that a client cannot trade with us on an obvious price error and expect us to just wear it. If this were possible we (and every other financial institution) would be at the mercy of collusion between staff and clients who could create a multi million pound price error and then demand payment. This would be thrown out of court in any country on this planet.... otherwise every broker/bank/exchange etc etc would be at risk.

We must refer to underlying market prices before we quote. OTHERWISE we could just wait for a huge position to be built up then put a 'rogue' print through .. stop the client out and say "tough 'our quote' got there and therefore you are done". The client can also ask for evidence that the underlying market reached a level relating to the quote on our platform.

Smart aleck comments about how we do not quote the exact exchange price so how can we compare are frankly just stupid. It is called Spread Betting. Our price is a spread around the underlying market or a spread around the 'derived forward' or 'fair value' price of the underlying market. In any dispute we must be able to prove that the price we quoted reflected what was going in the real (underlying) market. If the client disputes this he must also provide proof that supports his side. This is hardly unreasonable

The only factual comment made here was the apparent response from the regulators who quite reasonably pointed out that our terms are quite clear and quite fair. And the regulators are there to ensure 'treating customers fairly' procedures are followed by all SBs.

Grantx

you want an example of how much cheaper SB is than direct access. Try the 0.5% stamp duty on equity prices plus commision paid to your broker. On a 400p FTSE 100 stock this would equate to an extra 2p on the spread for the stamp duty plus whatever your commission is paid, twice over, to your broker (in and out of the trade). CS only quotes 0.1% in total which is a total spread around the underlying price or just 0.4p on a 400p stock..

In anyones language that is a saving of something like 2p (0.5%) on every trade. Which is generally more that the total bid offer spread on our platform anyway.

I always love these stories of 'sharp practices' ...there is never, ever, a proven example of CS indulging in 'sharp practices' it is always stories of clients complaining that CS have not allowed the client himself to indulge in 'sharp practices'. Trying to get any financial institution to stand by a blatant price error is never going to get you anywhere.

Talk of 'somebody' taking an SB to court to win a case on a Price error is just ridiculous. You might as well walk into a Farrari forecourt, take the last zero off the price of the car on display, and then try to get them to sell it to you at the displayed price whilst at the same time threatening to take them to court if they do not comply.

I seem to remember an online store a few years ago offered a white good at something like £2.49 instead of £249.00. Thousands of people bought the product but the store just rejected all the deals even though the clients had already paid.

Simon

A poor excuse...if your outfit was any good these issues would not exist.

 

[FXSCALPER2]

Thats a start. Where can a client find the list of data feeds Capital spreads use for their products so they can retro actively apply a reconcilliation of stopped out trades that were due to palpable error and reclaim monies due to them. And how many years can they retro actively apply that , is it 3-5years going back time of claim?

I'm assuming Capital spreads would keep their mouths shut if they know an error, rather than retro amending errors automatically on their clients behalf ?

I bet a lot of clients didnt even know they could reclaim a stopped out trade providing they can reconcile it, so wheres the list of data you work off to allow reconcilliation to commence ?

so in short do capital spreads keep historic price histories, if so how far back do you go and who do clients contact to get this data at capital spreads to do a reconcilliation against your true prices?

Seems bonkers, but if theres any whiff of price intergity, then by its very being ,reconcilliation against actual true data must happen for every trade. man o man...

Lets call it the third umpire. Stewards enquiry for every single trade, lordy.

This is the thing about Simon. He is too funny for words, really. He would rather go to his grave talking BS night and day than just fix the platform and move on. Get IG tell you how they do Simon. Make yourself more expensive even, go on humour us seriously.

 

[capitalspreads]

crap buddist

err there has to be a dispute for us to investigate.... and anyway you are completely wrong... if we see an error on our platform that stops out a client we do not wait for him to contact us we amend it immediately. Historic data goes back quite some distance as anyone with a reuters or bloomberg terminal will testify. Feeds all come from the various exchanges concerned, except FX which comes from a variety of quoting banks and out of hours FTSE quotes which come from a calculation using the DAX, Dow and S&P futures activity. So any client who ever believes he has been unfairly treated on a particular fill can come back at a later date and he can even get a forensic done by a third party. We retain copies of every single trade ever made by all of our clients with audit trials.

FXscalper
... ... why not send this type of comment to the CME or CBOTetc... I receive e-mails from the exchanges virtually every day informing me of price error/corrections/cancelled trade etc etc. Occasionally they completely wipe out whole ranges of trades claiming fat finger errors and we then have to go back over our systems and comply with our clients' trades. The other day the LSE price feeds were down for virtually the whole afternoon. Why not give them one of your nice little e-mails telling them how useless they are and why don't they listen to you as you obviously have enormous experience of offering a client internet trading service. It is hardly ever an error on our behalf that throws out stray prices it is more usually some error with the exchange price feeds concerned.

davecrom

actually the sharp practices comment wasn't aimed at you. I apologise as I realise it might have come out that way, your problem was quite recent and as you say was cleared up eventually. As you say we have to be very careful what we say on the phone. Every conversation is recorded and my staff must be polite but completely factual to the best of their ability. They cannot speculate. Unfortunately we cannot 'play favorites' and give one client a trade not given to others.

As most of the people who actually trade on the platform will know the system is getting faster and faster with many new markets coming on line. I have had my own account sitting open on my work pc for four days with no log out or failure of price delivery. 96 hours of continuous streaming FX prices. No time outs or down time.

Simon

 

[capitalspreads]

FX scalper

more expensive than who exactly?

3% margin on FTSE 100 stock 5% on 250
0.1% spread on FTSE 100 prices 0.2% on 250
1 pip on FTSE index

2 on eur/usd...jpy/usd

5 pips on brent and gold

4 on dow and S&P

98% auto trade fills.

over 99.9% robustness on platform availability.

those numbers just stack up dont they?.

thanks for giving me the chance to remind people of just how good it can get!

Cheers

Simon

 

[FXSCALPER2]

FX scalper

more expensive than who exactly?

3% margin on FTSE 100 stock 5% on 250
0.1% spread on FTSE 100 prices 0.2% on 250
1 pip on FTSE index

2 on eur/usd...jpy/usd

5 pips on brent and gold

4 on dow and S&P

98% auto trade fills.

over 99.9% robustness on platform availability.

those numbers just stack up dont they?.

thanks for giving me the chance to remind people of just how good it can get!

Cheers

Simon

You got it wrong again my dear man. I am saying your problem maybe because you are cheap. I am saying FIX YOUR plaform even if you have to end up being as expensive as IG, for example. You understand what I am saying now?

You are cheaper than IG on USDJPY and EURJPY (1 pips each). That is a huge discount. And I am sure you are cheaper on a lot of other markets. I am not even interested in saying you are not because you are very cheap (on both senses of the word).

The trouble is it doesn't mean a damn thing if you have such a useless platform that:

1- people can't trade because of your cranky platform

2- If they they trade and make money and you don't fancy it, you will take it back

3- you lock people in a trade they can't close

4- You reject a trade and then fill it later without notice, putting people at such levels of risk, as day traders, they have to morons to keep on trading with you, especially at fast times

5- take minutes to fill an order a client cannot cancel, then fill it only if it goes against the client

Fix your plaftorm and stop talking nonesense because believing what you say is like asking turkies to vote for x-mas.

Note for short term traders: Capital Spreads are cheaper than other better SB companies but they will push you around in return, they will fill orders which you thought were rejected, they will reject trades if it goes in your favour but fill it if it goes against you. Once you click to buy or sell, they can reject your trade but you can't cancel it. The dealer will rejct the trade if he doesn't like the price but you can't cancel it if you no longer like the price before it is filled. You will have trades at dangerous times which you cannot close. If you lose that is it, regardless of the price at the time, but if you win and they don't like it, they will get into your account and take your money out without even telling you about it.

Their published spreads don't mean a damn thing if you can't trade. They can give me 1 pip advance and I wouldn't trade short term with them. Not in million years! Say I go short USDJPY after NFP. First they will hang about before they do anything, then they will say my trade was rejected, then I would make tea and come back looking for a trade but Capital Spreads filled that trade they said was rejected. I see it is around breakeven and, as I don't want to be in the trade any more,I try to close it. I click buy to close but it takes 2 minutes before they say my trade is rejected. I go back to check and I find that I got filled for a 20 pip loss. At what point did I benefit form their cheap spread? I was shafted anyway despite their 'narrow spread'. With CMC I try the same thing, my trade gets requoted and I reject it: I have a choice. IG are also excellent.

Avoid Capital Spreads until they fix this ridiculous platform..

 

[stevespray]

Talk of 'somebody' taking an SB to court to win a case on a Price error is just ridiculous. You might as well walk into a Farrari forecourt, take the last zero off the price of the car on display, and then try to get them to sell it to you at the displayed price whilst at the same time threatening to take them to court if they do not comply.

I seem to remember an online store a few years ago offered a white good at something like £2.49 instead of £249.00. Thousands of people bought the product but the store just rejected all the deals even though the clients had already paid.

Simon

Simon,

Obviously 50 odd pips on USDJPY (which seems to be what triggered this whole debate) is clearly a fairly large error in terms of a spread bet and the person in question appeared to accept fairly quickly that the entry to his position was made on a dubious quote. Why could you not reach an agreement with the client to amend the opening level of the bet to an agreeable level? Why was the bet cancelled in full? Being the ‘cynic’ that I am I think that you take this approach (of cancelling the bet outright) to stop someone being tempted into trading a dubious price in the first place – the idea being that a good deal of time might pass before the error is reversed thus presenting the client with a problem if they wished to lay the bet off elsewhere – in laying the bet off there is a risk that the hedge would lose money and leave the client out of pocket if the main original leg of the bet was cancelled in full. Am I close?

Interestingly I was walking past my local Travel Agent at lunchtime. I noticed that he appears to be offering a rate of $1.94 to the GBP. On returning to my desk I see that the rate of exchange is 1.9980. Given that Travel Agents fall under FSA remit (in terms of exchange rate transactions) would I be able to claim a ‘palpable error’ (after the event) if I was to accept his lousy exchange rate offer or is he just offering a deal which I can either accept or reject? How is it that a Travel Agent can ‘offer’ such deals which are clearly so far from the ‘underlying market’ and this still be qualified as a ‘regulated business’. In that respect our good friends ‘50 pip erroneous trade’ is dwarfed by my local travel agent’s 580 pip ‘error’. Apparently the deal is termed ‘commission free’!!
My comments are obviously ‘tongue in cheek’. The point that I am trying to make is that anyone, or any business, can offer any deal that they like. If you are shrewd you will wait and look for a better rate. If you are in a hurry and you’re flying (from T5!) tonight then you might find that you want to take the offer of 1.94 to save time. There is no law which states the rate which MUST be offered and there is no law which says that someone cannot exercise their right to accept that offer.

You bring up the subject of the Ferrari forecourt. There are a number of fairly obvious technicalities with your analogy. Firstly you say “Take the last zero off the price of the car on display” – Surely this is an attempt to create a ‘deception with the intent to defraud’ or perhaps an ‘attempt to gain goods through deception’? You are hoping that the removal of the zero will go unnoticed? Or are you, secondly, implying that the attachment of a price ticket to a car in a showroom constitutes ‘an offer to contract’? (Which it doesn’t! A price tag is classed as an ‘Invitation To Treat’ – A price, if ‘offered’ by a potential client’, may or may not be accepted by the vendor. Remember.... offers are made by the clients and accepted or rejected by the vendor.
There are therefore several reasons why this analogy does not work in the context of what is being debated here. Firstly, nobody has fiddled with you advertised quote in an attempt to obtain a more advantageous price. So far as I know it is not possible for clients to alter your prices in such a manner? Therefore there is no attempt to defraud you or obtain a contract with you (ie open a spread bet) by using the deception that you suggest in your post. Secondly (and most critically in this matter), your quoting of a price does not constitute an offer to contract in just the same way that the price tag hanging on the car didn’t. Instead your quotation is an ‘Invitation To Treat’. When attempting to trade the client makes an offer to you to trade at your indicated price. The choice on whether that offer is accepted or rejected is entirely your choice and it is the outcome of that decision which determines if a contract is formed or not. In your analogy you imply that our argument is, in some way, connected to just seeing the price on the screen (or the price tag hanging on the car) and expecting the vendor to agree to contract regardless. This is not the argument and does not resemble what has been written.

Your analogy, in context, would be something like this;
You walk onto the forecourt and notice that one of the cars has a price tag which, to your knowledge, represents a saving of around xx% of the true market value. The dealer comes over and exchanges pleasantries. You say to the dealer that you are interested in car and ask about the normal particulars. Everything with regard to the car checks out so you make the dealer ‘an offer’ on the car which reflects the price shown in the windscreen (obviously we haven’t tampered with the screen price in just the same way as we don’t tamper with your pricing software). The dealer then has a choice to make – just like you do when a client offers to enter a bet with you. If the dealer accepts the offer, draws up the invoice, accepts your payment and throws you the documents + keys etc then the car is yours. If, 24 hours later, the dealer realises that he could have sold the car for more then there is nothing that he can do. Do you think that he can cancel the invoice, return your payment and then just call round and collect the car without you having any say in the matter? This is a far closer analogy to what you are suggesting is reasonable.


You mention the white goods for £2.49 instead of £249. I am not familiar with that case. What I would say, based on what you have written, is that there are grounds for ‘breach of contract’. A similar thing happened with Dell Computers some years back and they had to honour the orders with clients who had had their payments processed to their bank cards before Dell spotted the error.


I’ve spoken with another mate specifically about this subject and I regard his as an expert. His opinion is similar to mine. The pivotal moment is technically when the offer to contract is accepted. He says it’s a matter of ‘legal title’. At the point that the acceptance of a deal occurs the ‘legal title’ to the item in question moves from Party A to Party B. This is the same be it a motor car, spread bet or a packet of Kellogg’s Corn Flakes. Once Party B has legal title to the item Party A cannot lay claim to it and neither is Party A entitled to demand the item back simply because they were the prior owner. In order to get the item back Party A must go through the same procedure of offer and acceptance which Party B went through to acquire the item.
Steve.

 

[sfbarr]

Everything Fxscalper has said is true.... I've heard that Simon eats babies too...

 

[Crap Buddist]

crap buddist

err there has to be a dispute for us to investigate....
Simon

Yes and there is an ongoing huge one in existence day in day out Capital Spreads price integrity. The dispute is that your prices cannot be relied upon , but its not a problem as such, providing clients have the facility to have access to sight of true data ,then they can simply reconcile.

You can look at it as if you have thousands of price compliance officers doing a thorough job for you. All they need is the data (which you have) access. You can also look at it like doing a bank statement reconcilliation, keeping an eye on the banks and their charges etc. And not just for "brand new customers only".


So again who is the contact name at Capital spreads who will provide the client with the historic data the client requires so the clients can elect to reconcile all trades.
And what instructions are there for people to follow.?

How can they receieve the data, what form, how frequent. etc. ?

Clients procedure for reconcilliation of price execution.

Who knows maybe from this mass reconcilliation a clear picture of palpable errors and who's been paying for it, will be known.

I'd like to know the %.

Integrity of price is vital if customers are to have confidence in dealing and its good to know they can audit all trades against actual data and not just platform data which they trade off.

Capital Spreads must be charged with a "Duty of Care" to provide its clients a true and accurate price on which clients can choose to act/deal upon? This needs to be monitored surely? So going back to "err, there has to be a dispute for us to investigate " mindset does not send out a message that a bookmaker is too fussed about the price they supply, unless someone comes forward and disputes it. yeah then(the bookmaker) they may give a hoot. But not as a matter of normal business in providing excellent service and facillities. Not as a matter of procedure. This thinking needs to change .

Even more reason the client needs to take very seriously this disregard of principle and to reconcile all trades on true actual bookie data, and not leave it to the platform ,dealing prices, on which they have acted. Becasue as this is still ongoing, its faulty, or cannot be relied upon. Its not safe.

How many palpable errors this week? I mean if no one knows ,because they leave it until a complaint comes. Then no one knows the true figure?

Thanks in advance.

 

[stevespray]

Everything Fxscalper has said is true.

Is this your yearly post? :clover:

 

[davecrom01]

"Talk of 'somebody' taking an SB to court to win a case on a Price error is just ridiculous. You might as well walk into a Farrari forecourt, take the last zero off the price of the car on display, and then try to get them to sell it to you at the displayed price whilst at the same time threatening to take them to court if they do not comply."
---------------
Hello Simon,

I'm not sure about this analogy myself - the analogy might well be better phrased as "the Ferrari Dealer rips the zero off accidentally, and then along comes a customer. The Ferrari dealer then sells the customer the car, only to realise 8 hours later that there was something up with the price - even though on previous occasions when the prices were "wrong", he closed the entire dealership to customers, locking some inside, unable to leave as their new Ferrari depreciates around them rapidly.

But I do wonder how contract law "changed", just because an automated system "saw the wrong price and sold the car" rather than a human salesman doing the same.

I'm not doubting your interpretation of the law, because the FSA guy pretty much said the same thing to the suprise of most of us in here, but it does seem that it could be said that the "human intervention or lack of it" is one possible crux in all this.

Just when does a trade with CS actually become an enforceable contract?

Cheers,
Dave

 

[Crap Buddist]

"Talk of 'somebody' taking an SB to court to win a case on a Price error is just ridiculous. "

Who is the judge of that? How many palpable price errors have happend? how frequent? who has benefitted ? how many errors went undetected? how many went unreported? who is negligent?

 

[Trader333]

Is this your yearly post? :clover:

If it is you wont get a reply until 2009


Paul

 

[sfbarr]

I'm more of a reader than a writer! Unfortunately that last message I posted was edited by one of the administrators so the sarcasm is lost and the sentiment of the post misrepresented.

Fxscalper you crack me up! I don't agree with a single thing you say in relation to Capital Spreads but your posts make me laugh.

Keep fighting the fight but you better be careful or Simon might ring some of his friends in other spread betting companies and void your winning bets....and there is nothing you can do about it because he has even more friends working with the FSA ....

Folks that my posts for 2008 done.

 

[grantx]

Capitalspreads,

“the mercy of collusion between staff and clients who could create a multi million pound price error.”

You watch too many fantasy films. We are talking about Joe Public with a few grand (if that much) account, not some multi-billionaire megalomaniac by bent on world domination.

“We must refer to underlying market.” This is meaningless – high yields on junk also “refers” to Treasury yield but is nowhere near. That’s all this – a reference or datum point as you readily acknowledge: “...how we do not quote the exact exchange price so how can we compare are frankly just stupid. It is called Spread Betting”.

“the regulators are there to ensure 'treating customers fairly'”. This is a major point of contention among some on this post (myself included).

“followed by all SBs.” Does a rule/regulation/law preclude operating beyond if they wish to do so? Murder is illegal but it doesn’t seem to deter some people.

“0.5% stamp duty on equity prices”. So what proportion of your clients/turnover represents other instruments – indices, fx, commodities, fixed income? Looks like a red herring to me.

“Talk of 'somebody' taking an SB to court to win a case on a Price error is just ridiculous.” It’s ridiculous insofar as SB’s customers are unlikely to feature on Forbes 500 list and therefore litigation is not an option.

Your example re white goods. An identical case happened to a large retailer (can’t remember the details) but they had to honour the transactions.

“completely factual to the best of their ability”. Don’t you mean to best of their “knowledge”? The former implies the possibility of falsehoods through ignorance (and ignorance is never a defence); the latter implies they may not know fully what is going on in the markets. Both are indictments.

“96 hours of continuous streaming FX prices.” Praise the Lord. The wonders of modern technology.

Grant (LLD).

 

[tar]

Simon ,

Do CS intend to (realize) profits without the need to close my positions ? This is important to reduce costs to costumers . . .

 

[stevespray]

Kodak error shows need for legal protection
This article appeared in Up, a British business magazine, in spring 2002. It has not been updated since that date.

The potential cost of making a simple error on a website was highlighted early this year when Kodak.com misstated the price of its Kodak DX 3700 digital camera being offered for sale on its site. The company initially refused to fulfil the orders placed, and legal action was taken by disgruntled customers in Ilford County Court. Trading Standards and the Advertising Standards Authority also investigated. Almost immediately after the court action was raised, the company capitulated, although not without a few weeks of bad publicity.

An estimated 2,000 cameras were ordered for £100 each before the error was identified – the price should have been £329. The case is reminiscent of a more significant error by Argos in 1999 when it offered Sony Nicam TV s for £2.99 each, instead of £299. Thousands of orders were placed before the company recognised its mistake and apologised to customers – but refused to honour the orders. Legal action, although threatened, did not materialise.

The Kodak.com customers received confirmation of their orders, which referred to a contract having been formed. However, Kodak then denied that any contract was in fact formed and apologised to customers for "any inconvenience and disappointment caused."

Given the language used in its acknowledgement, it seems unlikely that Kodak could have won its argument that no contract was formed, and its decision to fulfil orders was possibly based on both the risk of fighting a losing court battle and negative publicity.

When an item is offered for sale on a website at a certain price, there is a consensus that it has the same effect in UK law as an item in a shop window being offered at a certain price. This is known as an "invitation to treat." At this stage, the item is not being "offered" to the customer. Rather, the customer is expected to make an offer at the check-out, which the shop will usually accept. If a price is incorrect, the shopkeeper can legally reject the customer's offer (although, if a shop does this too often, it may run into problems with Trading Standards).

Similarly, if a website confirms an order, the consensus has long been that the contract is formed at that point, in the absence of anything to the contrary in the terms and conditions of the site.

It is difficult to make sure that a website never contains an error of the kind found on Kodak.com, but it is possible for a site to protect itself in the way it accepts orders. Instead of concluding a contract at the point of the user clicking a button or sending the user an automated acceptance, a site can make it clear to users that they are submitting an offer on the site which if accepted will result in a binding contract. The law requires immediate acknowledgement of the order; not immediate acceptance. This is how Kodak could have avoided the problems it faced.

 

[grantx]

Steve,

"The law requires immediate acknowledgement of the order; not immediate acceptance. This is how Kodak could have avoided the problems it faced."

So then Kodak eventually replies with a (different) acceptance/revised price. Then the customer replies accepting or rejecting this. Not very practical.

"The law requires immediate acknowledgement of the order." Which without acceptance is pointless.

Sounds almost like the US "Bait and Switch" style which is illegal.

I wouldn't be surpised if this angle is considered by CS - in a fast market?

Grant.

 

[stevespray]

Steve,

"The law requires immediate acknowledgement of the order; not immediate acceptance. This is how Kodak could have avoided the problems it faced."

So then Kodak eventually replies with a (different) acceptance/revised price. Then the customer replies accepting or rejecting this. Not very practical.

"The law requires immediate acknowledgement of the order." Which without acceptance is pointless.

Sounds almost like the US "Bait and Switch" style which is illegal.

I wouldn't be surpised if this angle is considered by CS - in a fast market?

Grant.

"So then Kodak eventually replies with a (different) acceptance/revised price. Then the customer replies accepting or rejecting this. Not very practical."

No - this isnt how the process works in terms of the law. If Party A makes an offer to Party B which Party B refuses but then revises his invitation to treat to a different price then the process of the first offer (in terms of the offer / acceptance process) is deemed to be 'dead' or invalid. In order to contract Party A must again make an offer to Party B (based on Party A's ITT) which Party B is entitled to consider amd then accept or refuse. The point is that Party B never makes an offer to Party A. Party A always makes an offer to Party B based on Party B's invitation to treat.


I posted the Kodak story for two reasons. Firstly to demostrate beyond any reasonable doubt that any company who enters a contract online, based on a price error or otherwise, is deemed to be contractually obligated from the moment that they produce any statement or conformation that a contract has been formed. Secondly, I posted the story as it mentioned the Agros £2.99 Sony TV case. I assume this is the case that Simon was bringing up in his post on Friday? In Simon's post he implied that no one expected the vendor to actually deliver the goods, based on such an obvious error, regardless of whether the vendor entered a contract or not. The piece makes it fairly clear that Agros never had to deliver the TV's, not because of the invalidity of the contracts, but because nobody actually took the time and trouble to take the matter to court. Clearly the Kodak and Argos cases appear almost identical. It's just that the clients of Kodak appear to have slightly more about them than the clients of Argos! The clients of both firms were equally entitled to enforce their contracts.

What you will notice from the comments surrounding the two cases is of vital importance. At no point did either firm offer a defence of; "The price was obviously wrong so no one can expect us to be held to the contract". The defences which each of the firms provided appears to pivot around the point at which a contract is formed. This is the point which I made last week when this matter regarding the 50 pips cropped up. In both cases Kodak and Argos appear to initially state that orders placed were not accepted by them even if payments were taken. In the Kodak case it must have quickly beome obvious (at least to Kodak's lawyers) that the emails sent out to clients + responses made (on their webiste) meant that the clients offers, based on Kodak's invitation to treat, had been 'accepted' by the firm and therefore a contract existed from that point.

The implied advice offered in the piece is that online sites should not accept a clients offer there and then. The suggestion is that the clients make offers which the firm then accepts or rejects, not automatically, but in their own time at some point after the clients offer has been made. The firm would respond to the clients order with something like "Thank you for your order. We will respond to your order as soon as possible. We would like to make it clear that your order for item xxx has not yet been accepted yet but is instead awaiting processing".
The idea is to avoid saying anything which implies that the clients offer has been accepted. For example, if the website says "We will deliver you item within 24 hours" then there is implied acceptance and the client can consider that a contract exists.

What is also important is the clients right to withdraw an offer. Until an offer is accepted or rejected he / she is perfectly allowed to withdraw their offer. This is why spread bets need more or less immediate acceptance. If a spread bet firm tried to state, like Kodak should have done, that no enforeable contract actually existed upon apparent acceptance (regardless of right or wrong price) then the client could consider that his offer was still 'on the table' and therefore be within his right to withdraw that offer if the bet wasnt going his way. As I said last week (and the point which is more than clearly outlined in the Kodac case) - the pivotal point is the point at which the enforceable contract is deemed to be formed.

Steve.

 

[grantx]

Steve,

"So then Kodak eventually replies...” , etc.

I wasn’t making a statement of fact, just a hypothetical illustration of indecision and ambiguity.

“the pivotal point is the point at which the enforceable contract is deemed to be formed”. Precisely, and has yet to be resolved hopefully by Simon, certainly not by the FSA.

You may have a better idea of this than I do, but I would say the FSA is irrelevant here in that perhaps the relevant legislation, eg contract law, consumer law, sales of goods, is beyond the FSA’s statutory remit. Would you agree with this?

Grant.

 

[stevespray]

Steve,

"So then Kodak eventually replies...” , etc.

I wasn’t making a statement of fact, just a hypothetical illustration of indecision and ambiguity.

“the pivotal point is the point at which the enforceable contract is deemed to be formed”. Precisely, and has yet to be resolved hopefully by Simon, certainly not by the FSA.

You may have a better idea of this than I do, but I would say the FSA is irrelevant here in that perhaps the relevant legislation, eg contract law, consumer law, sales of goods, is beyond the FSA’s statutory remit. Would you agree with this?

Grant.

Yes, I would agree with you. The FSA, based on what has been written in this last week, don't have a clue as to what the law demands. The law is specific about when a contract is formed for a reason - so each party knows where they stand. In the case of a spread bet they are implying that is a case of 'when is a contract not a contract'...... if this came to court it would be sorted in less than 30 minutes!

In may ways I agree with what Simon has written re fairness etc. The problem is that the law just doenst work that way. Simon (and spread bet firms generally) have a huge task; they are trying to bring 'the markets' into your 'front room' so to speak. They are trying to replicate what goes on in the markets through their platforms etc. The problem is that contract and consumer law does not allow that to happen. That is not the fault of the consumer, it is simply the law of the land in which we live.


A few people have now asked Simon the same question; "When is a contract formed?"
I cannot speak for Simon but my guess is that he has no option but to agree that a contract, in regard to each individual bet, is formed at the moment his company accepts the clients 'offer' to enter into a bet at the stated level. Any other reply would leave a situation where the client in a position where they could withdraw their offer before the firm could acknowledge that a contract existed.
Take for example 50 pip man. If the firm contended that deals weren't actually done 'at the moment the firm issued the conformation (and email)' and therefore had the right to refuse the deal some hours later, then other clients who might have unconfirmed bets open, who were showing a clear loss, could legally withdraw those unconfirmed offers before the firm could confirm them.

In my opinion the whole point of the law is to clear show a clear moment at which a contract is confirmed / entered. If you ask anyone with a legal background they will tell you the same thing. This is why the defence in the Kodak case acted the way that they did. If the law was 'simple common sense', which is what Simon is angling at, then both Kodak and Argos would have defended themselves with that approach - clearly this did not happen.

The FSA clearly have two lines of approach in terms of spread betting contracts. It is clear that the people behind the document which I mentioned last week have significant legal experience and recognise terms and condition which cannot exist in a consumer contract. On the other hand we have FSA people on the phone who say that a spread bet contract is little more than "a gentleman's agreement" - lucky for us we know that these contracts are more than this.

I think that you are correct. The FSA tend to go through life 'bouncing off the sides'. By that I mean that they, like many government organisations, are highly reactive but rearly proactive. NRK is a classic example. Last week they admitted that they should have noticed the risks in the NRK model sooner. What a load of nonsense! Clearly if you were clever enough you understand NRK's imminent risk then you would be massively short NRK via a spread bet and planning your early retirement rather than working for some lethargic government quango.
Now it seems that the FSA and the BOE are reacting to the credit crunch with all these stories and ideas - this more than likely means that the bottom is near. It's just like when the BoE 'reacted' and sold off all the gold for $260/oz.
In the end it won't be the FSA that brings a spread bet company to task for a breach of contract - they will react once a client successfully brings a case.

Steve.