Best Thread Capital Spreads

@ montmorencyt2w : of course tradefair makes profits "if" for both Betfair and LCG , all operations are handled by LCG for example if u call to deal or u call the customer support u r calling LCG and not Betfair .... Betfair dont take the other side of your trade LCG does , betfair only takes a cut from the spread for introducing clients ....
 
tar said:
@ montmorencyt2w : of course tradefair makes profits "if" for both Betfair and LCG , all operations are handled by LCG for example if u call to deal or u call the customer support u r calling LCG and not Betfair .... Betfair dont take the other side of your trade LCG does , betfair only takes a cut from the spread for introducing clients ....
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Yes this is correct, LCG also have the financial responsibility for the white label client base, if the white label goes bankrupt. As I understand LCG owns the domain name, but who really owns the client base asset I don't know. Tricky, because the white label may invest a lot of money in marketing.
 
montmorencyt2w said:
According to the LCG 2009 annual report, Prospreads wasn't making any money for them at that time. That was explained by the start-up costs, and they still seemed optimistic.
However, they said that during 2010, they were going to beef-up the PR for it to grow the customer base, but I can't really say I've noticed.

I'm not sure that CMC next gen is really competing in the same market as Prospreads is it? No Dealing Desk, yes, but it doesn't really claim a DMA-like experience does it?

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BTW (and I don't mean you Ross) I am always seeing comments on T2W giving the impression that people think that the LCG "White Labels" are actually a part of LCG. As far as I can see, that is not the case. LCG on its website uses the term "White Label Partners", which include Tradefair, TD Waterhouse, PaddyPower, Saxo Bank.

As I understand it, these are all separate businesses from LCG (Tradefair is part of Betfair, for example), with their own customer bases, profit and losses, etc. LCG provides the underlying platform, although the front-end that the client sees may be different in look-and-feel.

LCG only has two wholly-owned spread-betting operations, namely Capital Spreads and Prospreads, and this is referred to in the 2009 annual report. If you want to see the profits etc, for e.g. Tradefair, you would presumably have to find the annual report for Betfair (there is some info at www.corporate.betfair.com), although presumably LCG's profits must at least indirectly be affected by whatever money it makes from its "White Label Partnership" arrangements. I could not spot this in the report, but maybe it is there, somewhere.

OK, here is quite a good statement of the situation for Tradefair (I use them as an example, since I have used them more than any other SB in the last 12 months):
http://corporate.betfair.com/about-us/betfair-group.aspx
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Interesting post, thanks.
 
tar said:
@ montmorencyt2w : of course tradefair makes profits "if" for both Betfair and LCG , all operations are handled by LCG for example if u call to deal or u call the customer support u r calling LCG and not Betfair .... Betfair dont take the other side of your trade LCG does , betfair only takes a cut from the spread for introducing clients ....
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Unless things have changed, I don't think that's true about customer services being the same?
 
Ross Spur said:
Unless things have changed, I don't think that's true about customer services being the same?
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Yes Ross, it probably is, Although, they probably have at Capitalspreads headquarter dedicated personal taking care of different white labels.
 
gle101 said:
Yes this is correct, LCG also have the financial responsibility for the white label client base, if the white label goes bankrupt. As I understand LCG owns the domain name, but who really owns the client base asset I don't know. Tricky, because the white label may invest a lot of money in marketing.
Click to expand...

What got me to thinking about this was a few lines in the LCG annual report talking about the percentage of clients who were active (surprisingly high) and the resulting number of active clients (seemed a bit low to me) and I got to wondering if this included the clients of all the White Labels. If it did, then that number was definitely low I'd think. From memory, about 53k, but anyone can read the report and correct me.

Of course, what we'd all like to know is the number of profitable clients/the number of losing clients. Of course, that is not spelled out, but there are some vague clues.

Back to your point about financial responsibility, if LCG goes bust, but Tradefair doesn't, is my money in my Tradefair account still intact?


The numbers on the Betfair corporate site were not as clearly or nicely laid out as in the CS annual report, but as far as I could see, Tradefair were not exactly making a fortune out of their spread betting operation, if I interpreted it correctly. (I think about £1.5M, which is surely peanuts in this business isn't it?)
 
gle101 said:
Yes Ross, it probably is, Although, they probably have at Capitalspreads headquarter dedicated personal taking care of different white labels.
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Yes, for what it is worth, looking back over old emails, I see Tradefair and CS have (or had) the same person in this role:

Sarah Howard-Williams
Head of Customer Support
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The bods answering the phone may be different though (I rarely if ever phone up).
 
The more I think about this, the more I think that tar is correct.

So, the model could be this:

(Keeping to my example of Tradefair):

- Tradefair pay the cost of "recruiting" me as a customer (sign-up bonus, advertising).
- TF have also paid for the customisation of the front-end to differentiate it from other White Labels.
- I sign up as a customer, going on to LCG's books, but my account and trades are flagged as "Tradefair".
- For each trade made, LCG is taking the other side, but a commission is paid to TF, probably based on the spread. (maybe also on overnight charges*).
-TF are not getting a fortune out of this, but in a way, they don't care as it is not their core business. They have (supposedly) 3M Betfair sports betting customers, some of whom could theoretically be attracted to financial betting. These are the customers that LCG is able to obtain without any marketing effort on their part. Betfair just put up some money for advertising and opening bonuses, but other than that, take no part in the operation. If the customer happens to win, they still don't lose, because they are not taking the trade, so it's just a nice steady income stream for them. I assume the situation is similar for other White Label partners.


Does this stack up? It is partly backed up by the LCG annual report which talks of paying commissions to its White Label Partners and also the advantages of the White Label client acquisition model to LCG.

So the chances are that any monies I have deposited, and the total of my account is sitting in LCG's coffers, not Tradefair/Betfair's. So if I have a CS account with money in it, and a Tradefair account with money in it, if LCG goes bust, I would only get one lot of £50k in compensation, maximum, not two (I guess), supposing I had that much money in the accounts.
 
tar said:
as montmorencyt2w said same guys answered my emails
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It's years ago now, but I think the initial account acceptance mail came from the same person, but later correspondence went to different addresses and phone numbers. Also, I remember asking a specific question about one white label's platform in relation to the others (when they all had different spreads) and the person concerned didn't know anything about it. Or maybe pretending they're separate is just part of the conspiracy?:)
 
Ross Spur said:
It's years ago now, but I think the initial account acceptance mail came from the same person, but later correspondence went to different addresses and phone numbers. Also, I remember asking a specific question about one white label's platform in relation to the others (when they all had different spreads) and the person concerned didn't know anything about it. Or maybe pretending they're separate is just part of the conspiracy?:)
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It is not a conspiracy , they can have different spreads i think , look they all have the same physical address :

12 Appold Street
London
EC2A 2AW
 
What comentators must remember is that they are (generally) the best informed of all the SB traders. They know where to shop around and where the best rates/margins/spreads etc can be found.

White label business is just a skin on the front of our trading platforms. Our White Label partners decide the spreads they wish to quote and LCG complies. It is easier if you think of Capital Spreads as a WL of LCG as well. LCG markets its own product (Capital Spreads) and our WL partners market theirs. We pay our partners a revenue share on the business they bring in.

To enlighten people slightly over the term WL. If you insure your car and search on 'confused' or the 'meerkat' chaps you will get a long list of searching 160 or 200 quotes. In reality there are only about five or six real underwriters. All of the names that you see are just brand names of one or another of the underwriters.

In the SB market there is one 'big beast' , three/four mediums, tow/three smallish and about six or seven tiny.

As per CS clients are always looking for something 'new' but in reality they will always trade in the major markets (plus a few favorites). Capital Spreads platforms provide really tight prices across the board, the lowest margins you will find virtually anywhere and miserly financing charges for when you hold a longer term postiion.

We believe that CS is still the best value out there and the speed and reliability of our platforms makes for a professional experience for our retail clients. Searchers for new product might want to look at the charts on our demo platform, these are in testing (which is why they are on the demo) but the functionality is truly great and includes back testing, email/sms notification, and better tick data than that on our current live offer.

Simon
 
capitalspreads said:
White label business is just a skin on the front of our trading platforms. Our White Label partners decide the spreads they wish to quote and LCG complies. It is easier if you think of Capital Spreads as a WL of LCG as well. LCG markets its own product (Capital Spreads) and our WL partners market theirs. We pay our partners a revenue share on the business they bring in.
Simon
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Simon, are you sure about this? Dealingdesk had 2 point spread on the Dow and 1 point spread on the Nasdaq. At the time CS had 3 point spread on the Dow and 2 point spread on the Nasdaq. Suddenly after quite some debate on this thread Dealingdesk changed the spread of the Dow and the Nasdaq to be in line of the spread of CS. Dealingdesk was "stealing" clients from CS due to lower spread (less profit for CS). Since this incident Dealingdesk have the same spread as CS. Please correct me if I am wrong.
 
gle101
dealing desk was on a different platform to CS. When the two were merged into the same platform CS came down to the DD spreads. Not sure about the nasdaq.. to be honest hardly anybody trades it so we do not focus much on its value. Clients tend to trade either the Dow or S&P.

Oddly enough DD did not actually nick any CS clients (or not enough for us to even bother counting), which rather ruined our arguments over "the spread" being all important !

Simon
 
capitalspreads said:
gle101
dealing desk was on a different platform to CS. When the two were merged into the same platform CS came down to the DD spreads. Not sure about the nasdaq.. to be honest hardly anybody trades it so we do not focus much on its value. Clients tend to trade either the Dow or S&P.

Oddly enough DD did not actually nick any CS clients (or not enough for us to even bother counting), which rather ruined our arguments over "the spread" being all important !

Simon
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Ok I understand, thanks a lot.
 
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