CMC Markets - 'Flash Crash' Spread Manipulators

[The Baptist]

CMC Markets - 'Flash Crash' Spread Manipulators

Had a stop I trailed up on Tullet Prebon TLPR.

On 24th Sept 2010 Friday passed I was stopped out at 283.71

The trade as per the LSE and every other platform I run was 390.1 at open 0800 and low for the day.

At 0900:45 when they stopped me out The Share was trading at 390.90 consistent with eSignal, ADVFN, Saxo Platform and all my other SB a/ccs.

Also with their spread however but for 3 sec's 0900:45-48 sec's it dropped straight 384.0 no levels in between, then it miracleously rebounded straight back to the current Underlying at 390.9, it traded at no levels in between.

There was no news, the share was very stable and gradually trading up from the open.

The average spread was 1.3 to 1.5 pence in most instances ie example 395.5 - 396.9 Sell/Buy.

I wonder what gave them the frighteners for 1 sec that they recovered from within another second only to return to actual underlying a second later - apart from my stop on an upswinging day that is.

I have always known these guy make there own spread around the market and can'bias' it one way or another and usually keep stops deep on high volume shares (FTSE250 stock).

But this fish was so brazen, it closed at 407 today, maybe they got drift of the pending upswing.

Watch and see their spread timeplan they provided, without explanation of this straight drop 1.8% by the way?

Needless they refuse to explain dealer behaviour and explain all spreads are their perogative - Please realise but only for the very heavily traded shares the relationship with underlying and actual spread maybe incidental at times.

Here is the short 'Flash Crash' Clip

http://www.youtube.com/watch?v=ZIrYACf8ZFM

 

[The Baptist]

Dear ,
Thank you for contacting CMC Markets. As stated in our Order Execution Policy - Chapter 1, para 2 - 'The Prices of the CMC Products are generated electronically by the platform. As such, the Prices at which you open and close Bets are exclusive to the platform and should not be compared to prices you may see elsewhere.'

'Loved this bit in Bold'

Unfortunately I am unable to provide you data from other sources. The following is a screen shot of the prices published by our platform (per second) between 09:00:00 to 09:00:59 on the 24/09/2010. Please note the price circled in red at the time your order was executed.

If you feel that your complaint is still not fully resolved, please contact us as soon as possible for further assistance.

Should all internal avenues be exhausted and you remain dissatisfied, you are able to escalate it to the Financial Ombudsman Service (FOS):

The Financial Ombudsman Service
The South Quay Plaza
183 Marsh Wall
London
E14 9SR

If you require a copy of their explanatory leaflet please go to the following address or alternatively we can put a copy of the leaflet in the post for you:

http://www.financial-ombudsman.org.uk/publications/consumer-leaflet.htm

If you do not respond within 8 weeks your complaint will be automatically closed.

Regards,

Hafidh
Customer Management Team (London)

Tel: +44 (0) 20 3003 8588
Email: [email protected]
Website: www.cmcmarkets.co.uk

 

[The Baptist]

here is that amazing spread zigzag of nigh on 2%...They recovered Mind!

 

[The Baptist]

here is that amazing spread zigzag of nigh on 2%...They recovered Mind!

I know not new to many sceptics here... but the clearest recorded bang to rights bust I have seen.

The LSE data - is empirical and used for all tax enquiries etc..

I quote:

eDOL is the definitive legal record of daily trading activity on the London Stock Exchange.

Each individual trade and volume is recorded together with the official closing quotation. Also included are SEDOL and ISIN codes as well as full benefits (dividend and interest) details.

eDOL is widely used by customers for: valuations, probate research, price monitoring and confirmation, checking stock eligibility for ISAs.

If you interested I will post the purchased eODL for the 24th shoot to page 137 for Tullet Prebon ..long story short at 0800 open was lowest trade of day 390.1 at 0900:45 was 390.9 and heading up... never went lower only up from there.

 

[The Baptist]

38 quid cost if ever required by you guys, its the final word on all trade with times. page 137 for Tullet Prebon

 

[The Baptist]

Prices of the CMC Products are generated electronically by the platform

..either false or a worry if they get HFT tools - every split nanosecond of light volume could see super computers engineering beneficial 'micro crashes' for a few seconds Retail mugs will be ones scalped...

 

[pboyles]

That's quite an evidence gathering job you did there. Lets see how long it takes before you get attacked by some of their backers, either that or your thread will mysteriously disappear.

 

[The Baptist]

best get a quick screen shot then before the underworld forces make further happenings occur.

 

[bangkoker]

Interesting.

 

[N Rothschild]

Maybe try trading in the real market not bucker shops?

 

[shadowninja]

What's the problem exactly?

Dear CMC

I would like to close my account. Please write a cheque with the balance of my account made payable to ShadowNinja.

Ta,

The Baptist

Job's a goodun. I've never had problems with IG, btw.

 

[N Rothschild]

this thread is almost amusing, you sound somewhat suprised you got ripped off by a spreadbet company?

 

[FX Bandit]

this thread is almost amusing, you sound somewhat suprised you got ripped off by a spreadbet company?

They're not all bad all of the time. I can't complain about IG either, to be honest.

 

[PualoP]

Unfortunately you're only looking at traded price. When your order got triggered, all CMC did was give you the best price available in the underlying market. No conspiracies, just bad luck.

 

[leonarda]

Baptist, as PualoP has nicely pointed out the underlying spread widened like it quite often does for stocks at 8am and 9am as orders go through. You need to be aware of that, I never use close stops spread betting, my automated stops are a good 8% away. but I must admit makes short TF trading rather tricky...but i'm in it for the medium term.

 

[The Baptist]

Unfortunately you're only looking at traded price. When your order got triggered, all CMC did was give you the best price available in the underlying market. No conspiracies, just bad luck.

As compared to Rothschild - Of 'Gold will never get to $1300 you gold bug fool' fame and many other miscellaneous non-intellectual contribution, apart from bellyaching from the bleaches. This looks like an interesting & Potentially helpful post..PualoP, thanks for it..

So if I understand you right, whilst last trade was 390.9 - because there was a change in the bids at that point and no other bids of 390 or there around were in the system, ie. say there was a period for 3 sec's that the bid demand was pulled all the way down to 384.0 - and was reorganised before being replaced, that saw market depth drop to a 384.0 best bidder for 3 secs and that triggered the stop. inspite of no volume being traded at lower level their 'electronic spread' dived down for that period?

Surely if we pulled all bids by arrangement on a particular share for 3 sec's the spread could not be accepted as near zero? With out any trade at near zero or any volume underlying this?

Is that in effect what you are saying?

Apprieciate your response -

 

[PualoP]

As compared to Rothschild - Of 'Gold will never get to $1300 you gold bug fool' fame and many other miscellaneous non-intellectual contribution, apart from bellyaching from the bleaches. This looks like an interesting & Potentially helpful post..PualoP, thanks for it..

So if I understand you right, whilst last trade was 390.9 - because there was a change in the bids at that point and no other bids of 390 or there around were in the system, ie. say there was a period for 3 sec's that the bid demand was pulled all the way down to 384.0 - and was reorganised before being replaced, that saw market depth drop to a 384.0 best bidder for 3 secs and that triggered the stop. inspite of no volume being traded at lower level their 'electronic spread' dived down for that period?

Surely if we pulled all bids by arrangement on a particular share for 3 sec's the spread could not be accepted as near zero? With out any trade at near zero or any volume underlying this?

Is that in effect what you are saying?

Apprieciate your response -

With CMC yes, however the execution policy differs from firm to firm. I have had this happen to me many a time with IG, Capitals Spreads and City Index and their execution policy is to only use traded price becuase of the very fact you highlighted above about people being able to pull bids/offers and manipulate the market. So in this case I would not expect you to have been executued if you were trading with those firms.

Unfortunately, CMC are an altogether different beast....

 

[The Baptist]

Baptist, as PualoP has nicely pointed out the underlying spread widened like it quite often does for stocks at 8am and 9am as orders go through. You need to be aware of that, I never use close stops spread betting, my automated stops are a good 8% away. but I must admit makes short TF trading rather tricky...but i'm in it for the medium term.

If this turns out a case of innocent electronic kit chasing a periodic gap in Bid support on a FTSE 250 share, then certainly your comments on ST trading are highly valuable and accurate.. My original stop is typically far away ie..it was 360 most of the time and the trade was more position than scalp.

I had a period where I was a bit concerned with Equities generally and tightened harder than typical, but well below the low of the last weeks trade.

This experience is inherently valuable to any rookie SB traders, as I rarely get caught like this.. as I don't do Lightly traded Stocks with SB's ever and typically have 'position distance' stops..

I still consider all bids from 384 - 390.9 last trade being pulled on a FTSE250 stock pretty darn unlucky, esp when in the first 2 hours of UK trading session, even for 3 sec's. It could not have all been the same buyer or broker filling the market depth in that range.

Anyway more experience the cost was immaterial to me but I was thinking of introducing clients who are on small Grubstakes to strategy follow - and felt 'our dont tell me these guys are bent..' It may not be the case.

Still find the spread shrink wrapping down with out trade or volume a questionable hypothesis, but then again..

 

[The Baptist]

Maybe try trading in the real market not bucker shops?

I do all my big scale trading that involves Equities on a number of full broker platforms that don't involve Spreads, this was a small test of a new SB platform for the benefit of potentially utilising it for small investor clients...requiring leverage in a familiar structure (Namely Spreads).

SB is culturally understood and accepted in the UK, whether you wish to refer to them or not as Bucket shops.

Where your contribution as in many other interactions we have had - amount to 'you are a schmuck get a real trading relationship going' or 'all certain types of companies are thieves', I would like to invite you to curtail your contributions and let the adults interact. There is detail in this that is clearly over your head, Have a nice day.

 

[arabianights]

to check... do they quote a fixed spread on this?