Best Thread CMC Markets owner answers your questions

[Ross Spur]

It really baffles me why a spread-betting company would bother to go through the hassle and expense of developing a trading platform when all they need to do is provide an API / interface to their back-end for a popular trading platform such as NinjaTrader to connect to. The platform provided by CMC is more like a toy with bling in comparison. Why is there not a single Spreadbetting firm which has the sense to support NinjaTrader, yet there are nearly fifty regular brokers that do?

Could be because they have no control over it, ie, they can't intercept clients who they think are losing them money and put them on dealer referral, or introduce designer slippage.

 

[gle101]

I don't think this is the main problem. SB operate with fixed spread, so there is an inbuilt technical problem of swiftly converting the underlying asset to a spread bet price quote, and this on a huge number of instruments. It is difficult to get a platform like MT4 to work with SB (although SLM is doing a good job of it). Whatever platform they use they can manipulate clients and price feed with back office administrative parameters, if they so wish. Most of the SB are today performing well and there has been a gradual shift in the right direction of treating clients fairly. Increased competition and regulation such as MiFID have been the main cause for this change in attitude, this in combination with more demanding and sophisticated clients makes me assure we are looking at a bright future for SB.

 

[Black Swan]

Could be because they have no control over it, ie, they can't intercept clients who they think are losing them money and put them on dealer referral, or introduce designer slippage.

Ross, I reckon this Q. belongs in the spread-betting myth/reality thread tbh...I'll bet (pun intended) as you get more experienced and (hopefully) successful the *trader paranoia* will evaporate..

 

[PC at CMC Markets]

Hi Shadowninja

many thanks for your blog and points taken on board.
regards peter

It's not so much running multiple applications but multiple instances of Flash. While I'm trading, I'm not just running trading software. I'll be surfing the web, running Flash streaming music sites, viewing YouTube videos etc. One issue I have when dabbling on Betfair is that Betfair is Flash-crazy. If you view too many matches, my computer starts swapping like mad. Fortunately, I now use A Geek's Toy (think DMA ladder for betting exchanges) and this means I need to view far fewer Betfair pages. If you read that article in my previous post, you will see that Steve Jobs doesn't like Flash, either. In fact, he states that the main reason Macs crash is because of Flash.

Anyway, I hope my post is of use to you.

 

[Luc.Chase]

I don't think this is the main problem. SB operate with fixed spread, so there is an inbuilt technical problem of swiftly converting the underlying asset to a spread bet price quote, and this on a huge number of instruments. It is difficult to get a platform like MT4 to work with SB (although SLM is doing a good job of it). Whatever platform they use they can manipulate clients and price feed with back office administrative parameters, if they so wish. Most of the SB are today performing well and there has been a gradual shift in the right direction of treating clients fairly. Increased competition and regulation such as MiFID have been the main cause for this change in attitude, this in combination with more demanding and sophisticated clients makes me assure we are looking at a bright future for SB.

Introducing extra spread to the pricing to cover the speadbetting business model is not a problem. But I had not realised that there was a spread betting firm offering use of Metatrader as the trading platform. Good to know, but my strong preference would be for NinjaTrader 7.

 

[gle101]

Introducing extra spread to the pricing to cover the speadbetting business model is not a problem. But I had not realised that there was a spread betting firm offering use of Metatrader as the trading platform. Good to know, but my strong preference would be for NinjaTrader 7.

I agree it is not a problem, if you din't take in consideration the extra time it takes. We are talking about milliseconds here. The servers and push technic that have to be used for this operation have to be very sophistacated. Many SB today have very narrow spread (not so for CMC, they have to improve in this area), even better than the real markets at times, so this fact onto itself can create a problem for the SB.

 

[Luc.Chase]

Maybe PC can shed some light on the decision making process in deciding not to offer connectivity support for other trading platforms. I do understand that have a very good, sexy, unique platform of your own can improve your marketing (if you can ever really do a better jod than those dedicated to that task) but why not offer the option to use industry leaders such as NT7 as well?

 

[blairsf]

Peter, are you planning to include trading of smallcap shares on nextgen in the future (say down to £50M?) as it currenly only seems to have the UK350 shares.
Your marketmaker platform still has smallcap shares on it, but the marketmaker platform prices are often wider than the market bid/ask by some distance even before you add in your spread.
I have previously spreadbet significant volumes of smallcap shares with you in the past but only over the phone where your pricing was OK.
However reciently CMC seem to have stopped this (labour intensive?) phone based spreadbetting (with access to market type prices).
So are you, as a company, moving away from offering competitive Smallcap share spread betting (leaving the way for IG Index or MF Global Spreads etc..) in this area ?

 

[PC at CMC Markets]

Hi Luc.Chase
Baffle no more let me try explain some of the reasons. Please accept this explanation as a general explanation as the subject is quite complex and full of regulations around spread betting but anyway let me explain first and come back to me if you need to.

Firstly, it is important to understand that if you want the tax benefits of spread betting then you have to open a bet not a financial trade. In other words you cannot deal on exchange and say you are betting.
You need to bet with a counter party (book makers licence holder) so they are the counter party to your trade. In effect when you bet you are betting with a book maker even though you are betting on a financial product.
Because there is no cgt on your winnings the government have to collect their tax some where along the line so they charge a levy or performance fee, which is passed onto the betting client and this has to be built into the spread bet price, in other words you pay the tax on the stake not on your winnings. Bit like on course and off course horse racing. we have to build this into the spread bet price for you to bet on.
In addition because you are betting with a counter party there are for example, clearing fees and market spreads that have to be built into the bet spread. We as spread betters have to quote you a price with all the costs, eg tax etc built into the spread and deliver to you a price to bet on. therefore we have to build our own internet betting platform for you to place your bets. remember you are not buying financial products, you are betting with a book maker.

Also because spread bet clients do not always transact in marketable amounts we have to deliver a price on a platform to you as opposed to a platform that will execute on an exchange.

I can assure you that if you see our platform as a toy it is a very expensive toy because we have to always remain competitive and transact real time. Competition is the best way to keep spread betters competitive and deliver really good technology. If you look at spread bet spreads now they are very competitive and we have to take all the above factors into account. when you trade on exchange the additional costs are take out, eg stamp duty, clearing fees, brokerage. when you trade on exchange you take the spread and the rest is added on. with us it is all built in because you are betting.
we transact thousands of transactions a day across 4000 real time products and the pricing has to be spot on otherwise we would lose business quickly. We need our own platform to deliver all of the above.

That in a nutshell is why we have to build our own platform and why we basically cannot use ninjatrader etc. hope that helps. best wishes peter.

ps please dont tell my team of 250 developers and technicals that they have been working on a toy for the last two years. it will depress them this side of christmas.

It really baffles me why a spread-betting company would bother to go through the hassle and expense of developing a trading platform when all they need to do is provide an API / interface to their back-end for a popular trading platform such as NinjaTrader to connect to. The platform provided by CMC is more like a toy with bling in comparison. Why is there not a single Spreadbetting firm which has the sense to support NinjaTrader, yet there are nearly fifty regular brokers that do?

 

[PC at CMC Markets]

hi blairsf
no we are going to offer small caps and they should be loaded in January. we will be loading approximately around 3000 instruments in January which will include small cap shares as well. almost there with next gen.

tks peter

Peter, are you planning to include trading of smallcap shares on nextgen in the future (say down to £50M?) as it currenly only seems to have the UK350 shares.
Your marketmaker platform still has smallcap shares on it, but the marketmaker platform prices are often wider than the market bid/ask by some distance even before you add in your spread.
I have previously spreadbet significant volumes of smallcap shares with you in the past but only over the phone where your pricing was OK.
However reciently CMC seem to have stopped this (labour intensive?) phone based spreadbetting (with access to market type prices).
So are you, as a company, moving away from offering competitive Smallcap share spread betting (leaving the way for IG Index or MF Global Spreads etc..) in this area ?

 

[PC at CMC Markets]

Hi luc see above explanation to your earlier question.
thanks peter

Maybe PC can shed some light on the decision making process in deciding not to offer connectivity support for other trading platforms. I do understand that have a very good, sexy, unique platform of your own can improve your marketing (if you can ever really do a better jod than those dedicated to that task) but why not offer the option to use industry leaders such as NT7 as well?

 

[PC at CMC Markets]

Hi gle101
good point and noted this end.
I do have to comment on your spreads quote.
you have to separate head line spreads to consistently good spreads. I believe over a consistent period of time our spreads are the best. doesn't matter what the spreads are if the markets are volatile and your ticket gets cancelled. with us we fill every ticket and spreads are consistent.
having said that our spreads are going to improve over next month or two so watch this space.
thanks peter

I agree it is not a problem, if you din't take in consideration the extra time it takes. We are talking about milliseconds here. The servers and push technic that have to be used for this operation have to be very sophistacated. Many SB today have very narrow spread (not so for CMC, they have to improve in this area), even better than the real markets at times, so this fact onto itself can create a problem for the SB.

 

[PC at CMC Markets]

yes see explanation below
tks peter
QUOTE=Luc.Chase;1356662]What some of us really want is to be able to use a robust platform of our own choosing such as NinjaTrader 7. Is there a particular reason why CMC would not provide an option to use NinjaTrader?[/QUOTE]

 

[PC at CMC Markets]

hi ross
come on it is christmas. tomorrow is my last day in the office having not had holiday this year. can you say something positive for once.
Peter

Could be because they have no control over it, ie, they can't intercept clients who they think are losing them money and put them on dealer referral, or introduce designer slippage.

 

[scose-no-doubt]

PC, at the moment a lot of this is yesteryear experience and/or conjecture and opinion with little substance and if the point of this thread really was to prove you actually give a sh1t and believe in your product(which I believe to be the case) rather than just pasting your name over a forum for rankings, you have to admit it's not going your way at the moment
Why not give us (new/potential customers) a no nonsense, no small-print, no boll0cks, 30 day £XXX risk-free, deposit claw-back type offer to try out your system. If it your platform and services really are any good I'm sure people will let it be known.

 

[lovejoy21]

Hi gle101
good point and noted this end.
I do have to comment on your spreads quote.
you have to separate head line spreads to consistently good spreads. I believe over a consistent period of time our spreads are the best. doesn't matter what the spreads are if the markets are volatile and your ticket gets cancelled. with us we fill every ticket and spreads are consistent.
having said that our spreads are going to improve over next month or two so watch this space.
thanks peter

Peter,

Is there anyway of obtaining a sample of what your average spreads are across a range of FX pairs? I know your spreads are variable but I couldnht find anything on your website about typical / average spreads or max / min one could expect?

Thanks

 

[lovejoy21]

Hi Luc.Chase
Baffle no more let me try explain some of the reasons. Please accept this explanation as a general explanation as the subject is quite complex and full of regulations around spread betting but anyway let me explain first and come back to me if you need to.

Firstly, it is important to understand that if you want the tax benefits of spread betting then you have to open a bet not a financial trade. In other words you cannot deal on exchange and say you are betting.
You need to bet with a counter party (book makers licence holder) so they are the counter party to your trade. In effect when you bet you are betting with a book maker even though you are betting on a financial product.
Because there is no cgt on your winnings the government have to collect their tax some where along the line so they charge a levy or performance fee, which is passed onto the betting client and this has to be built into the spread bet price, in other words you pay the tax on the stake not on your winnings. Bit like on course and off course horse racing. we have to build this into the spread bet price for you to bet on.
In addition because you are betting with a counter party there are for example, clearing fees and market spreads that have to be built into the bet spread. We as spread betters have to quote you a price with all the costs, eg tax etc built into the spread and deliver to you a price to bet on. therefore we have to build our own internet betting platform for you to place your bets. remember you are not buying financial products, you are betting with a book maker.

Also because spread bet clients do not always transact in marketable amounts we have to deliver a price on a platform to you as opposed to a platform that will execute on an exchange.

I can assure you that if you see our platform as a toy it is a very expensive toy because we have to always remain competitive and transact real time. Competition is the best way to keep spread betters competitive and deliver really good technology. If you look at spread bet spreads now they are very competitive and we have to take all the above factors into account. when you trade on exchange the additional costs are take out, eg stamp duty, clearing fees, brokerage. when you trade on exchange you take the spread and the rest is added on. with us it is all built in because you are betting.
we transact thousands of transactions a day across 4000 real time products and the pricing has to be spot on otherwise we would lose business quickly. We need our own platform to deliver all of the above.

That in a nutshell is why we have to build our own platform and why we basically cannot use ninjatrader etc. hope that helps. best wishes peter.

ps please dont tell my team of 250 developers and technicals that they have been working on a toy for the last two years. it will depress them this side of christmas.

Good answer, well explained.

Presumably the only way round this would be to only offer 'bet' sizes that are 'available' on the underlying exchange e.g. for FX pairs starting bets of the equivalent of 1.0 lots etc. i.e. much ike Pro-spreads do - they use currenex liquidity on FX pairs and add there own spread to cover their costs (i.e. they are STP) but you can only bet in standard whole lot sizes i.e. 1.0 (which is the equivalent of $10 per pip for EUR/USD for example) and thus this approach would really only be aimed at the serious spreadbetter with a decent account size and not the mass market.

 

[Black Swan]

Why not give us (new/potential customers) a no nonsense, no small-print, no boll0cks, 30 day £XXX risk-free, deposit claw-back type offer to try out your system. If it your platform and services really are any good I'm sure people will let it be known.

LOL like you'd use it anyway, you'd still just sit there biting your finger nails saying "should I, shouldnt I?"..Anyway, get back inside Dante's trading room...sit in the corner with the hat on, or get down to Elizabeth Duke and buy yourself some 90% pure gold...there's a good lad..

 

[Ross Spur]

Ross, I reckon this Q. belongs in the spread-betting myth/reality thread tbh...I'll bet (pun intended) as you get more experienced and (hopefully) successful the *trader paranoia* will evaporate..

Nothing to do with paranoia. If you look back through the archives you'll find that a well-known trading platform does have the facility to dial in slippage, and it's been admitted that some clients are flagged and put on dealer referral. (And FYI I've been SB-ing since 2001.)

 

[PC at CMC Markets]

Hi lovejoy
if you select an instrument and you can put up a spread chart for that instrument
this will give you our real time spreads throughout the day real time.
tks peter

Peter,

Is there anyway of obtaining a sample of what your average spreads are across a range of FX pairs? I know your spreads are variable but I couldnht find anything on your website about typical / average spreads or max / min one could expect?

Thanks