arabianights
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no problem PC.
What I'm trying to get at is that i don't think the point I've raised has anything to do with your platform/product offering.
Let's take an example.
An IB comes onto your dealers and says that each of their 100 underlying clients wants exposure to 1m shares of Vodafone VOD LN ( I know - you wish ), and each want to put cash up front and pay 0% funding.
that's a combined notional position of c£180m.
now i don't know what you charge, but let's say for a decent IB it's 5 basis points in and out.
so on this trade, you are grossing £180k in spread.
now obviously you can't run this naked, so either you tie up £180m which you don't have, thereby incurring finance charges from your bank (assuming you have that depth of facility with them) to cover the position, or you hedge using CFDs with your broker, thereby incurring funding. i imagine you probably pay c0.5% over 1mlibor, let's say 1.1% total.
now this is a cost to you of c£200k per annum that you're not recouping. in addition you are probably paying away 1-2bps in comm on the cfd, let's say 1, so that's another £36k round trip.
if the clients decide to run this position for 2 years your P&L would be -£256k - not accounting for the cost of having the infrastructure in place to handle the business!
THIS is what i mean about the product not being viable on the scale arabian suggested.
no amount of 'next gen' developments gets around this, but as ever if i am wrong i would love to be corrected.
But he would have the £180m... because the client would have had to deposit it before putting on the trade.
My other "revolutionary" spread betting idea: something like a FOBT. Let punters stick 10p a point on ftse in ladbrokes using something next to the roulette machine.... obviously stops would have to be guaranteed. It's workable, although regulatory issues may make it impossible...