Best Thread CMC Markets owner answers your questions

[PC at CMC Markets]

Welcome back lovejoy havent seen you around for couple of weeks. Hope you had nice Christmas and didnt put on four pounds like I did.

Thanks to you and others for putting this info up about tax on spread betting. I have to be careful what I say because I am not allowed to give tax advice but I think your assessment is spot on.
However individual should make sure of their own tax status. sorry just covering my a++e

cheers peter

I don't why people come to this conclusion...gambling is gambling it's black and white...whether it's your sole source of income does not make any difference to whether you profits are taxed or not. Gambling profits in the UK are tax free regardless of how much you profit you make or whether it's your sole income or not.

When spreadbetting might be construed as trading is when it as part of an organised activity to make profits out of the gambling public ie. if you are providing a service to the public for a fee using your exepertise.

See here for starters then follow the links, if in doubt speak to an accountant who specialises in this area of tax.

http://www.hmrc.gov.uk/manuals/bimmanual/BIM22017.htm

 

[gle101]

ha ha ha ha you will say anything to get information.
I suppose you can always ask Goldman Sachs about the size of this business after all they bought ten percent in 2007 and they are not exactly in the small league.

by the way have you visited our Stockholm office yet, I will ask them to put the red carpet out for you.

cheers pc

Simon from Capitalspreads told us, nothing secret about it. Transparent and open is the keywords of today.

Red carpet, well you do anything to get a good post from me. Thanks a lot, nice gesture (skip the red carpet will you), I might take you up on that offer someday.

 

[Black Swan]

Is this your way of admitting that you trade unprofitably off small timeframes? I could have sworn I saw you post some successful trades on small timeframes from someone like FXCM. I guess I must be delusional about those trades.

I hope by your post what you mean is that there are better alternatives to trade on for small timeframes, rather than it can't be done. Because it can definitely be done.

<sigh> I do wish people would simply read posts..I can trade profitably on most time frame, however, anything other than swing and or position trading, using SB as your route to market, is swimming against the tide. Once you get down to 1-3 minute TFs it's quite frankly madness to use an SB firm (if trading FX). You need, for example, 0.5 spread from FXCM through their active trader account if you are playing off the small TFs. Paying a 2-3 pip spread, + the lag in fill (the sb firms *cut*) and the cost on exit ensures you're behind the curve on too many trades. You are (if you have to pay for a stop as well) paying up to 5 times more than you need to.

If you trade GBP/CHF or GBP/JPY you could be 8-10 pips offside vis a vis DMA/ECN for no reason other than many SB firms are simply not set up to *help* you take money out of the market on smaller TFs. Now on the smalls if you're aiming for 20 pips with a 20 pip stop...well you work it out. That's not their (the SB firm's) fault per se, it's quite simply not their business model, it's not how they're set up. I've stated this before, don't hate the player and hate the game play the player and play the game.

Re. the trades I've posted up, I've never been below a half hr TF for my decision making for a while. My opinion (fwiw) is anything below that is a waste of my time. I don't agree with the James 16 thread ethos; "anything below the daily is noise" but I can see his point and I like giving back as little to the market as possible.

BTW, I often used to see you lurk on the live thread when I posted up trades, why not trade with the guys there, it's looking a bit skinny of imput atm.

 

[Ross Spur]

<sigh> I do wish people would simply read posts..I can trade profitably on most time frame, however, anything other than swing and or position trading, using SB as your route to market, is swimming against the tide. Once you get down to 1-3 minute TFs it's quite frankly madness to use an SB firm (if trading FX). You need, for example, 0.5 spread from FXCM through their active trader account if you are playing off the small TFs. Paying a 2-3 pip spread, + the lag in fill (the sb firms *cut*) and the cost on exit ensures you're behind the curve on too many trades. You are (if you have to pay for a stop as well) paying up to 5 times more than you need to.

If you trade GBP/CHF or GBP/JPY you could be 8-10 pips offside vis a vis DMA/ECN for no reason other than many SB firms are simply not set up to *help* you take money out of the market on smaller TFs. Now on the smalls if you're aiming for 20 pips with a 20 pip stop...well you work it out. That's not their (the SB firm's) fault per se, it's quite simply not their business model, it's not how they're set up. I've stated this before, don't hate the player and hate the game play the player and play the game.

Re. the trades I've posted up, I've never been below a half hr TF for my decision making for a while. My opinion (fwiw) is anything below that is a waste of my time. I don't agree with the James 16 thread ethos; "anything below the daily is noise" but I can see his point and I like giving back as little to the market as possible.

BTW, I often used to see you lurk on the live thread when I posted up trades, why not trade with the guys there, it's looking a bit skinny of imput atm.

Weren't you saying that a point or two in the spread didn't make any difference a few pages back?

 

[Shakone]

Peter I agree that execution is very important. And some companies can make it appear to be a better spread, but actually when all things are taken into consideration it is worse. However, I am able to trade with a 1 pip spread on EURUSD, and haven't had any problems with execution. So to move to a company which has a spread of typically 1.6pips + a good execution doesn't make sense. Anything more than 2 points on the DOW is also too much. Good execution is something to be expected, and I think something that everyone will have to provide in the future. I do like your precision pricing. I also like your old fashioned way of referring to posts as blogs

Very glad to hear there might be a nice calendar feature coming up. Some other questions from my experience on the demo platform. Does it have floor trader pivots as an overlay on the charts? I might have missed these somewhere. If they do, is the close calculated on the daily (midnight) close, or the close of US trading?

One thing that I found a little frustrating was the actual interface. It looks pretty, but when you open up a new window, it always open direct centre, which means I have to drag something away to be able to see what I want.

 

[Black Swan]

Weren't you saying that a point or two in the spread didn't make any difference a few pages back?

Let me try this one more time; IMO SB-ers (trading forex, certain commods, metals) should only swing and or position trade. On that basis you don't have to be that spread sensitive...If you are day trading FX, (perhaps trying to take 20 pips out of the market off smaller TFs with 20 pip risk), then IMO you should not use SB unless your tax advisor/accountant suggests it's an effecient way for you to minimise your tax liabilities and or (attempt) to avoid tax...It's (SB-ing FX) at least 100% more expensive per trip/trade than DMA/ECN.

 

[lovejoy21]

Let me try this one more time; IMO SB-ers (trading forex, certain commods, metals) should only swing and or position trade. On that basis you don't have to be that spread sensitive...If you are day trading FX, (perhaps trying to take 20 pips out of the market off smaller TFs with 20 pip risk), then IMO you should not use SB unless your tax advisor/accountant suggests it's an effecient way for you to minimise your tax liabilities and or (attempt) to avoid tax...It's (SB-ing FX) at least 100% more expensive per trip/trade than DMA/ECN.

I totally agree with this, I did my own spread analysis (assuming instant fills - and lets face it an ECN is always gonna have better execution than a market maker) and came to the same conclusion - that on the whole you are better of trading via an ECN than trading forex using spreadbetting if you are a day trader (dependant on your tax bracket and how efficient you are at making your investment vehicle as efficient as possible).

 

[PC at CMC Markets]

Hi Lovejoy and Blackswan.

I would say that your analysis is probably correct about spread betting on forex. I have never done the analysis myself but there is a lot of truth in what you say. However, I think that this type of analysis does not apply to our next gen platfom. I know you are thinking, I knew he would say that. But if you look at my previous blogs sorry posts you will see that we have set up our next gen platform as a high frequency trading platform built by the ex-head of Goldmans who built their ready platform (along with others). The team that has built next gen for spread bet (and cfds) have built it in a way that we can compete with exchanges and ECNs. We see Exchanges and ECNs as the competition, not other spread bet firms. Obviously at the moment our spread bet spreads are not as tight as an ecn for forex but then we have to build into the spreads the spread bet tax and in non forex products exchange fees, commissions etc. It has to be an all inclusive price where as ecns and exchanges offer a net price with commissions etc added on.

I am here posting these messages because I want to get across to the spread betters that next gen spread bet is a different level. It is not about head line spreads, it is about execution, technology and precision pricing. I believe that we are there with the execution technology but need to tighten up the commercials a bit with tighter spreads and that is coming. It is all about getting the technology right for tighter spreads on no requotes, no fill or kill no ticket time outs, no dealer referrals, filling the ticket every time. some more work to be done but it is coming and there will be tighter spreads.

I have to say that i do not believe that the spread bet industry will exist in it's present form, in the next couple of years. Competitors will have to follow what we are doing because of the higher standards of execution, precision pricing, no requotes etc. and tighter spreads. I have looked at all competitors technology, across all the products and I see no body with the technology that we have developed. It is very high level and will get better. The aim for all spread bet firms is to compete with ecn's and exchanges and make it viable to trade any financial product as a spread bet without pricing latency, execution latency, precision pricing etc. That is achievable but it is only achievable through technology. If you do not have the technology then you will not be able to compete with ecns, exchanges and CMC Markets. We made that commitment over one year ago and we are now delivering the technology that will lift the spread bet industry. it is still early days but i believe one day all spread betters will work this way. you heard it here first.

cheers peter

I totally agree with this, I did my own spread analysis (assuming instant fills - and lets face it an ECN is always gonna have better execution than a market maker) and came to the same conclusion - that on the whole you are better of trading via an ECN than trading forex using spreadbetting if you are a day trader (dependant on your tax bracket and how efficient you are at making your investment vehicle as efficient as possible).

 

[PC at CMC Markets]

hi Shakone
pivot points coming in next release. should be about four weeks

cheers pc

Peter I agree that execution is very important. And some companies can make it appear to be a better spread, but actually when all things are taken into consideration it is worse. However, I am able to trade with a 1 pip spread on EURUSD, and haven't had any problems with execution. So to move to a company which has a spread of typically 1.6pips + a good execution doesn't make sense. Anything more than 2 points on the DOW is also too much. Good execution is something to be expected, and I think something that everyone will have to provide in the future. I do like your precision pricing. I also like your old fashioned way of referring to posts as blogs

Very glad to hear there might be a nice calendar feature coming up. Some other questions from my experience on the demo platform. Does it have floor trader pivots as an overlay on the charts? I might have missed these somewhere. If they do, is the close calculated on the daily (midnight) close, or the close of US trading?

One thing that I found a little frustrating was the actual interface. It looks pretty, but when you open up a new window, it always open direct centre, which means I have to drag something away to be able to see what I want.

 

[PC at CMC Markets]

Hi Gle101
see if you were a client of ours you would be used to red carpet treatment. ha ha

You know how big we are otherwise you wouldnt have put so many posts up here. Are all Swedes this crafty ha ha

have a good day

pc

Simon from Capitalspreads told us, nothing secret about it. Transparent and open is the keywords of today.

Red carpet, well you do anything to get a good post from me. Thanks a lot, nice gesture (skip the red carpet will you), I might take you up on that offer someday.

 

[Physicsman]

Hi PC,

Just a quick question: for commodity products where the underlying futures markets have limit movements, what happens to the spreadbet if a market is at limt up or limit down? Do you still accept both buy and sell trades if the futures market is locked for example limit up?

Thanks!

 

[gle101]

Hi Gle101
see if you were a client of ours you would be used to red carpet treatment. ha ha

You know how big we are otherwise you wouldnt have put so many posts up here. Are all Swedes this crafty ha ha

have a good day

pc

Would you say Sven-Göran Ericksson were crafty, I would say smart, ha ha. I skimmed through the annual report, but can't find anything about no. of SB clients. Impressive figures though. I guess we have to celebrate big time when the first live SB client comes on board giving his/hers report.:clap:

 

[PC at CMC Markets]

Good morning physicsman

Thanks for asking this question it is really good question and I have not been talking enough about our rolling cash commodities enough. By the way rolling cash commodities were the most traded products on next gen for December. Really beginning to see some good business there and talking of spreads as we often do on these posts havent found any sb firm with tighter spreads than us on commodities but no doubt if they are out there somebody will tell me. I should also say that we are the only company that offers rolling cash commodities across so many products. in fact once again I think nobody offers rolling cash commodities, they are normally future commodities. we have built cash commodities for our clients so they can trade them across all markets even when futures are limit up or limit down.

So to answer your question. I loved this question. thanks
Rolling Cash commodities spread bets are always trading with us because the cash markets never go limit up or limit down, in the under line market, even when the futures markets are limit up and down.
In essence cash markets in any products are always trading, the futures markets trade in line with cash (and vice versa) but some futures exchanges impose daily limits. But because we offer the cash markets you can always trade on them.
Hope that helps. commodities business really growing with us on next gen. it is our fastest growing spread bet sector.

cheers peter

Hi PC,

Just a quick question: for commodity products where the underlying futures markets have limit movements, what happens to the spreadbet if a market is at limt up or limit down? Do you still accept both buy and sell trades if the futures market is locked for example limit up?

Thanks!

 

[lovejoy21]

Hi Lovejoy and Blackswan.

I would say that your analysis is probably correct about spread betting on forex. I have never done the analysis myself but there is a lot of truth in what you say. However, I think that this type of analysis does not apply to our next gen platfom. I know you are thinking, I knew he would say that. But if you look at my previous blogs sorry posts you will see that we have set up our next gen platform as a high frequency trading platform built by the ex-head of Goldmans who built their ready platform (along with others). The team that has built next gen for spread bet (and cfds) have built it in a way that we can compete with exchanges and ECNs. We see Exchanges and ECNs as the competition, not other spread bet firms. Obviously at the moment our spread bet spreads are not as tight as an ecn for forex but then we have to build into the spreads the spread bet tax and in non forex products exchange fees, commissions etc. It has to be an all inclusive price where as ecns and exchanges offer a net price with commissions etc added on.

I am here posting these messages because I want to get across to the spread betters that next gen spread bet is a different level. It is not about head line spreads, it is about execution, technology and precision pricing. I believe that we are there with the execution technology but need to tighten up the commercials a bit with tighter spreads and that is coming. It is all about getting the technology right for tighter spreads on no requotes, no fill or kill no ticket time outs, no dealer referrals, filling the ticket every time. some more work to be done but it is coming and there will be tighter spreads.

I have to say that i do not believe that the spread bet industry will exist in it's present form, in the next couple of years. Competitors will have to follow what we are doing because of the higher standards of execution, precision pricing, no requotes etc. and tighter spreads. I have looked at all competitors technology, across all the products and I see no body with the technology that we have developed. It is very high level and will get better. The aim for all spread bet firms is to compete with ecn's and exchanges and make it viable to trade any financial product as a spread bet without pricing latency, execution latency, precision pricing etc. That is achievable but it is only achievable through technology. If you do not have the technology then you will not be able to compete with ecns, exchanges and CMC Markets. We made that commitment over one year ago and we are now delivering the technology that will lift the spread bet industry. it is still early days but i believe one day all spread betters will work this way. you heard it here first.

cheers peter

Hi Peter,

I totaly get what you're saying and I applaud CMC for taking the step into NDD territory and automatic execution plus no-requotes which (requotes, dealer referral, execution delays) are the most frustrating thing for a trader IMO. Unfortunately due to the nature of the SB industry these have been all too common in the past...it's not necessarily the SB industry itself as this has and does occur with market makers in the FX world too, it's jsut that the SB is made up of 95% market makers with dealing desks whereas in the FX world there are a lot of STP, DMA, ECN, NDD providers to choose from.

It's an obvious next step IMo for SB firms like yourself to compete with brokers outside of the SB world ...I dont know how big the SB client base / funds are but it does look pretty saturated with providers from where I sit.

I do agree that headline spreads are not the whole story as if you dont get instant execution, get requotes or referrals then you're not actually getting those spreads...but the problem is unless someone suffers this i.e. an obvious execution delay, requote, dealer referral they will most likely still compare the headline spreads as there is no obvious way to compare the execution / spread over a period of time. Plus I would expect there is a lack of education in the SB world as, like I said above it mainly consists of market makers with dealing desks and also is associated with beginners. Lastly, a lot of people as with other things in life get comfortable with their provider and people generally don't like change do they.

From when I last looked at your FX spreads you were certainly comparable with market makers in the FX world especially the likes of Alpari UK, Fxpro, IBFX, FXCM etc (the former alwasy used to requote me) which are popular with beginners and thus as they are market makers with dealing desks and not SB if I were someone using those brokers (and not fussed about not using MT4) I wouldn't hesitate to give you a try as you've got the tax saving and better execution with the NDD.

I think I recall from my analysis that for my tradng style my net profit would increase 30% if I used an ECN broker than a typical SB broker.

 

[gle101]

I have to say that i do not believe that the spread bet industry will exist in it's present form, in the next couple of years. Competitors will have to follow what we are doing because of the higher standards of execution, precision pricing, no requotes etc. and tighter spreads. I have looked at all competitors technology, across all the products and I see no body with the technology that we have developed. It is very high level and will get better. The aim for all spread bet firms is to compete with ecn's and exchanges and make it viable to trade any financial product as a spread bet without pricing latency, execution latency, precision pricing etc. That is achievable but it is only achievable through technology. If you do not have the technology then you will not be able to compete with ecns, exchanges and CMC Markets. We made that commitment over one year ago and we are now delivering the technology that will lift the spread bet industry. it is still early days but i believe one day all spread betters will work this way. you heard it here first.

cheers peter

I agree, but you haven't read all my posts. Been predicting this development of the SB industry years back. You have to skip the fixed spread though, in order to succeed with what you are aiming.

 

[PC at CMC Markets]

Hi gle101

I did like Sven. I thought he was a gentleman, he did excellent job for us and has been one of our best managers since 1966. Lets not forget the wonderful 5-1 win against Germany in 2001 World Cup qualifier and the Michael Owen hat trick. very very good manager and a gentlemen.

What I can tell you is that we have 16 offices around the world, we had over 70,000 TRADING clients last year and clients from nearly 90 different countries. We also own a stock broker in Australia. 96 percent of our business is done on line.

Don't worry about live clients posting here they are so happy and content with next gen they cannot think of anything to say ha ha. Also to be honest if they have a query they call us direct. You cannot understand why there are not many live clients here because you do not have a live account. By the way not sure you can trade on next gen if you are living in Sweden. Spread bet is UK product with UK tax advantages so you have to be UK resident so we couldn't accept you any way but you can trade cfds through our Sweden office where the red carpet and a guard of honour is waiting for you, plus a friendly face and a nice cup of coffee. If you want to go there I will ask our Manager to take care of you personally. His name is Mattias. By the way we were the first SB firm to open office in Sweden and it is great place to do business. Love coming there and next time will let you know and buy you a bottle of that dodgy Scandinavian lager that gets me drunk by just sniffing the bottle.

cheers pc

cheers pc

Would you say Sven-Göran Ericksson were crafty, I would say smart, ha ha. I skimmed through the annual report, but can't find anything about no. of SB clients. Impressive figures though. I guess we have to celebrate big time when the first live SB client comes on board giving his/hers report.:clap:

 

[PC at CMC Markets]

Hi gle101
I promise you that we will get there. It really is just a technology issue. I am not talking about client facing technology, I am talking about all the back end trading technology that allows us to execute thousands of products, real time, across a public network, across precision pricing, no re quotes etc. That you can compare to an exchange or ECN. That is our commitment and the goal and we will get there. We are nearly there, I can almost taste it and product roll out will begin soon. It cannot come fast enough for me.

We are focused, we know what to do and we have experts here building everything. Once day you will truly love us, you will be singing our praises from the roof tops and you will buy me a nice big piece of humble pie. yummy looking forward to that, especially if you are paying.

tks pc

I agree, but you haven't read all my posts. Been predicting this development of the SB industry years back. You have to skip the fixed spread though, in order to succeed with what you are aiming.

 

[gle101]

Hi gle101

I did like Sven. I thought he was a gentleman, he did excellent job for us and has been one of our best managers since 1966. Lets not forget the wonderful 5-1 win against Germany in 2001 World Cup qualifier and the Michael Owen hat trick. very very good manager and a gentlemen.

What I can tell you is that we have 16 offices around the world, we had over 70,000 TRADING clients last year and clients from nearly 90 different countries. We also own a stock broker in Australia. 96 percent of our business is done on line.

Don't worry about live clients posting here they are so happy and content with next gen they cannot think of anything to say ha ha. Also to be honest if they have a query they call us direct. You cannot understand why there are not many live clients here because you do not have a live account. By the way not sure you can trade on next gen if you are living in Sweden. Spread bet is UK product with UK tax advantages so you have to be UK resident so we couldn't accept you any way but you can trade cfds through our Sweden office where the red carpet and a guard of honour is waiting for you, plus a friendly face and a nice cup of coffee. If you want to go there I will ask our Manager to take care of you personally. His name is Mattias. By the way we were the first SB firm to open office in Sweden and it is great place to do business. Love coming there and next time will let you know and buy you a bottle of that dodgy Scandinavian lager that gets me drunk by just sniffing the bottle.

cheers pc

cheers pc

What is this Peter, not possible for me to spread bet with you! You must be joking. Sweden is a part of EU you know.
I think you have to read up on the taxation part. Sorry, missed the part about the beer.

 

[PC at CMC Markets]

hi gle101

As a UK company we cannot accept non uk residents to spread bet. That I understand is the regulation, that is one of the reasons we have two products here, spread bet and cfds, as a non-resident you can trade cfds. However I have asked compliance to send me their over view and I will post what they say. It is my understanding that if you are spread betting with Uk spread bet company then they should not accept you as a client if you give your Swedish address. Compliance have confirmed this but will give you overview when received.

anyway will get back to you.

thanks peter

What is this Peter, not possible for me to spread bet with you! You must be joking. Sweden is a part of EU you know.
I think you have to read up on the taxation part. Sorry, missed the part about the beer.

 

[PC at CMC Markets]

hi Lovejoy

Just one point, it is not possible for dma on spread bet because it is betting product and in effect you have to ask us for a price. if we dma say share spread bet it would not be a bet it would be a trade so it has to be a bet if you want the tax advantages.

Like I said in previous blog that the spread bet industry has been borne out of book makers applying their trade across financial products when in fact financial spread betting should be about all the things I think we are building. we are a financial company with a spread bet product.

What we are doing will change the spread bet industry and eventually the mindset of people that want to spread bet but cannot due to the issues you have raised. Imagine if you could spread bet on exchange type prices with instant execution, no requotes and all tax free. The ultimate way to trade and it is coming from us. keep the faith because it will take time but that is our goal and we will not take a step backwards in trying to achieve our aim.

cheers peter

Hi Peter,

I totaly get what you're saying and I applaud CMC for taking the step into NDD territory and automatic execution plus no-requotes which (requotes, dealer referral, execution delays) are the most frustrating thing for a trader IMO. Unfortunately due to the nature of the SB industry these have been all too common in the past...it's not necessarily the SB industry itself as this has and does occur with market makers in the FX world too, it's jsut that the SB is made up of 95% market makers with dealing desks whereas in the FX world there are a lot of STP, DMA, ECN, NDD providers to choose from.

It's an obvious next step IMo for SB firms like yourself to compete with brokers outside of the SB world ...I dont know how big the SB client base / funds are but it does look pretty saturated with providers from where I sit.

I do agree that headline spreads are not the whole story as if you dont get instant execution, get requotes or referrals then you're not actually getting those spreads...but the problem is unless someone suffers this i.e. an obvious execution delay, requote, dealer referral they will most likely still compare the headline spreads as there is no obvious way to compare the execution / spread over a period of time. Plus I would expect there is a lack of education in the SB world as, like I said above it mainly consists of market makers with dealing desks and also is associated with beginners. Lastly, a lot of people as with other things in life get comfortable with their provider and people generally don't like change do they.

From when I last looked at your FX spreads you were certainly comparable with market makers in the FX world especially the likes of Alpari UK, Fxpro, IBFX, FXCM etc (the former alwasy used to requote me) which are popular with beginners and thus as they are market makers with dealing desks and not SB if I were someone using those brokers (and not fussed about not using MT4) I wouldn't hesitate to give you a try as you've got the tax saving and better execution with the NDD.

I think I recall from my analysis that for my tradng style my net profit would increase 30% if I used an ECN broker than a typical SB broker.