Hi all. I'm new to the forum and wanted some thoughts from fellow spreadbetters on whether I've been treated unfairly by IG Index.
I've been trading for years with CMC and City Index with absolutely no problems but within 2 days of trading with IG Index I feel that I've been completely stitched up.
I opened a buy position in a stock where the current share price was 7.7 p
I was offered 7.5 - 7.9 for a day position or
4.5 - 4.9 for a Jun-09 position.
The Jun-09 position looked very attractive as it factored in the high dividend yield on the stock and at 4.9 limited my total downside to 4.9 points even if the share price fell to zero.
I opened a sizable buy position at 4.9.
Later that day I received this email ....
Dear Client,
We are writing to you to inform you of an adjustment made to your JUN09 Invesco UK Property Income Tst position. Invesco UK Property Income Tst will probably not be paying the dividend expected by our equity support department.
Therefore all open spread bets will be rebooked to amend your opening level by 3.038 points. At the same time we will amend the levels of our futures contracts by 3.038 points. This will mean no profit and loss difference to your positions.
Please do not hesitate to contact us should you have any further queries.
They had increased the Jun-09 price to 8.3p from the 4.9p I bought at.
There is no way I would have traded at this price.
I complained and got this reply ....
Thank you for your email. The reason that we adjusted the position was that our forward prices were becoming inaccurate, and as such it was decided that the cash price should be used. In addition, we may further adjust the positions as stated in our Customer Agreement (full details available at IG Index - Customer Agreement
28. Adjustments and takeovers
(1) If any Financial Index becomes subject to possible adjustment as the result of any of the events set out in Term 28(2) below (a "Corporate Event") affecting a related financial instrument, we will determine the appropriate adjustment, if any, to be made to the size and/or value and/or number of the related Bet(s) (and/or to the level of any Order) to account for the diluting or concentrating effect necessary to preserve the economic equivalent of the rights and obligations of the parties in relation to that Bet immediately prior to that Corporate Event, to be effective from the date determined by us.
(2) The events to which Term 28(1) refers are the declaration by the issuer of a financial instrument (or, if the financial instrument is itself a derivative, the issuer of the security underlying that instrument) of the terms of any of the following:
(5) In the event that there is declared or paid in respect of any financial instrument a special dividend or a dividend that is unusually large or payable by reference to an ex-dividend date that is unusually early or late (in each case, having regard to dividend payments in previous years in respect of that same financial instrument), we may make an appropriate adjustment (including a retrospective adjustment) to the Opening Level and/or the Stake of a Bet that relates to that financial instrument.
I hope this clarifies the situation. Please do not hesitate to contact us should you have any further queries.
I am now showing quite a sizeable loss (due mainly to the spread) that when I opened the position I was happy to ride until Jun-09. I now feel I am stuck in a very poor position and I have little choice but to close the revised position at a big loss.
IG effectively increased my buy trade price by 60% from 4.9p to 8.3p after I had traded.
This is an extreme adjustment to make and I have demanded that IG just cancel the deal but they are refusing so far.
Is it just me that thinks I've been stitched up?
Thanks all.
