Fins "Rolling Share" spread confusion

[Trender]

As I had once made an enquiry to finspreads, just got a letter from them containing their "newsletter".

In it, they describe their new product "rolling share bets" which "has no spread" (apart from normal spread in the real share market one would have to assume), ie, "the price you see in the market is the price you receive".

They use Marks and Spencer as an example, and I quote "the current share price of M&S, including the 1/2p market spread, is 346p - 346.5p. Therefore M&S rolling with Financial Spreads is 346p - 346.5p."

OK, I think, if I take what they're saying at face value(!), then this is a better way of trading the biggest FTSE shares with the smallest spreads than using my current broker. No stamp duty, no tax, no commission. On the face of it, excellent.

So, then I go to the website to check out this seemingly excellent product. But wait "rolling share bets mirror the underlying share price and include a small spread of 0.2% ". Not what they say in the newsletter, and obviously making the product a lot less attractive.

If anyone from Fins is reading this, it's this kind of conflicting information that really turns people off. Why would anyone feel comfortable using your services when you can't get your promotional material to agree with itself?

Anyone got any other info on this? Is the newsletter wrong, or the info on the website?

 

[Riz]

Hi Trender,

It was correct initially, they then started messing up with it, first the 30 seconds rule about asking for a quote, then we started hearing from some traders that their quoteswere being delayed, then they removed some from internet trading, ie azn, lastly this 0.2% additional spread... obviously they make the rules as they go along...

Riz

 

[Skimbleshanks]

A small spread of 0.2%. Have you actually stopped to work what this means? If not, let me do the mathematics for you - on M&S at 346p it means just over half a penny. Yep, 0.692p to be precise.

I just laugh my socks off every time I hear someone complaining about what is just a few pennies. If you can't afford it, you shouldn't be trading - trust me, you're likely to be losing thousands and thousands of pennies in this game before you get the hang of not losing them, so I wouldn't worry too much about the odd half penny.

I think Fins are wonderful - although they did slightly blot their copybook by not sending me a Christmas card this year (unlike another broker who did even though I closed my account with them earlier in the year).

 

[Trender]

Skimble, the fact that in this case it's "pennies" as you put it is totally irrelevant. That simply depends on the price of the underlying share. Obviously the percentage widening of the spread by Fins is what counts.

If, for example, I take a per point value on a share equivalent to buying £10000 worth of the underlying share, then immediately I take a position I'm risking (or it's costing me if you like to look at it that way) 0.2% extra, in this case £20. If I then do 5 trades in a day, thats £100 more I have to make just to break even . That doesn't seem like pennies to me.

As we all(?) know, profitable trading works on such a knife edge that I for one would rather not be lumbered with an extra 0.2% spread.

Apart from that, my main point was that Fins were contradicting themselves in their marketing material.

 

[Skimbleshanks]

Well, you could always go back to buying and selling stocks the old fashioned way, through a broker. Say your commission is £15 per side, that's £150 for 5 trades a day. Oh, and don't forget you'll also need to chip in to Gordon Brown's pocket-money account (otherwise called stamp duty at 0.5%) each time you buy your stock. That's an additional £50 x 5 times per day = £250 for buying £10,000 worth.

So that's £400 it costs you to trade the way we all had to before SB and CFD companies came on the scene. Day trading in the good ol' days certainly sorted the men out from the boys.

Therefore, having to build in 0.2% to your trade for a SB is mere pennies.

Any old codgers round here remember the delights of T10s? Ahhh, those were the days ...

 

[Mr. Charts]

T10 ?
I used to trade T25 with only 20% gearing!

 

[Trender]

So that's £400 it costs you to trade the way we all had to before SB and CFD companies came on the scene. Day trading in the good ol' days certainly sorted the men out from the boys.

Yup, been there, done that. Horrible.

Skim, ol' girl, you do like doing my math for me don't you!! I'm well aware of the costs, having contributed mucho to Gordon's stamps.

Anyway, I agree, 0.2% is better than 0.5%, but I still don't like marketing tactics that don't tell the whole truth. Go to Fins website, click on latest news, and read under 2nd October 2002. It says "Financial Spreads Rolling Share markets are spread free** and miror the underlying price of the share. ** Spread free refers to the Financial Spreads spread; market spread is still charged ".

No mention of the 0.2% extra spread applied by Fins until you start going through the examples . Doesn't fill a natural cynic like me with confidence - just makes me think what else are they not telling me?

 

[Skimbleshanks]

Less of the 'old' if you don't mind Young Trender!

Marketing tactics which don't tell the whole truth are the rule, not the exception. I'm a cynic too (in case you hadn't already guessed).

My guess is that Fins are also not about to tell you that a) they don't send out Xmas cards b) you are statistically likely to make a positive impact on their bottom line c) they are in business for the sole intent of making lots of profits (as is any business, so let's not forget that) d) if they don't offer you a job it's probably because you're not a good enough trader for them e) if you speak nicely to them they can be very obliging

 

[Trender]

aahhhhh.............its a while since someone prefixed my name with "young"

I like your list!!

 

[Splurge]

'I just laugh my socks off every time I hear someone complaining about what is just a few pennies'

Im sorry but what a ridiculous comment to make. I read through the different threads on these boards and many if not most are related to the spreads that you can get in the market. I am sure if you decide to trade with £1.00 on fins on a stock such as M&S at 3 quid it wouldnt be a lot, but of course it wouldnt earn much either.

£20 a point on RBS would be a different matter for sure as pointed out above.

The facts here are that fins tried to cash in on what cmc were doing, lost too much money so had to change the rules to try to stem the losses by making it more difficult for the scalper which they have done. Now the scalper goes elsewhere..........

Preserving capital is fundamental to trading and giving a slice away before you start is not a strategy any serious trader would relish at all.

 

[Skimbleshanks]

Ahhhh ... so you think spending 0.692p to be a serious matter?

 

[mooms]

I think its a good place to close this thread reguarding this 0.2% charge before it gets out of control.

 

[dsmodi]

The point is fins are basically lying out of their teeth. That's not just a marketing tactic - it's ummmm what's that word, oh yes, it's LYING. And that is the point young/old/don'tmatter Trender was making. Validly. And I think it was a piont worth making as well.

If 0.692p is not so important, then equally, why are fins charging it? And lying to do so?

 

[Splurge]

omg - sorry I thought this was an important point that had been made by trender. You are correct skim 0.692p is a minor issue. I myself trade more than 1p a point.

Nice advice skim

 

[mooms]

Ive just read the documentation on the Fins website.

This 0.25% is for longs which are rolled over to the next week,this is basically interest for lending the stock as you have the stock on margin.

If how ever you roll over a short position you will recieve 0.25% this is money owed to you by the peron who lent you the stock.

This procedure above is also carried out with CMC Spreadbet and all CFD providers.

Hope this clears up the issue.