IG Index "dealing desk" delays...

[SpreadDoctor]

"your whole ... argument above, has for whatever reason, won absolutely no other supporters"

Thats what they said to Galileo, but the Earth is still round.

Yours is a very poor riposte to a legitimate claim.

I have to agree with Peakoil on this. What you have to realise is that firstly the FCA haven't got a clue what is going on. I deal with them quite a lot in the course of business and they really haven't got a clue - trust me on that.

w.r.t a dealer hedging a clients position this is not insider trading in any shape or form. In any case the hedge transaction is not going to move the market unless it is huge size so it is very unlikely to give the client a worse price. In terms of taking prices from a dealer then they can do what they want, it's up to to the client if he wants to transact from the dealer. A dealer can offer you whatever price they want and they can hedge what they want. Basically if you want a level playing field you should trade DMA.

GLGT

 

[postman]

I have to agree with Peakoil on this. What you have to realise is that firstly the FCA haven't got a clue what is going on. I deal with them quite a lot in the course of business and they really haven't got a clue - trust me on that.

w.r.t a dealer hedging a clients position this is not insider trading in any shape or form. In any case the hedge transaction is not going to move the market unless it is huge size so it is very unlikely to give the client a worse price. In terms of taking prices from a dealer then they can do what they want, it's up to to the client if he wants to transact from the dealer. A dealer can offer you whatever price they want and they can hedge what they want. Basically if you want a level playing field you should trade DMA.

GLGT

I think the point is that when you trade above a certain size (which probably varies from SB to SB) then you are delayed in your transaction. That delay is to allow the SB to hedge your bet with them. ie they hadge first and then they fill your bet. If they cant hedge, you get a message saying price not valid.
If they were hedging AFTER they took your bet then you wouldn't be delayed.

 

[postman]

Just one more thing guys.
We know companies manipulated Libor, Gold, currencies ... the list goes on. Why is it so hard to believe that an SB wouldn't engage in some 'less than kosha' practices.
Using your own argument SpreadDoctor, they're not likely to get caught because the regulators aren't up to the job.
Where's a Guardian journalist when you need one.

 

[SpreadDoctor]

Just one more thing guys.
We know companies manipulated Libor, Gold, currencies ... the list goes on. Why is it so hard to believe that an SB wouldn't engage in some 'less than kosha' practices.
Using your own argument SpreadDoctor, they're not likely to get caught because the regulators aren't up to the job.
Where's a Guardian journalist when you need one.

of course dealers cheat everyone in the industry knows that. Its just less blatant than it used to be. proving it is a different matter though and their T&C's basically say they can do what they want. The FCA would never investigate as politically they cant handle any more scandals.

 

[highbury fx]

of course dealers cheat everyone in the industry knows that. Its just less blatant than it used to be. proving it is a different matter though and their T&C's basically say they can do what they want. The FCA would never investigate as politically they cant handle any more scandals.

I don't think any legitimate spreadbet firm would resort to cheating, they just don't need to. I'll try to put my point across...

The main difference between the small sb firms and the IG's of this world is the depth of their risk book and the size of their client base.

It's no secret most s/b clients lose, its one of the reason that so many sb firms offer 'free money' promotions because ultimately they know the client will lose it and actually cost very little in terms of acquisition ! (although these type of promotions are quite probably about to be made to stop). It is otherwise very expensive to acquire clients but once the sb firm has the client they have a good chance to capture most of the clients loss. how much of the clients total loss depends on the size of their risk book. IG for example are big enough to warehouse risk that may capture 95%+ of all B book losses. A mid size s/b firm may only be able to run enough risk to capture 90% of the B book loss.

The smaller companies will either run very small risk or offer the no dealing desk model whereby instead of making money by capturing a loss, they make money by the difference in spread between the client dealing and their hedge against it.

Cheating doesn't really come into it because s/b firms know they don't need to interfere with the clients trading behaviour, they know the client is likely to inflict enough damage on themselves. the only factor that may influence this is how quickly each particular spreadbet firm tries to capture the loss.. some may be happy getting it in 6 months whilst some may want to do it all in 3 months. Its the one's who try to do it quickly who you find are the more shall we say aggressive in their approach to how they interact with their clients. The bigger ones are hot on customer service and try to be approachable and accountable.

Bear in mind there isn't much more than 10 s/b co's and with the exception of the ones that have gone (Cantor Index, MF Global, WorldSpreads) they all seem to make enough to keep going. MF Global and WorldSpreads went because ultimately they didn't have enough clients losing enough money that they had to break the rules to buy time. They got found out in the end and the FCA and FSCS done a good job in making sure that people got most of their money back - there can be no argument that the deposit guaranty works well enough.

I understand there is a them versus me mentality and that trusting the s/b firm can be difficult when you think too many incidents are conspiring against you but quite honestly there isn't any reason other than capturing the loss quicker to do anything untoward as the sb firm will likely get it anyway soon enough.

 

[Sonicscooter]

I don't think any legitimate spreadbet firm would resort to cheating, they just don't need to. I'll try to put my point across...

The main difference between the small sb firms and the IG's of this world is the depth of their risk book and the size of their client base.

It's no secret most s/b clients lose, its one of the reason that so many sb firms offer 'free money' promotions because ultimately they know the client will lose it and actually cost very little in terms of acquisition ! (although these type of promotions are quite probably about to be made to stop). It is otherwise very expensive to acquire clients but once the sb firm has the client they have a good chance to capture most of the clients loss. how much of the clients total loss depends on the size of their risk book. IG for example are big enough to warehouse risk that may capture 95%+ of all B book losses. A mid size s/b firm may only be able to run enough risk to capture 90% of the B book loss.

The smaller companies will either run very small risk or offer the no dealing desk model whereby instead of making money by capturing a loss, they make money by the difference in spread between the client dealing and their hedge against it.

Cheating doesn't really come into it because s/b firms know they don't need to interfere with the clients trading behaviour, they know the client is likely to inflict enough damage on themselves. the only factor that may influence this is how quickly each particular spreadbet firm tries to capture the loss.. some may be happy getting it in 6 months whilst some may want to do it all in 3 months. Its the one's who try to do it quickly who you find are the more shall we say aggressive in their approach to how they interact with their clients. The bigger ones are hot on customer service and try to be approachable and accountable.

Bear in mind there isn't much more than 10 s/b co's and with the exception of the ones that have gone (Cantor Index, MF Global, WorldSpreads) they all seem to make enough to keep going. MF Global and WorldSpreads went because ultimately they didn't have enough clients losing enough money that they had to break the rules to buy time. They got found out in the end and the FCA and FSCS done a good job in making sure that people got most of their money back - there can be no argument that the deposit guaranty works well enough.

I understand there is a them versus me mentality and that trusting the s/b firm can be difficult when you think too many incidents are conspiring against you but quite honestly there isn't any reason other than capturing the loss quicker to do anything untoward as the sb firm will likely get it anyway soon enough.

Therefore how does this affect their interaction with lets say, the 5 % that do consistently make money.

 

[postman]

I don't think any legitimate spreadbet firm would resort to cheating, ....

I just googled "spread betting firms fined" and apart from a misleading ad campaign and some transaction reporting there is NOT ONE story of an SB cheating customers.
They must be the only reputable group of financial organisations in the world.

Or maybe they hired Jo Moore as press secretary to think of ways of burying bad news.

 

[highbury fx]

Therefore how does this affect their interaction with lets say, the 5 % that do consistently make money.

it depends how clever the SB firm are and how quickly they analyse the clients to spot the winners. Most will A book them and continue to try and interact well with them.

I've said before that A booking clients at least enables the spreadbet firm to earn commissions from the client rather than make it difficult so the client leaves. The SB firm can pass the risk on to their liquidity providers safe in the knowledge that they can at least make some money from a client that would otherwise be expensive.

Just because a SB firm can capture 95% of a clients loss it doesn't mean that 5% of clients make money. The 5% of the clients loss the SB firm doesn't capture is eaten away in spread they need to pay to hedge their over all position. They cant just sit there with ever increasing risk - they'll need to go in to the market themselves eventually.

We think around 30% of clients at any one time are in a trade that is winning but only 20% of clients will be up.

 

[darktone]

Therefore how does this affect their interaction with lets say, the 5 % that do consistently make money.

Just put yourself in the SB shoes sonic.

You have clients who are consistently profitable. Lets split these into two groups.

+traders and tarders.

The +traders can consistently make money despite realistic fills on stops / market orders etc. You could hedge these guys 1 to 1 (+ whatever you can squeak on the spread) with your liquidity provider/s. Or you could coat tail them. When they buy / sell 10 you hedge 20.

The tarders are making money but they are doing it on unrealistic fills, ie without realistic stop slippage, promotional spread / fill offers, latent pricing etc. Without this price advantage theyd be flat to losing.
These are the guys that will get your attention, and will likely bleat loudest when you take away their generous B book pricing.

 

[tar]

IG clearly states - in annual reports - that they may hedge their exposure in a certain correlated markets , if it reached a predefined certain threshold , to get it back under that threshold . They don't set watch John whether he wants to buy or short the Dow !

Hedging means that the whole business isn't worth it for them , because their spreads are on par with the markets' if not even less - if you factor commissions , slippage and costs - . Its not cost effective .

Check pages 128-130

http://www.iggroup.com/content/files/annual_report_12.pdf

 

[darktone]

IG clearly states - in annual reports - that they may hedge their exposure in a certain correlated markets , if it reached a predefined certain threshold , to get it back under that threshold . They don't set watch John whether he wants to buy or short the Dow !

Hedging means that the whole business isn't worth it for them , because their spreads are on par with the markets' if not even less - if you factor commissions , slippage and costs - . Its not cost effective .

Check pages 128-130

http://www.iggroup.com/content/files/annual_report_12.pdf

I must be thick. Can you show me the bit where they say 'They don't set watch John whether he wants to buy or short'. They certainly watch john an individuals margin requirement.

To my 'im a SB company' mind its simple. If i see that a section of clients who are consistently taking money out me then id want to do something about that.
Ie, If my LPs are giving me spread X and im offering it at X+1 then it would be a few button clicks to automatically pass that risk to my LP and keep the +1. Or i could coat tail.
Even if I were offering wider spreads than my LPs, I could still sidestep the bulk of the profit super client could otherwise take out of me.

 

[Sonicscooter]

This is thread is going on n on n on.......so anyone wish to venture at a concise conclusion...............please......

 

[darktone]

This is thread is going on n on n on.......so anyone wish to venture at a concise conclusion...............please......

A concise conclusion?
Ok heres mine.
Regardless of reality, what you believe is true, for you, so be careful what you believe.

 

[Sonicscooter]

Mr Darktone, i believe that answer wasn't the best available.........

 

[darktone]

Mr Darktone, i believe that answer wasn't the best available.........

Id have to agree 100% with that one scoot!

 

[Hate2Lose]

The whole argument is, IMO, academic. Where you’ve got a synthetic market (i.e. SB), you’re inevitably likely to be paying some ‘hidden’ charges (e.g. re-quotes). ‘The definition of a ‘less than kosha’ practice is surely subjective. Better to use a DMA provider!

 

[Sonicscooter]

Well Mr Brillo pad...........i just thought of your silly thread again as i closed a short position, the price on screen on the DAX was 9001, i wanted to close ie possible resistance at 9k, closed, but the price i received was 8997.8, so i gained 3.2 i didn't expect it, but every little helps.

Now how many punters come on this forum and mention positive things, none just negative stuff, and here you are admitting to bad phone connection as you spread bet on your phone.......

O'i hate moaning ar5es.

 

[gooders72]

I've been trading on my IG Index account for the last year, and it's generally been smooth.

Over the last few days, however, I've noticed that trades have been slower. I put on a few trades on my PC and I got a rotating progress bar with a message "Your deal is being handled by our dealing desk..."

Is this something new that IG has started, or is that just what happens to you when you start making money?

IG Index are a major fraud outfit mate. Don't spread bet, buy stocks - they're all criminals.

 

[gooders72]

Well Mr Brillo pad...........i just thought of your silly thread again as i closed a short position, the price on screen on the DAX was 9001, i wanted to close ie possible resistance at 9k, closed, but the price i received was 8997.8, so i gained 3.2 i didn't expect it, but every little helps.

Now how many punters come on this forum and mention positive things, none just negative stuff, and here you are admitting to bad phone connection as you spread bet on your phone.......

O'i hate moaning ar5es.

Shut your face you shill. We all know all the SB fraudsters post on here.