Market Share

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montmorencyt2w

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The origin of this thread is some thoughts I had after a discussion on the CS thread about LCG group. I didn't think it was fair to continue this in the CS thread, especially as it would be good to widen out the discussion to non-LCG SB operations. I will add any useful-looking facts here, and invite anyone else to do similar.


In the LCG 2009 Annual Report I found a reference to the "Investments Trends 2009 UK Spread Betting and CFD Report)", in which it was said that LCG was now 3rd in the SB market.

I googled for this report. I am not sure if the following is the original report or a digest. I think it was commissioned by IG and not surprisingly, it is written from an IG point of view.

http://www.iggroup.com/content/files/ml_conf_ nov09.pdf


The LCG Annual Report, 2009:
http://www.londoncapitalgroup.com/reports/2009_annualreport.pdf
According to a comprehensive survey conducted
by Investment Trends in September 2009, London
Capital Group has established itself as a significant
financial spread betting provider and is now ranked
third in the market by number of client accounts
(Investments Trends 2009 UK Spread Betting
and CFD Report). In addition to this, our own
brand, Capital Spreads ranked number three as
primary account provider and achieved the highest
satisfaction rating of all UK providers in relation to
spread value offered, with 89% or those surveyed
responding that Capital Spreads offers either Good
or Very Good value. This was the highest value based
satisfaction level achieved by any financial spread
betting business.
On average 39% of total clients were active
during the year and funds on account rose by
35%. Average trades per day rose 14% to 23,975
(2008:20,967).
Click to expand...


There is also a useful summary here:
http://www.financial-spread-betting.com/Derivatives-industry-growth.html
Market share

The largest company in the industry is IG Index, which is listed on the London Stock Exchange with a market value of around £1 billion. It now has over 72,000 clients worldwide, making approximately one million transactions a month - over 90% of them online.

Rival firm CMC Markets, 10 per cent owned by Goldman Sachs is thought to be the second-largest provider opening 4,000 to 6,000 accounts for private clients each month (July 2009) - although CMC being a private company it is under no obligation to publish its financial results. Two other long established competitors are Cantor Index and City Index. Cantor is part of the Cantor Fitzgerald Group, a global financial services provider, while City Index is part of IPGL, a privately owned company with a substantial shareholding in the world's leading derivatives broker ICAP. In Mid-2006 City Index acquired Finspreads so now both companies operate under the same umbrella. Capital Spreads is a more recent entrant having launched in 2003 but has been rapidly gaining market share to the extent that it has now displaced Cantor from fourth place.

In the past five years the industry has experienced rapid expansion with that started with the launch of Capital Spreads in 2003, followed by Worldspreads in 2005. Both companies offer very competitive spreads and subsequently good value for clients and their introduction has helped bring spreads down. More recent entrants include GFT UK, which is related to US-based currency dealer Global Forex Trading, ODL Markets and Finospread.
IG Index (SB 'inventor') - 30%
CMC - 9%
Cityindex - 8%
Capital Spreads - 6%

Note: This survey conducted by Investment Trends was contracted by major spread betting firms including IG Index and it involved surveying almost 9,000 investors. IG dominates the market place with approximately one in every two active financial spread betting clients in the UK now holding an account with them and 30% using IG Index as their primary provider. However, white-label sites mean that about 49 per cent of clients also have a CityIndex account, even if they are not branded as such. According to the research report by Investment Trends the success of IG Index's trading platform, PureDeal, and its accessibility to non-professional investors, has been credited with much of IGIndex's feat in dominating the UK spread betting industry. It is also interesting to note that most investors stated that use a spread betting account as it allows them to short asset classes and also because it allows them to magnify investment returns whilst giving them access to a huge range of markets. Only 22% stated that they use spread betting to help them act as a hedge to their existing investments. Trading on indices such as the FTSE 100 is still very popular with spread betters, with about 76 per cent taking bets on indices, while 61 per cent said they bet on foreign exchange moves.

The Investment Trends survey also ranked Capital Spreads as number three in the market ranked by number of main account users (Investments Trends 2009 UK Spread Betting and CFD Report). In addition Capital Spreads achieved the highest satisfaction rating of all UK brokers in relation to spread value offered, with 89% or those surveyed responding that Capital Spreads offers either 'good' or 'very good' value.
Click to expand...


The LCG 2010 report is due out in February, so it might be interesting to see any major changes from 2009.

Oh, despite CMC apparently not being obliged to publish reports, here is theirs from March, 2009:
http://www.cmcmarketsplc.com/content/documents/cmcmarketsplc_results_2009.pdf
36% increase in number of active customers to 76,000
50% increase in number of customer trades to 30 m
Click to expand...
(Not sure if all those customers are spread-betting though, or all in the UK).

The March 2010 report is also findable by google, but the resulting link is rather unwieldly so I won't post it. I found it searching for:
"cmc markets annual report 2010"
 
In a way, this fits more into the theme I was developing on the CS thread, however, it is also from the site I have linked to above, and is an interview with the powers-that-be at Tradefair that I hadn't noticed before, and answers an interesting question for me:

http://www.financial-spread-betting.com/Tradefair-interview.html

FSB: It is our understanding that your spread betting platform is powered by London Capital Group. Please comment. Are there any spread or technical differences which makes your platform different from the LCG platform?

Head: We do use LCG as our platform provider however we've redesigned the platform ourselves making it easier to use (1 click trading when you have the deal ticket open) and have taken our own account management team in-house to improve the user experience. In addition Tradefair has some of the lowest financing costs (+/- 1% of the base rate). We also provide the user with free learning tools like Robbie Burns 'Naked Trader' book and have the ability to offer credit to those customers that require it. In terms of the spread and rolling charges these are the same as those that you would find on LCG's platform.
Click to expand...

It is true that when I first started using Tradefair in early 2010, their financing was very cheap. Unfortunately, in April 2010, I received an email from them saying they were changing that 1% to 2%, and there was a noticeable increase in my overnight costs. I didn't get a corresponding email from Capital Spreads, with whom I also have an account, so I think they were already at 2% (and this is also suggested by their 2010 Annual Report). This interview must date from before the time that increase took place.
 
Unfortunately, I think this is accounts of any type, and it could be in any country, as they operate world-wide. I could not spot any specific figure for spread-betting accounts in the UK. It may be there somewhere.

Having said that, they appear to be a close 2nd in the ranking behind IG.
But again, I'm not sure if this is in spread-betting or spead-betting plus other things, such as CFDs.

Must say, I think the CS reports are easier on the eye (and so are their charts :) ).
 
Market share

The largest company in the industry is IG Index, which is listed on the London Stock Exchange with a market value of around £1 billion. It now has over 72,000 clients worldwide, making approximately one million transactions a month - over 90% of them online.

Rival firm CMC Markets, 10 per cent owned by Goldman Sachs is thought to be the second-largest provider opening 4,000 to 6,000 accounts for private clients each month (July 2009) - although CMC being a private company it is under no obligation to publish its financial results. Two other long established competitors are Cantor Index and City Index. Cantor is part of the Cantor Fitzgerald Group, a global financial services provider, while City Index is part of IPGL, a privately owned company with a substantial shareholding in the world's leading derivatives broker ICAP. In Mid-2006 City Index acquired Finspreads so now both companies operate under the same umbrella. Capital Spreads is a more recent entrant having launched in 2003 but has been rapidly gaining market share to the extent that it has now displaced Cantor from fourth place.

In the past five years the industry has experienced rapid expansion with that started with the launch of Capital Spreads in 2003, followed by Worldspreads in 2005. Both companies offer very competitive spreads and subsequently good value for clients and their introduction has helped bring spreads down. More recent entrants include GFT UK, which is related to US-based currency dealer Global Forex Trading, ODL Markets and Finospread.
IG Index (SB 'inventor') - 30%
CMC - 9%
Cityindex - 8%
Capital Spreads - 6%

Note: This survey conducted by Investment Trends was contracted by major spread betting firms including IG Index and it involved surveying almost 9,000 investors. IG dominates the market place with approximately one in every two active financial spread betting clients in the UK now holding an account with them and 30% using IG Index as their primary provider. However, white-label sites mean that about 49 per cent of clients also have a CityIndex account, even if they are not branded as such. According to the research report by Investment Trends the success of IG Index's trading platform, PureDeal, and its accessibility to non-professional investors, has been credited with much of IGIndex's feat in dominating the UK spread betting industry. It is also interesting to note that most investors stated that use a spread betting account as it allows them to short asset classes and also because it allows them to magnify investment returns whilst giving them access to a huge range of markets. Only 22% stated that they use spread betting to help them act as a hedge to their existing investments. Trading on indices such as the FTSE 100 is still very popular with spread betters, with about 76 per cent taking bets on indices, while 61 per cent said they bet on foreign exchange moves.

The Investment Trends survey also ranked Capital Spreads as number three in the market ranked by number of main account users (Investments Trends 2009 UK Spread Betting and CFD Report). In addition Capital Spreads achieved the highest satisfaction rating of all UK brokers in relation to spread value offered, with 89% or those surveyed responding that Capital Spreads offers either 'good' or 'very good' value.
Click to expand...

This report seems to be older than me :).
1. I doubt CMC open almost 6k accounts a month, as Ross mentioned there aren't many CMC customers here.
2. IG value is £1bln? Even after a tumble last week they are worth almost £1.7bln.

Besides that, I doubt that the interviews with Simon Denham are real, at least they are written by somebody else as during 'World Money Show' in London in November 2010 on every question his answer was something like 'Blah, blah, blah, we don't care how you trade as you will lose and we'll make money'. it was shocking to hear an MD to speak like that. He should hire somebody like David Jones (from IG).
 
How u decide market share ? number of accounts ? many have multiple accounts with LCG because of the white label stuff ...
 
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