ProSpreads, Spread Vs DMA conflict?

[gc1]

I believe some exchanges have a rule that disallow crossing orders (simultaneous buy and sell orders for the same tradeable object at the same price level for the same account). So maybe this "internalisation" is needed to prevent this rule being breached - since the orders at the exchange are in the name of Prospreads and not the spread betting customer.

I think it would be a good idea if the Prospreads representative says on which exchanges and markets this internalisation can happen and on which is cannot.

 

[alex2006]

I have a really account and I only trade CURRENEX (their spot FX)The truth is, when I hit the bid price for sell, I get a price 0.5 pip lower displayed in the standard order ticket, say EUR/USD. When I hit offer price, as you would guess, I get 0.5 pip higher. In this way, I get filled very quickly. However, if I purposely modify the price in the order ticket to match the bid/offer price on the screen(underlying market, in their terms), I don't get filled until the real market prices surpass my desired price.

To summarise, I think the price screen with narrow spreads you see is most likely a real DMA price, say from CURRENEX feed. But the price you get filled, is a price WITH their commission. EUR/USD for example, during normal trading hours, DMA shows 0.8-1 most of time, you would get 1.8-2 pips spread to trade with. For GBP/USD, you get around 2+1 spread to trade.

Whether you like their "narrow spreads" or not, it is entirely up to you.

 

[A Dashing Blade]

I tested on Eurex as well - your fill acknowledgement has FBC.EUREX.INTERNAL market . . .

Was seeing just "EUREX." this morning.

 

[riogordo]

I have an account with PS and a few others, and to honest I don't care if they take the other side of my bets as long as I get the price I want. I prefer to use PS as the platform is super quick and I never get any requotes. What I do not like is the thought of an SB sitting on my order, seeing where the price is going before accepting or rejecting my bet.

 

[v01101999]

Was seeing just "EUREX." this morning.

so as I was postulating before - some clients could be "strategically" internalised whereas some are not. This is what the ProSpread rep also seems to suggest.

In other words, if you are considered a sucker (for whatever reason), they would rather not hedge your trade and operate in a bucket shop manner but if you are are a smart boy - your orders will be hedged.

 

[Dommo]

I have an account with PS and a few others, and to honest I don't care if they take the other side of my bets as long as I get the price I want. I prefer to use PS as the platform is super quick and I never get any requotes. What I do not like is the thought of an SB sitting on my order, seeing where the price is going before accepting or rejecting my bet.

With regard to market orders/immediate execution (only) I see three possibilities:

1) client trade is immediately, automatically hedged on an exchange
2) client trade is (when possible) matched against opposing client positions, residual risk being hedged on exchange as the need arises
3) dealer takes the other side of the deal, or has discretion to do so.

1 would tend to give me most comfort. I think 2 is also fine, provided that execution/confirmation is rapid, and achieved at the price seen. I think that most or all of the comments I have read regarding Prospreads indicate that market/immediate orders are executed quickly at the price seen.

3 would make me feel uncomfortable because it is (apart from dealer spread) a zero sum game between client and dealer. This can't last. Of course, my dislike goes away if I nevertheless always get fast exection at the price seen.

I am speculating that "automatic" and "strategic" hedging (terms used earlier by Prospreads contributor) correspond to 1 and 2 above - maybe Prospreads could confirm?

I am also very interested to hear from Rigordo/other clients with experience of market/immediate execution in very volatile periods.

Finally, I should make clear that I am not considering other order types - limit, stoploss etc nor the issues raised about order priority - which I imagine are more complex.

 

[riogordo]

3 would make me feel uncomfortable because it is (apart from dealer spread) a zero sum game between client and dealer. This can't last. Of course, my dislike goes away if I nevertheless always get fast exection at the price seen.


I am also very interested to hear from Rigordo/other clients with experience of market/immediate execution in very volatile periods.

QUOTE]

I agree with you on 3, but am not too bothered as long as I get an immediate fill at the price or market price. What I won't tollerate is waiting for a fill, seeing the price go my way only to get requoted. Do I really care if they take my Profits/Losses and pass them onto the market (+/- their spread)? NO.

As for speed on execution in volatile periods, I personally have had no issue. Even over Non farm. At least I know if I have to get out of a position at Mkt. I can. You can loose many points with other SB's just waiting to get filled, so I would rather pay slightly more for the comfort factor.

 

[chezlaw]

3 would make me feel uncomfortable because it is (apart from dealer spread) a zero sum game between client and dealer. This can't last. Of course, my dislike goes away if I nevertheless always get fast exection at the price seen.


I am also very interested to hear from Rigordo/other clients with experience of market/immediate execution in very volatile periods.

I agree with you on 3, but am not too bothered as long as I get an immediate fill at the price or market price. What I won't tollerate is waiting for a fill, seeing the price go my way only to get requoted. Do I really care if they take my Profits/Losses and pass them onto the market (+/- their spread)? NO.

As for speed on execution in volatile periods, I personally have had no issue. Even over Non farm. At least I know if I have to get out of a position at Mkt. I can. You can loose many points with other SB's just waiting to get filled, so I would rather pay slightly more for the comfort factor.

its the 'slippage' that bothers me.

I though everything was hedged in the market, then it appears some hedging is internal which loses some simplicity and transparancy but doesn't sound unreasonable, and now we're suddenly talking about prospreads possibly taking positions against us (what sort of hedging is that?). What next?

Txs, v01101999 for bringing all this up.

 

[arabianights]

Txs, v01101999 for bringing all this up.

Yeah I don't think that should be underestimated... looks like first scoop for a while

 

[ccclarette658]

deals on own account by executing client orders outside a regulated market

Yes you do see the real market but you don't trade it seems.

Yes, I will explain again with pleasure.

For spreadbetting, with the games played by the spreadbetter companies aganst the public betting their pennies, crystal balls are needed, because you need to have extra pairs of eyes all the time.

All of it is obvious. Let us try again and see if it lands. You are not participating in the market. You are making bets with a bookie. It serves their interest to suggest that they merely act as your agent in passing your bets to the market.

We auto hedge a lot of our client trades and strategically hedge the other trades.

Why do they say this? Which strategy? Hoo benefits? The punter?
If they hedged all their trades they would say so. do u c or not c?

I have explained many times. None of this is constructed for the benefit of the public.

I hope and expect this clarifies...

You cannot complain that I do not tell you everything...

 

[ccclarette658]

It will still show 30th, but some exchanges show you are 30th in the Q, but when orders come into the market, it is based as random fills.

Nonsense.

Your comments are naive and foolish, I am sorry to have to tell you.

 

[chezlaw]

If they hedged all their trades they would say so. do u c or not c?

Well they did say so.

Simon: ProSpreads has some distinct features, some of which are unavailable at other spread betting companies. ProSpreads directly references the underlying futures price and hedges every bet taken out by its clients. This means that the client will never get requoted, because if the price in the underlying futures market is available to ProSpreads for hedging, the spreadbet price is available to clients. Being re-quoted is probably the No 1 frustration we hear of other spread betting companies. Also, the betting functionality on the ProSpreads platform is advanced in that there are no restrictions on where you can place your limit and stop orders.

Simon: ProSpreads hedges every bet taken out by its customers. So what we do, is show the customer our hedging platform, which is Direct Market Access and 'pass on' the functionality that we have on that platform. So it is not our customer who enters the market, but ProSpreads who enters the market to hedge the bet taken out by its customers.

Simon: As ProSpreads hedges every trade is is able to pass on the DMA functionality to its customers. This includes joining the bid and offers. For example if the underlying FTSE future is 3910-3911, the customer can work a limit buy bet at 3910; then if we get filled on the hedge(in other words, buying the future at 3910) then the customer will get filled also.

from the interview: http://www.financial-spread-betting.com/Futures-betting.html


Seems like things have changed, maybe not. Either way clarification seems required.

and this

Simon: In a nut shell we are offering an impartial and transparent level playing field. Trading is hard enough as it is without having the odds stacked against you.

1. NO REQUOTES!
2. TRANSPARENT PRICING.
3. NO LIMITS ON WHERE YOU CAN PLACE ORDERS
4. VERY FAST EXECUTION
5. VEW DEPTH OF MARKET (LEVEL 2)
6. 3 DIFFERENT WAYS TO PLACE BETS, INCLUDING SINGLE CLICK TRADING.
7. ProSpreads HEDGES EVERY BET TAKEN OUT BY CLIENTS.
8. & TIGHT SPREADS !

 

[Jack Hughes]

Do you know when that article appeared, chezlaw? I think Prospreads changed tactics when LCG took over, because they only seem to mention 'DMA functionality' now, which presumably would have changed the T&Cs.

 

[chezlaw]

Do you know when that article appeared, chezlaw? I think Prospreads changed tactics when LCG took over, because they only seem to mention 'DMA functionality' now, which presumably would have changed the T&Cs.

I'm not sure but its after LCG took over as they're mentioned as the owners. The minimum initial deposit is stated to be £1000 (does that help anyone date it)

Edit: I got an email from prospreads on the 3/11/2009 saying PLUS- WE HAVE ALSO CUT OUR MINIMUM OPENING ACCOUNT DEPOSIT TO JUST £1000.

 

[2be]

well, it looks like pro turns out to be not that much different to any spreadbetting company, there is too many questions and it must have been damaging to their image as offering DMA. For me DMA has brough another meaning (Do Move Again).
There is however a difference, they still do not offer 24hrs trading, and majority of others do, which seems to put trader at considerable disadvantage.

 

[Jack Hughes]

well, it looks like pro turns out to be not that much different to any spreadbetting company, there is too many questions and it must have been damaging to their image as offering DMA. For me DMA has brough another meaning (Do Move Again).
There is however a difference, they still do not offer 24hrs trading, and majority of others do, which seems to put trader at considerable disadvantage.

Another difference is that the spreads are wider. And there are no charts. And the margins and account opening deposits are higher.

 

[A Dashing Blade]

Another difference is that the spreads are wider. And there are no charts. And the margins and account opening deposits are higher.

I would have said the margins were more than reasonable and that anyone who condiders margin requirements a saliant factor when choosing a broker is too stupid to trade.

The opening deposit is relatively high because you trade in units of the underlying market. None of this 1p a point crap.

Tbh mate, are you deliberately trolling this thread? These are points that have been explained numerous times before and as you yourself appreciated here . . . ?

. . . I thought the Futuresbetting model was that bets were automatically entered in the 'real' market, the client paying extra spread instead of commission. . . .

 

[Jack Hughes]

I would have said the margins were more than reasonable and that anyone who condiders margin requirements a saliant factor when choosing a broker is too stupid to trade.

The opening deposit is relatively high because you trade in units of the underlying market. None of this 1p a point crap.

Tbh mate, are you deliberately trolling this thread? These are points that have been explained numerous times before and as you yourself appreciated here . . . ?

Like everyone else here, I'm just interested to know how Prospreads operates. As launched, the idea was that all trades were automatically entered in the real market, hence the extra spread, high margins and need to trade in the underlying units of the exchange.

Now we discover that (apparently), PS isn't really that different from other spreadbet providers. If you're making enough profit to benefit from the zero tax angle, then congrats, but as I see it, the majority are left with something that offers the worst of both spread bet and DMA worlds.

 

[A Dashing Blade]

Like everyone else here, I'm just interested to know how Prospreads operates. As launched, the idea was that all trades were automatically entered in the real market, hence the extra spread, high margins and need to trade in the underlying units of the exchange.

Now we discover that (apparently), PS isn't really that different from other spreadbet providers. If you're making enough profit to benefit from the zero tax angle, then congrats, but as I see it, the majority are left with something that offers the worst of both spread bet and DMA worlds.

Any and all SB companies are gonna add an "extra spread" so don't see the relevence of this point.

As I see it, at worst, PS only occaisionally fail to back-to-back a punter's trade on the real market, this makes them far superior to any and all other SB outfits.

 

[pit pony]

well, it looks like pro turns out to be not that much different to any spreadbetting company, there is too many questions and it must have been damaging to their image as offering DMA. For me DMA has brough another meaning (Do Move Again).
There is however a difference, they still do not offer 24hrs trading, and majority of others do, which seems to put trader at considerable disadvantage.

I have been reading the threads, to me each way it does not bother me if they hedge dont hedge, i am happy paying or selling at what level i want to. With any other SB company you would not get a service like ProSpreads.