Spreadbetting with IG UK from Switzerland

[commtrader]

Hi all,

I am currently based in Switzerland and am looking to open an account with a UK spread betting broker. I am looking to SB because I found the cost of CFD's to be high (as a beginner). Two brokers at IG indicated that it would cost $30 in total to open and close position a share CFD position. SB would be much cheaper, but IG would not allow me to open a SB account as I was not a UK resident. It is also not possible to open a SB account via IG Switzerland/Germany/Austria/Italy websites.

I have a preference for IG as they are reputable, have automated trading, guaranteed stops and cover many share markets (there is limited information on other brokers, especially on the reputation part).

Determined to begin trading, I opened a CFD account with IG in the UK. When I logged into the system, I noticed that under account settings I could open a spread-betting account, which the system immediately allowed me to do.

I have 3 questions:

(i) Why is it that the IG broker on the phone says that as Swiss resident I cannot open a SB account, yet it is possible to do so via their UK website?

(ii) What would be the implications of trading using the SB account as a non-UK resident? Would IG allow me to do this, despite initially telling me I can not open a SB account from outside the UK? If I made a profit would they pay it out? Should I ask them to clarify?

(iii) Why does IG not allow non-UK residents to SB? GFT Trading allows this, though they make it clear that it is your responsibility to understand the tax implications of the country you are trading from.

Any advice on the above would be most welcome.

 

[itwasinthetubes]

If you are not paying your taxes in the UK you will not be exempt from them, as SB in the UK is classified as betting and does not incur taxes from wins (and you cannot deduct losses). I think this only applies to the UK. Don't know how betting is considered in Switzerland for tax purposes...

 

[commtrader]

Turns out you CAN SB with IG U.K. from Switzerland. There are a few restrictions like not being able to fund the account using a Swiss credit card, transfer only. You also can't fund a SB account using USD that originate from the US.

I would need to pay tax here in Switzerland which would be the same tax applied on other 'gambling' revenues. Basically you can SB with IG so long as there is no IG office in your country, and so long as you don't live in the US, Turkey and Australia.

 

[Hate2Lose]

Hi all,

I am currently based in Switzerland and am looking to open an account with a UK spread betting broker. I am looking to SB because I found the cost of CFD's to be high (as a beginner). Two brokers at IG indicated that it would cost $30 in total to open and close position a share CFD position. SB would be much cheaper, but IG would not allow me to open a SB account as I was not a UK resident. It is also not possible to open a SB account via IG Switzerland/Germany/Austria/Italy websites.

I have a preference for IG as they are reputable, have automated trading, guaranteed stops and cover many share markets (there is limited information on other brokers, especially on the reputation part).

Determined to begin trading, I opened a CFD account with IG in the UK. When I logged into the system, I noticed that under account settings I could open a spread-betting account, which the system immediately allowed me to do.

I have 3 questions:

(i) Why is it that the IG broker on the phone says that as Swiss resident I cannot open a SB account, yet it is possible to do so via their UK website?

(ii) What would be the implications of trading using the SB account as a non-UK resident? Would IG allow me to do this, despite initially telling me I can not open a SB account from outside the UK? If I made a profit would they pay it out? Should I ask them to clarify?

(iii) Why does IG not allow non-UK residents to SB? GFT Trading allows this, though they make it clear that it is your responsibility to understand the tax implications of the country you are trading from.

Any advice on the above would be most welcome.

Firstly, that SBs are cheaper is a mis-conception – unless you’re doing really small deal sizes. The cost is in the spread, and as they ‘run a book’ (i.e. act as a bookmaker), when you win they lose. Therefore, there are hidden costs, for example the execution prices you may get might be a little off market, so it’s their way of creaming a little more off the top. I prefer DMA, but that’s beside the point.

However, I can see why you’d want to do it. If you’re doing smaller deal sizes, there are no minimums, so might be better in this case (I think IG let you do £1 per point).

SB does have its uses, IMHO.

I think it’s simply because some foreign SB subsidiaries aren’t permitted to offer SB, so introducing you to the UK branch would be in some way ‘arranging’, which may be a regulated activity in itself. So, they would be carrying out a regulated activity is something that’s prohibited in that country! A shot in the dark, but makes sense to me.

Definitely worth asking if they’ll pay it out. You wouldn’t want to get caught out after putting in the hours! Please update, it’s an interesting one.

 

[commtrader]

My comments:

"Firstly, that SBs are cheaper is a mis-conception – unless you’re doing really small deal sizes. "
-- Yes, I'm just starting out so I'm only risking $50 or 1% per trade. Cost of opening and closing a CFD is about $30 with IG, so that would put my risk up to 1,6% which I'm not comfortable with yet, and doesn't make sense for a beginner.


" So, they would be carrying out a regulated activity is something that’s prohibited in that country! A shot in the dark, but makes sense to me."

-- I'm not sure, IG for instance don't allow SB in the US, Turkey and Australia where it is illegal, so I doubt they would make an exception for Switzerland.


"Definitely worth asking if they’ll pay it out. You wouldn’t want to get caught out after putting in the hours! Please update, it’s an interesting one."

-- Yes, I did that and they said in writing that it was fine to go ahead and trade, so I guess it has to be ok.

 

[Hate2Lose]

My comments:

"Firstly, that SBs are cheaper is a mis-conception – unless you’re doing really small deal sizes. "
-- Yes, I'm just starting out so I'm only risking $50 or 1% per trade. Cost of opening and closing a CFD is about $30 with IG, so that would put my risk up to 1,6% which I'm not comfortable with yet, and doesn't make sense for a beginner.


" So, they would be carrying out a regulated activity is something that’s prohibited in that country! A shot in the dark, but makes sense to me."

-- I'm not sure, IG for instance don't allow SB in the US, Turkey and Australia where it is illegal, so I doubt they would make an exception for Switzerland.


"Definitely worth asking if they’ll pay it out. You wouldn’t want to get caught out after putting in the hours! Please update, it’s an interesting one."

-- Yes, I did that and they said in writing that it was fine to go ahead and trade, so I guess it has to be ok.

I see. Yes, CFDs would be expensive for you. Worth into CFDs in future, when you’re upping your deal sizes and your strategy is refined, IMO.