Tax free futures trading using TT, Stellar, CQG....iBetfinancials

[DT]

Prospreads offer DMA to the futures market through a spread betting account, all profits are tax free.

You only need £1K for a live account. While CQG does the look the dogs nuts I don't have spare £35K available right now.

It's good to see other DMA brokers coming onto the market. Maybe they'll reduce that minimum eventually. Keep us posted Rowland.

AFAIK they aren't necessarily DMA but rather DMA like... there was another thread on here where a forum user had side by side screen prints one showing his order on pro spreads the other showing a different data feed - the order with pro spreads seemingly hadn't been sent to the exchange. The indication seemed to be that orders aren't necessarily sent to the exchanged but could be matched by them either with other client orders or taking positions against clients.

If you're happy to cross the bid/offer spread on every order then its probably not an issue but if things such as queue position are important then the difference between actual direct market access and some 'DMA like' service is important.

 

[clbfjc]

Hi,

Has anyone looked at ProSpreads as an alternative. Simlar setup, with free market squak, platform takes a bit of getting used to but easy enough to use.

 

[BF2]

It all looks very good.

I have only one question. Why the hell would HMRC ever agree to such a scheme? As most of the customers of iBet would be large profitable traders who would otherwise be using traditional futures brokers, HMRC is set to lose tens of millions in tax revenue.

I also don't understand how iBet can 'wrap' the trades and call them spread bets. The very definition of betting means you bet against the house. If the house is not providing the odds (in this case, price quotes), then you are not betting.

You cannot just call a DMA trade in an exchange a 'bet'. I also may want to call my income tax 'CGT', but just because I want to call it so, it's not going to become 'CGT'.

 

[ibetfinancials]

Hi BF2,

Financial Spread Betting isn't a "scheme" ("movie scheme" etc).

HMRC granted iBet (Kyte Group) a spread betting license, just like they issued to hundreds of other spread betting firms in the UK. The fact that iBet are the only company in the UK to choose to use professional futures trading software and hedge all trades instantly directly into the market is irrelevant.

Financial Spread Betting is tax free in the UK but HMRC still gain revenue from betting levy tax and corporation tax on the spread betting firms profits. As 90%-99% of spread betting clients lose money, HMRC are actually very wise to tax the trade itself (millions) and then spread betting firm's profits (large) as opposed to the profits (comparatively tiny) of they few thousand people in the UK who actually make regular profits Spread Betting.

The day that the revenues from taxing the (few thousand) individuals exceed the revenues from taxing the (millions who lose money to the) spread betting firm, HMRC may look to begin taxing Spread Betting winnings. At this point, all those losing will be able to offset their losses which is something HMRC will aslo need to consider.

Perhaps this will happen the day that bookmakers start losing money to punters....

For further details on iBet Financials, please contact Rowland Turton on [email protected]

 

[BF2]

Hi BF2,

Financial Spread Betting isn't a "scheme" ("movie scheme" etc).

HMRC granted iBet (Kyte Group) a spread betting license, just like they issued to hundreds of other spread betting firms in the UK. The fact that iBet are the only company in the UK to choose to use professional futures trading software and hedge all trades instantly directly into the market is irrelevant.

Financial Spread Betting is tax free in the UK but HMRC still gain revenue from betting levy tax and corporation tax on the spread betting firms profits. As 90%-99% of spread betting clients lose money, HMRC are actually very wise to tax the trade itself (millions) and then spread betting firm's profits (large) as opposed to the profits (comparatively tiny) of they few thousand people in the UK who actually make regular profits Spread Betting.

The day that the revenues from taxing the (few thousand) individuals exceed the revenues from taxing the (millions who lose money to the) spread betting firm, HMRC may look to begin taxing Spread Betting winnings. At this point, all those losing will be able to offset their losses which is something HMRC will aslo need to consider.

Perhaps this will happen the day that bookmakers start losing money to punters....

For further details on iBet Financials, please contact Rowland Turton on [email protected]

Hello Rowland,
Thank you for the quick reply. Two more questions.

1. You say you cannot segregate customer funds because you have to post the margin to the exchange - but so does every other futures broker. When the customer deposits funds, it should go to the segregated account. When the customer opens a trade, the broker posts the margin from the customer account to the exchange. Once the position is closed the margin comes back to the customer account +/- any profit/loss. That's the model, broadly speaking.

How are you different from, for example, Interactive Brokers that you cannot follow this model?

I hear what you say about stability and conservative approach of the company - but we have had Refco and Man Group right under the nose of the regulators - so past stability is not a guarantee.

2. Second, price quotes is one aspect, but the other just as crucial aspect is execution speed and fills. I appreciate you offer TT, but how good are your data networks? How physically close to the exchanges are your data centres?

Thanks.

(By the way I am not trying to be confrontational, but if I am to deposit my hard earned thousands with a company I haven't heard of before, then I need to do my homework first)

 

[ibetfinancials]

Hello Rowland,
Thank you for the quick reply. Two more questions.

1. You say you cannot segregate customer funds because you have to post the margin to the exchange - but so does every other futures broker. When the customer deposits funds, it should go to the segregated account. When the customer opens a trade, the broker posts the margin from the customer account to the exchange. Once the position is closed the margin comes back to the customer account +/- any profit/loss. That's the model, broadly speaking.

How are you different from, for example, Interactive Brokers that you cannot follow this model?

I hear what you say about stability and conservative approach of the Kyle Group - but we have had Refco and Man Group right under the nose of the regulators - so past stability is not a guarantee.

2. Second, price quotes is one aspect, but the other just as crucial aspect is execution speed and fills. I appreciate you offer TT, but how good are your data networks? How physically close to the exchanges are your data centres?

Thanks.

(By the way I am not trying to be confrontational, but if I am to deposit my hard earned thousands with a company I haven't heard of before, then I need to do my homework first)

Hi BF2,

I very much welcome your questions, thank you.

1. The futures order at the exchange doesn't belong to you (the client), it belongs to iBet and so we cannot use "your" segregated funds to hold "our" (perfectly hedged) position.

For this reason we do not offer high levels of leverage in comparison to traditional futures brokers. Other brokers can segregate funds (allegedly !) and use these funds as margin for the client's position. This is why you need to pay tax on your futures winnings with other brokers as you own the future.

In addition, unlike some of the firms you mention, Kyte does not have a proprietary trading arm. We simply provide execution and clearing and so (as Im sure you would agree) we do not face the same risks as the firms you mention.

2. Very close. And we offer various co-lo options. We have many highly time-sensitive algo users using iBet/Kyte. Please feel free to contact me directly so that I can give you specific speed data for your setup.

I would be happy to answer any of your specific questions at the email below.

For further details on iBet Financials, please contact Rowland Turton on [email protected]

 

[tonster01]

HMRC are actually very wise to tax the trade itself (millions) and then spread betting firm's profits (large) as opposed to the profits (comparatively tiny) of they few thousand people in the UK who actually make regular profits Spread Betting.

The day that the revenues from taxing the (few thousand) individuals exceed the revenues from taxing the (millions who lose money to the) spread betting firm, HMRC may look to begin taxing Spread Betting winnings. At this point, all those losing will be able to offset their losses which is something HMRC will aslo need to consider.

Perhaps this will happen the day that bookmakers start losing money to punters....[/email]

Not exactly the pitch that would encourage me to start trading if I was just starting out but each to their own!

 

[DJS1]

Hi BF2,

Financial Spread Betting isn't a "scheme" ("movie scheme" etc).

HMRC granted iBet (Kyte Group) a spread betting license, just like they issued to hundreds of other spread betting firms in the UK. The fact that iBet are the only company in the UK to choose to use professional futures trading software and hedge all trades instantly directly into the market is irrelevant.

Financial Spread Betting is tax free in the UK but HMRC still gain revenue from betting levy tax and corporation tax on the spread betting firms profits. As 90%-99% of spread betting clients lose money, HMRC are actually very wise to tax the trade itself (millions) and then spread betting firm's profits (large) as opposed to the profits (comparatively tiny) of they few thousand people in the UK who actually make regular profits Spread Betting.

The day that the revenues from taxing the (few thousand) individuals exceed the revenues from taxing the (millions who lose money to the) spread betting firm, HMRC may look to begin taxing Spread Betting winnings. At this point, all those losing will be able to offset their losses which is something HMRC will aslo need to consider.

Perhaps this will happen the day that bookmakers start losing money to punters....

For further details on iBet Financials, please contact Rowland Turton on [email protected]

iBet Financials,

You should do your research properly before making such audacious claims, I know for a fact your not the only provider who hedge all trades automatically...if you are, why do you not advertise that your DMA?

I agree principly that a lot of people claim to do a lot of things that they don't, but you claiming that your the only providers to auto hedge every position is misleading and untrue!

 

[tonyblu]

Hi Rowland,

I trade STIRS and Bunds and like the sound of ibet but just wondered what happens with your rebates?

 

[ibetfinancials]

Hi tonyblu,

Unfortunately as iBet (the holder of the future - hence the reason your trade can qualify as a Spread Bet) does not qualify for rebates, we cannot pass these savings on to the client. It is one of the drawdowns of iBet. We do however have a number of high volume STIR traders who trade with us and are still better off despite the rebates lost due to the tax-free nature of iBet.

This wouldnt be relevant to the Bund obviously.

Some US markets iBet also doesnt qualify for the rebates/iip etc.

This obviously needs to be included in your calculations as to whether you would be better off with iBet or not.

Most profitable traders should be better off under iBet unless their profit comes almost entirely from rebates.

For further details on iBet Financials, please contact Rowland Turton on [email protected]

 

[clbfjc]

Hi,

I know you have said previously that you have large volume STIR traders that I presume mainly spread. Are you able to use TT autospreader to spread Bund / Bobl, Schatz / Bobl etc etc?

 

[ibetfinancials]

Hi clbfjc,

Yes, you can use the TT autospreader to spread BBS. You could also use the Stellar or CQG autospreaders which we also offer. Please contact me at the email below for software and commission costs.

Any yes again, usually STIR spreads. Some small scalping outrights I believe also.

For further details on iBet Financials, please contact Rowland Turton on [email protected]

 

[bootsyjam]

Hi BF2,

Financial Spread Betting isn't a "scheme" ("movie scheme" etc).

HMRC granted iBet (Kyte Group) a spread betting license, just like they issued to hundreds of other spread betting firms in the UK. The fact that iBet are the only company in the UK to choose to use professional futures trading software and hedge all trades instantly directly into the market is irrelevant.

Financial Spread Betting is tax free in the UK but HMRC still gain revenue from betting levy tax and corporation tax on the spread betting firms profits. As 90%-99% of spread betting clients lose money, HMRC are actually very wise to tax the trade itself (millions) and then spread betting firm's profits (large) as opposed to the profits (comparatively tiny) of they few thousand people in the UK who actually make regular profits Spread Betting."

Hey there-looking to become more tax efficient and on the surface this tax free/spread betting wrapper sounds awesome as I'm already using futures charts with volume in order to enter the market with an ECN spot forex broker.

But here's the thing that I don't get. Whilst spread betting tax free sounds fantastic, I can't see that there is any benefit.
Simply because if spread betting is your primary source of income then is treated as such by the UK authorities and taxed using either capital gains or income tax levels (I forget which-think it's the latter).

So if the either independently funded or company backed traders are using Ibet and it's their primary source of income then they're going to get taxed anyway.

How about I put it this way: if I was using Prospreads to enter the same futures markets, and I earned 200k per annum, and I had an account with Ibet as well and earned 200k per annum on that account-what is the difference in the tax treatment between these 2 accounts? How is earnings from Ibet treated any differently-or am I missing something? Merry Xmas everyone!

 

[Aston1st]

Hi BF2,

Financial Spread Betting isn't a "scheme" ("movie scheme" etc).

HMRC granted iBet (Kyte Group) a spread betting license, just like they issued to hundreds of other spread betting firms in the UK. The fact that iBet are the only company in the UK to choose to use professional futures trading software and hedge all trades instantly directly into the market is irrelevant.

Financial Spread Betting is tax free in the UK but HMRC still gain revenue from betting levy tax and corporation tax on the spread betting firms profits. As 90%-99% of spread betting clients lose money, HMRC are actually very wise to tax the trade itself (millions) and then spread betting firm's profits (large) as opposed to the profits (comparatively tiny) of they few thousand people in the UK who actually make regular profits Spread Betting."

Hey there-looking to become more tax efficient and on the surface this tax free/spread betting wrapper sounds awesome as I'm already using futures charts with volume in order to enter the market with an ECN spot forex broker.

But here's the thing that I don't get. Whilst spread betting tax free sounds fantastic, I can't see that there is any benefit.
Simply because if spread betting is your primary source of income then is treated as such by the UK authorities and taxed using either capital gains or income tax levels (I forget which-think it's the latter).

So if the either independently funded or company backed traders are using Ibet and it's their primary source of income then they're going to get taxed anyway.

How about I put it this way: if I was using Prospreads to enter the same futures markets, and I earned 200k per annum, and I had an account with Ibet as well and earned 200k per annum on that account-what is the difference in the tax treatment between these 2 accounts? How is earnings from Ibet treated any differently-or am I missing something? Merry Xmas everyone!

So if I go to the Casino each night to win money on the Wheel, and it's my only source of income then it's taxable?

Can you please direct me to the particular reference where HMRC states this?

 

[terribletrader]

did we get any clarification on iBet / Kyte .
I dont think bootsyjam is correct in his claims you would be taxed ...