Worldspreads; WorldSpreads shares down after loss warning

[Black Swan]

So much for the zero spread offers eh? Conor reckons he's got his strat. spot on, wouldn't mind him coming back on here to flesh out his reasoning on that as similar to IG these overseas excursions appear to be a real drag on profits and cash flow, perhaps the expansion initiative had dreadful (unforseen) timing?

IMHO we're going to be left with 2-3 major SB players after a period of takeovers/consolidation, problem for the failing SB firms is they have nothing to offer in a trade sale except a database of (mostly unhappy) clients..

Shares in financial spread-betting company WorldSpreads Group plc fell around 15% after it warned of a small loss for the year to end-March instead of the expected profit.

The Dublin-based company said in its update on current trading that returns from investment in new overseas offices were taking longer than originally anticipated.

This was a result of longer than expected lead times in its marketing campaigns and lower than expected market volatility.

While existing operations were delivering revenue growth in line with management expectations, the accelerated second-half growth forecast for the group at the interims had not yet materialised.

WorldSpreads said core trading activities continued to show positive growth, with transaction numbers up more than 50% in calendar 2010, active clients up more than 40% and client funds up more than 80%.

The group became operational in France, Germany, Denmark and Sweden in October and strengthened its IT, back office, legal and compliance functions to support its growth strategy.

CEO Conor Foley said the board remained convinced that its strategy for overseas expansion would achieve its original objectives but the impact of its investment may not now be evident until the new financial year starting on April 1.

WorldSpreads shares were down 8.75p at 48.25p.

http://www.stockmarketwire.com/display/?id=4067960&sectionId=standardNews

 

[Ross Spur]

Maybe they should have tried to sort out the basics before the silly spreads offer and expansion program?

 

[gle101]

So much for the zero spread offers eh? Conor reckons he's got his strat. spot on, wouldn't mind him coming back on here to flesh out his reasoning on that as similar to IG these overseas excursions appear to be a real drag on profits and cash flow, perhaps the expansion initiative had dreadful (unforseen) timing?

IMHO we're going to be left with 2-3 major SB players after a period of takeovers/consolidation, problem for the failing SB firms is they have nothing to offer in a trade sale except a database of (mostly unhappy) clients..

Shares in financial spread-betting company WorldSpreads Group plc fell around 15% after it warned of a small loss for the year to end-March instead of the expected profit.

The Dublin-based company said in its update on current trading that returns from investment in new overseas offices were taking longer than originally anticipated.

This was a result of longer than expected lead times in its marketing campaigns and lower than expected market volatility.

While existing operations were delivering revenue growth in line with management expectations, the accelerated second-half growth forecast for the group at the interims had not yet materialised.

WorldSpreads said core trading activities continued to show positive growth, with transaction numbers up more than 50% in calendar 2010, active clients up more than 40% and client funds up more than 80%.

The group became operational in France, Germany, Denmark and Sweden in October and strengthened its IT, back office, legal and compliance functions to support its growth strategy.

CEO Conor Foley said the board remained convinced that its strategy for overseas expansion would achieve its original objectives but the impact of its investment may not now be evident until the new financial year starting on April 1.

WorldSpreads shares were down 8.75p at 48.25p.

http://www.stockmarketwire.com/display/?id=4067960&sectionId=standardNews

I agree on the part, they have to skip their 0 spread offer. No experience traders really takes it for a serious offer in the long run. What they should do, is to work on their Goodwill, which has taken a beating in the last years.

 

[arabianights]

who cares?

edit: that sounded a bit confrontational, wasn't supposed to be... I really meaning what's the relevance...?

 

[Ross Spur]

who cares?

edit: that sounded a bit confrontational, wasn't supposed to be... I really meaning what's the relevance...?

Don't really give a flying proverbial, but I think WS deserves it.

 

[montmorencyt2w]

IMHO we're going to be left with 2-3 major SB players after a period of takeovers/consolidation, problem for the failing SB firms is they have nothing to offer in a trade sale except a database of (mostly unhappy) clients..

From your other posting:

What also concerns me is the possibility of one of the SB companies, such as WS, going pop. I'd be happy to see some determined consolidation taking place in this industry to benefit/protect the consumer..

So long as they didn't become monopolistic/cartel-like with it. (We already see that with the big retail banks, although they supposedly compete).


Well, we have FXCM, Prospreads, and (so we are told by Peter Cruddas), CMC Markets competing not on spreads or fancy offers, but on execution, and there seems to be some suggestion that CS is also trying to compete at that end of the market (even though they also still do offers and compete on spreads).

We have SLM, not particularly competitive on spreads, and with a few execution problems (jury still out I think), but with a so far USP of combining spread-betting with MT4 (which wasn't easy, so they told me). I hope that experiment proves successful, but we will have to wait and see how it plays out.

 

[Black Swan]

From your other posting:



So long as they didn't become monopolistic/cartel-like with it. (We already see that with the big retail banks, although they supposedly compete).


Well, we have FXCM, Prospreads, and (so we are told by Peter Cruddas), CMC Markets competing not on spreads or fancy offers, but on execution, and there seems to be some suggestion that CS is also trying to compete at that end of the market (even though they also still do offers and compete on spreads).

We have SLM, not particularly competitive on spreads, and with a few execution problems (jury still out I think), but with a so far USP of combining spread-betting with MT4 (which wasn't easy, so they told me). I hope that experiment proves successful, but we will have to wait and see how it plays out.

I reckon a lot of white labels will disappear, and some of the weaker independent players will too. Perhaps if we had excellence, from 3-4 sources all competing on innovation and service, then we'd be doing OK.

What's for sure is that the gimmicks (in some instances dishonest gimmicks) aren't working and I'm glad of that as no matter how many times you tell folk that an SB firm cant deliver a consistent 1 pip spread on, for example, EU they never believe you. As to why and how these undercapitalised Co's could think they could crack other continents is beyond me.

 

[tim3]

I agree on the part, they have to skip their 0 spread offer. No experience traders really takes it for a serious offer in the long run. What they should do, is to work on their Goodwill, which has taken a beating in the last years.

Agree I am not intrested in 0 spread as it makes me suspicious as to how they achieve it.

Just give us fair spreads and dealing.

 

[capitalspreads]

ummmmm

CS has been offering 1 pip on Eur/Usd for almost a year .... no plans to change at all.

 

[montmorencyt2w]

I reckon a lot of white labels will disappear

Maybe, but of those I am familiar with, spread-betting is not their core business.
I assume they got into white labelling because:

1. They could see a market expanding and didn't want to miss out
2. This way they could do it with relatively little effort* and just some marketing costs.
3. If spread-betting were really to take off, it might eat into their core business, so better to be in than out.
4. It could be done with relatively little risk. If they are just getting a cut of the profits from the underlying platform, then they don't have to worry about clients winning in the way that LCG does. True if they win too much, then the White Label won't get as much of a cut, but they shouldn't actually lose.

They also don't have to worry about the day to day running of the platform. It's just a nice little cash cow to supplement their main business. That's the way I'm seeing it at the moment, anyway.

[* Although, Tradefair, for one, say they did put a lot of effort into making their front-end to the platform more user-friendly, so it would seem that it may not be quite as hands-off as I was suggesting]

 

[montmorencyt2w]

ummmmm

CS has been offering 1 pip on Eur/Usd for almost a year .... no plans to change at all.

I'm guessing that Black Swan meant that it could not be guaranteed consistently in the sense that in some circumstances you wouldn't see the benefit of it, i.e. slippage, requotes & bad fills. I assume this is more of an issue when size becomes bigger.

 

[tar]

ummmmm

CS has been offering 1 pip on Eur/Usd for almost a year .... no plans to change at all.

Oanda did for 8 years

 

[geewcee]

Coincedence that I cant seem to admin my WS account today? I'm trying to move stops etc and the software is just not working at all. *sigh* Have to admit I've been pretty happy with WS up till about 2 weeks ago but since then I'm getting referrals on every single trade. Time to shift companies?

 

[gle101]

Coincedence that I cant seem to admin my WS account today? I'm trying to move stops etc and the software is just not working at all. *sigh* Have to admit I've been pretty happy with WS up till about 2 weeks ago but since then I'm getting referrals on every single trade. Time to shift companies?

Yes it looks like you been put on constant referral to a dealer. This unlawful behavior by the SB should result in them being stripped of their SB license. It is not allowed according to the EU MiFID financial directives. I am amazed that a SB company today practice this kind of discrimination. Ask them up front, if the answer is yes, move away instantly. Do not continue to trade with them. Trading is hard enough, one should not put up with this kind of treatment. WS is doing themselves an injustice, the company will continue to move move downwards in unison with the share price, until they realize, they should put the client best interest in the forefront of their service.

 

[Ross Spur]

Coincedence that I cant seem to admin my WS account today? I'm trying to move stops etc and the software is just not working at all. *sigh* Have to admit I've been pretty happy with WS up till about 2 weeks ago but since then I'm getting referrals on every single trade. Time to shift companies?

Or time to video the evidence and contact the FSA and/or FOS? I suspect that if MiFID was clear about this then the end result will be fewer SBs giving fully automatic trading with wider spreads... like CMC Next Gen, in fact.

 

[Ross Spur]

This unlawful behavior by the SB should result in them being stripped of their SB license. It is not allowed according to the EU MiFID financial directives. I am amazed that a SB company today practice this kind of discrimination.

Unlawful? I think the defence is that they're not obliged to take a trade.

 

[geewcee]

Once CMC get the full range of LSE markets launched on their next gen platform I'm going there anyway. I'll give Worldspreads a buzz on Monday and ask why I'm getting referrals everytime. I wouldn't mind but I'm hardly a big player, most of my trades are £1 per point.

 

[Ross Spur]

Once CMC get the full range of LSE markets launched on their next gen platform I'm going there anyway. I'll give Worldspreads a buzz on Monday and ask why I'm getting referrals everytime. I wouldn't mind but I'm hardly a big player, most of my trades are £1 per point.

Whatever the stake, you won't have any problems if you're losing consistently.

 

[gle101]

Unlawful? I think the defence is that they're not obliged to take a trade.

Well, MiFID clearly states that you are not allowed to discriminate a client. To flag a client in order to restrict the client from trading is nothing less than discrimination.

 

[PipStar]

Well, MiFID clearly states that you are not allowed to discriminate a client. To flag a client in order to restrict the client from trading is nothing less than discrimination.

They all do it because they know they can get away with it. You keep mentioning MiFID but its's worthless because there is no regulator that investigates these spreadbetters to stamp out unfair trading pratices. See what's happening now in the usa where all 16 members of the NFA/CFTC are under investigation for any possible unfair practices. And two usa brokers Ikon and Gain/Forex.com were fined for breaking the rules.
unfortunately, it's just not happening this way in the U.K or european union.

As for Worldspreads, don't lose any more time with this outfit. There is much better than them out there.