Zero spread vs DMA discussion?

Jack o'Clubs said:
FWIW, our professional DMA system at work also does not allow physical delivery. Unless you're a commercial why would a 'speculating firm' (for COT definition purposes) want to take the risk of a trader forgetting to rollover his position and ending up having to take delivery of a commodity?
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That's not the question I'm asking, I'm not concerned with the 'why'.
 
Jack o'Clubs said:
Not valid arguments, I'm afraid.

Is a hedge-fund 'not professional' because when it buys or shorts a UK stock through its broker it will use an OTC CFD to avoid stamp-duty? Of course not.

Spreadbetting is effectively an OTC tax-efficient wrapper for individuals. Look at a firm like Prospreads, cost aside it is no different from DMA access. Can a 'professional' use it, ie trading inside a fund - no because the tax benefit won't apply. The fact that many spreadbet firms use sharp practices is because they're dealing with muppet retail punters and can get away with it, not because in itself it is a 'spreadbet'.
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CFD's are not the same as spread betting are they? There are exchange traded CFD's that allow physical delivery.
 
new_trader said:
CFD's are not the same as spread betting are they? There are exchange traded CFD's that allow physical delivery.
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Most CFDs are OTC. I see more similarities than differences: they are used by institutional investors to avoid tax (ie SDRT on UK shares), just like OTC spreadbets are used by individual investors to avoid tax (CGT and SDRT).
 
ive seen it both ways ive seen serious guys spreadbetting in good size in ther PA and ive seen guys doing DMA (through broker tho) with all the kit but no clue

meh.
 
Jack o'Clubs said:
Most CFDs are OTC. I see more similarities than differences: they are used by institutional investors to avoid tax (ie SDRT on UK shares), just like OTC spreadbets are used by individual investors to avoid tax (CGT and SDRT).
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OK, you seem to have some sort of a clue. So, my question:

Think of the people/companies that would either want to sell and deliver a commodity or want to buy and take physical delivery of a commodity and tell me if they can do this via a spread betting firm and name it/them.

Thank you.

This forum is so overly biased towards indicators and pretty shape trading 'systems' that the spread betters will tell you there is no need to go DMA. Most of them have probably never had a DMA account and aren't able to give a fully informed opinion about both. You need to seek out how you want to trade and what you NEED (or not) for yourself. That's my advice.
 
new_trader said:
OK, you seem to have some sort of a clue. So, my question:

Think of the people/companies that would either want to sell and deliver a commodity or want to buy and take physical delivery of a commodity and tell me if they can do this via a spread betting firm and name it/them.

Thank you.
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Oh, you know the answer to that. If physical delivery is important for you then clearly you need DMA. But then not all futures allow delivery - its not even an issue if you trade index futures or NDF currencies. My point (and the reason for the CFD analogy) is that while all traders needing physical delivery are professional, it does not follow that all those who speculate and have no need for delivery, are unprofessional.

How about you answering a question of mine (then I can see, equally condescendingly, if you have some sort of clue): aside from cost what is the difference between trading a future through Prospreads and DMA? Thank you.
 
Jack o'Clubs said:
How about you answering a question of mine (then I can see, equally condescendingly, if you have some sort of clue): aside from cost what is the difference between trading a future through Prospreads and DMA? Thank you.
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oooh oooh pick me pick me!
 
Jack o'Clubs said:
Oh, you know the answer to that. If physical delivery is important for you then clearly you need DMA. But then not all futures allow delivery - its not even an issue if you trade index futures or NDF currencies. My point (and the reason for the CFD analogy) is that while all traders needing physical delivery are professional, it does not follow that all those who speculate and have no need for delivery, are unprofessional.

How about you answering a question of mine (then I can see, equally condescendingly, if you have some sort of clue): aside from cost what is the difference between trading a future through Prospreads and DMA? Thank you.
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:?:

someone said tax already so the only one i can think of is counterparty risk?

maybe fsa regulation. thats two.
 
DashRiprock said:
:?:

someone said tax already so the only one i can think of is counterparty risk?

maybe fsa regulation. thats two.
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The only difference i find is that ProSpreads offer DMA as a spreadbet, DMA through an arcade would mean paying a fix sum of around £2000+ a month before a trade, with ProSpreads its all added into their spreads with no other fee's.
 
Would there be much call for a UK based FSA regulated version of Prospreads? Actually, it would be slightly different to prospreads. the price would be the actual futures price (and you would be able to see your trade hit the market as everything would be directly hedged without question - complete transparency) and then a comm would be charged each day. the spread wouldnt widen as sunch. it would be equal to or perhaps marginally less than prospreads. would this interest anyone?

Maybe some of you 3000+ posts chaps can help me here?
 
trader30 said:
Would there be much call for a UK based FSA regulated version of Prospreads? Actually, it would be slightly different to prospreads. the price would be the actual futures price (and you would be able to see your trade hit the market as everything would be directly hedged without question - complete transparency) and then a comm would be charged each day. the spread wouldnt widen as sunch. it would be equal to or perhaps marginally less than prospreads. would this interest anyone?

Maybe some of you 3000+ posts chaps can help me here?
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It is regulated by the FSC of Gibraltar so you'll have to check the implications there.
"Client funds are held in a segregated account, separate from the activities of ProSpreads Limited."
ie if Prospreads go down, you still have access to the money in the bank.
If the bank goes down, then you're only covered by FSC insurance if there is any.

Speaking of which, does prospreads allow limit orders to be used where you can trade inside the spread?
If so, are they acting in the background to get their spread back somewhere by scalping the underlying market?

Edit: I just got an answer from them.
ProSpreads: Client funds are held in a segregated account in Barclays of London

you: So, does that come under FSA or FSC account protection?

ProSpreads: FSA
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personally, i would swap my FSC for FSA anyday. maybe others wouldnt be as bothered.

i would guess prospreads would allow limits inside the spread but i dont know. ive never actually traded with them.

do you think there may be many chaps on here who might be interested in using a slightly cheaper uk version of prospreads? does anyone use them?

is there a search function where i can see who uses them? im new to t2w.

i wonder who has bought the domain www.trade2lose.com ?! how silly.
 
basically what i think happens is you can make inside prices and all prospreads to is place an identical order on teh exchange and charge you commission for every fill you get.
 
DashRiprock said:
basically what i think happens is you can make inside prices and all prospreads to is place an identical order on teh exchange and charge you commission for every fill you get.
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from their FAQ:
Does ProSpreads charge commission on electronic betting?
No. We derive our income from making a spread around the price of the underlying security.

SO, where do they make the money?
 
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