UK Spreadbet firms to be investigated by the FCA

[Xela]

I'm sure there would have been some interesting scenes down there at court.

It's a long time ago, now, and I don't remember it, myself, but this was more or less the reason for the Ladbroke's share-price collapse and change of managerial ownership - they knew their gaming licence would never be renewed because they couldn't satisfy a court they were "fit and proper people" within the meaning of the Gaming Acts.

That was way back in the 1970's, I think, well before my time anyway, and the regulator then was the Gaming Board (predecessor to the current Gambling Commission), but as with everything else, regulation has only gradually increased since then.

 

[southall]

Spread bet firms are cheats.
They have a habit of stopping you out at the worst price.
Rejecting your orders if you are winning punter and they cant hedge you eg you are trading a fast market or binary option, but they accept all bets from losing punters at large size in the same situation.

Basically the same as Bucket shops from Livermores day.

 

[Pippi436]

Its not so much that they are cheats - they dont really need to cheat at all. Their clients cant trade for shit, they will piss away the account in no time on their own. Just read the IG statements, their average client lifetime is below a year. So they need aggressive marketing campaigns to constantly bring in fresh meat. Agressive marketing + very low entry barrier + excessive leverage = a lot of blown accounts = alot of $ for IG, Plus500 and so on. Thats their core business model, they are more advertising firms really than trading/brokerage firms.

 

[Tim Smith]

they dont really need to cheat at all. Their clients cant trade for shit, they will piss away the account in no time on their own.

This is the honest truth.

The same goes for the bookies, casinos, lotteries and anything else of that genre.

99% will pay both the house's profit and the 1%'s winnings.

99% is bigger than 1%, which is why you hear so many complaints about the house cheating, being crooked and "should be shut down".

Why do you think the CFD providers run A/B books ? The B books don't go anywhere near the real market / liquidity providers because the CFD providers know there's a fat chance of you "winning" and if you do "win" it will be relatively small and easily paid for by all the loosers on the B-book and still leaving the CFD provider with more than enough profit. Once you start winning consistently, then you get shifted to the A-book because they know they need to be more serious about hedging their risk because you've demonstrated you're a real risk rather than a theoretical one.

 

[Visaria]

7000th post!

Spreadbetting firms hedge their entire portfolio of bets with OTC products offered by investment banks. I know this because I'm acquainted with someone who works or used to work at the HSBC desk which dealt with this.

 

[Visaria]

Spread bet firms are cheats.
They have a habit of stopping you out at the worst price.
Rejecting your orders if you are winning punter and they cant hedge you eg you are trading a fast market or binary option, but they accept all bets from losing punters at large size in the same situation.

Basically the same as Bucket shops from Livermores day.

I think spreadbetting is an outstanding way of trading the markets. I've never had an account closed and I've made money from them for 20 years. I personally know guys who have made millions from them, again no problems.

In general, they do not like scalpers, those who trade in and out in 5 secs, those who try to take a tick here and there. If you want to do that, then a futures broker will more than welcome you (commissions!)

As for stops, well u set the stop and they fill u best they can (all computerised, no one is manually looking at your 1 contract order to try and screw you!), just as a futures broker would. If you have a complaint re a fill, they will listen to you and amend it if is really is unfair. Try doing that with IB!

 

[wintergasp]

IG wouldn't make it past their first renewal. AHAHAH .

That is quite interesting, thanks for that info. I'm sure there would have been some interesting scenes down there at court.

I doubt it. Just look at where IG's founder went to school to.

 

[wintergasp]

7000th post!

Spreadbetting firms hedge their entire portfolio of bets with OTC products offered by investment banks. I know this because I'm acquainted with someone who works or used to work at the HSBC desk which dealt with this.

No, this is false.

I know this because I worked as a liquidity provider / market maker and dealth with CFDs and OTC providers directly.

They may hedge some using futures but unlikely in 90% of the cases.

 

[wintergasp]

I think spreadbetting is an outstanding way of trading the markets. I've never had an account closed and I've made money from them for 20 years. I personally know guys who have made millions from them, again no problems.

In general, they do not like scalpers, those who trade in and out in 5 secs, those who try to take a tick here and there. If you want to do that, then a futures broker will more than welcome you (commissions!)

As for stops, well u set the stop and they fill u best they can (all computerised, no one is manually looking at your 1 contract order to try and screw you!), just as a futures broker would. If you have a complaint re a fill, they will listen to you and amend it if is really is unfair. Try doing that with IB!

You've made money from them for 20 years and never figured out you could trade the equivalent on regulated exchange-listed venues such as futures ? ... waouw

What you say is completely wrong. CFDs providers can have automated stop hunters because a CFD is a proprietary OTC product.

Futures brokers can't because they root your order to the exchange.

I doubt either you or your friend has ever made money.

 

[CBC]

You've made money from them for 20 years and never figured out you could trade the equivalent on regulated exchange-listed venues such as futures ? ... waouw

? Spreadbetting is tax free in lots of Europe, any trader would use a spread betting company to avoid tax. If it wern't tax free then they would lose a tonne of clients.