Three of the biggest spread betting providers are calling for stricter oversight of the industry after the recent Worldspreads and MF Global bankruptcies showed several flaws in the FSA supervision role.
One of the most important rules governing the financial activity respects to the segregation of client funds. Spread betting and CFD providers should separate client funds from their own. When opening an account and depositing funds, a client is not buying an equity position in the provider but rather contracting its services. The client is responsible for any losses deriving from its buying and selling activity but it should not incur in any risk deriving from the provider activities. In this sense, the FSA imposes providers to segregate client funds, holding them in separate accounts from the company funds.
Unfortunately both MF Global and Worldspreads did not comply with FSA rules and client funds simply vanished. To protect from this situation there is still another rule known as the Financial Services Compensation Scheme that fully protects the first £50,000 a client holds in his account. Although the vast majority of clients is in this situation, there are some that hold more than that amount and will see their money burned by the provider with no guarantee of recovering beyond the £50,000 threshold.
IG Index, CMC markets, and London Capital Group stated that the FSA has been spending too much resources with the biggest providers in the industry but was not able to conveniently scrutinise the financial affairs of the smaller operators. They are asking for further scrutiny of the industry and in a more equitable way.
It is doubtful that the FSA has the necessary resources to further scrutinise all the smaller players, at least in the same way it does for the biggest ones. One thing is for sure, something needs to be done regarding the segregation rule. Regulation should be changed such that client funds are assured to be separated from provider funds. It should be created a mechanism such that the client is not relying on the provider complying with its obligations but instead being certain the funds are held in a risk-free account.
Spread betting companies complying with FSA rules are concerned that clients may lose confidence after the Worldspreads and MF Global cases and have been sending emails to clients in order to further assure them their funds are secure. Spread Co is just an example. Earlier this month, Jonathan Silvester, Head of Compliance, stated in an email: “…all funds that you deposit with Spread Co, as a Retail Client, in connection with your account, are held as Client Money in accordance with FSA rules. This means that your funds are segregated from Spread Co’s own money.” He also added that “controls and procedures are designed to ensure that our clients are protected in the unlikely event that Spread Co was to become insolvent.”
09 Mar 2012
CMC Markets, a spread betting provider based in London, has just launched an Android application to add to its portfolio of mobile software.
CMC has been offering mobile trading for iPhone and iPad since sometime ago but was lacking the Android market, a significant part of spread betting traders. The new application will allow Android clients to do almost everything they can do when using the main application, so that they can trade without limitations when they are on the go, out off office. The application includes:
- Powerful filter system – an easy to use search feature that allows traders to find the markets they want and to analyse performance and volatility;
- Factsheets – information about each market including bid-offer spreads, margin requirements, real time news, and additional information;
- Watch lists – traders can set their own watch lists with their favourite markets for easy access. These lists can be synchronised across platforms;
- Complete order features – traders can place stop and limit orders and even trailing stops as they can with the desktop version;
- Payments – funds can be uploaded to the trader’s CMC account directly from his phone;
The introduction of this Android version by CMC was a widely expected move in a time mobile platforms are growing at a fast pace. With the huge competition amongst spread betting companies, specially in the UK, there is a need to capture clients’ attention through extra tools and functionality. Over the last two years we have been assisting to several improvements in spread providers benefitting traders. Today’s spread better is no longer the City trader from years ago, with years of investment experience and a huge net worth. Recent data shows that spread traders come from everywhere now and most are not high earners.
Worldspreads stated in a press release that the company is delighted with the response to its mobile trading platforms that allow clients to place trades from their iPhone and iPad devices.
According to Worldspreads, as of 12 January 2012, over 17% of its clients have at least logged on to their accounts to review their positions using the mobile platform. Over 4% of the company clients place at least some trades using the mobile platform and in the UK this percentage doubles to 8%.
Conor Foley, WorldSpreads CEO, commented: “It is encouraging to receive the feedback that there has been widespread satisfaction from WorldSpreads’ clients regarding our new mobile trading platform. I am confident that the next releases will continue to improve the client’s mobile trading experience.”
The company launched an iOS optimized platform in November and it is expected to launch an Android optimized version in Q1 2012.
Although WorldSpreads is offering mobile trading for iPad, it is optimized more for iPhone than for iPad since it does not use the extra functionality it could to take advantage of the much larger screen an iPad has. In fact, spreadbetting.com has been evaluating mobile software provided by spread betting companies and came to the conclusion that only a few make a separation between the iPhone and the iPad and take advantage of the enlarged screen. IG Index, GFT, and CMC Markets lead this small group.
05 Dec 2011
CMC Markets, one of the leading spread betting and CFD providers, has just introduced nine new commodity markets for clients to trade.
CMC added palladium, orange juice, platinum and some other commodities to its already large offer of cash commodity markets. With this latest addition, clients can now choose from 26 different markets.
At the same time, CMC has also reduced spreads on some existing commodity markets. Clients can trade gold at a 0.3-point spread and brent crude at 3.5 points.
Peter Cruddas, CMC founder, commented: “When other markets are volatile, traders often move to commodities as part of their risk strategy. With this in mind, we have reduced the spreads on a number of our cash commodities while introducing nine new commodities to our platform.”
CMC has been investing heavily in its trading platform. According to the company, since the launch of its Next Generation platform one year ago, it has been experiencing a large growth in the number of clients, making the business more cost effective and allowing the company to cut on spreads.
Peter Cruddas added: “A key part of our strategy has been to invest heavily in bringing our customers the best technology on the market, and our Next Generation platform allows us to trade efficiently so that we can pass the cost savings onto our customers. These spreads are some of the tightest anywhere on the market, and we are also committed to keeping our average spreads low.”
07 Oct 2011
CMC Markets, one of the leading spread betting and CFD providers, has announced the introduction of several changes in its trading platforms. The company is launching several enhancements in its charting package, improving platform features, enhancing its mobile platform, and improving the order ticket.
CMC, which presented a loss in 2011 due to strong investments in its new NextGeneration trading platform, continues to surprise traders with new features added to the trading platform. The company wants to provide the best trading environment and is relying on client requests to develop new features and add to the trading platform. As part of the enhancements to introduce in October, CMC made a strong improvement in the charting package to allow traders to easily manage their studies and trades. Now it is possible to save all chart analysis in watch lists and load them when needed. New time frames were added: 2-minute, 10-minute, and monthly. CMC also added new technical indicators and several customisation options. It is possible to change colours of charts and indicators in a way that other spread betting companies don’t have to offer. Coming later in the month, historical data will go behind up to 20 years for indices, commodities and FX pairs.
Several minor improvements were added into the trading platform to enhance the trader’s experience: support for drag and drop, live spread on quote panel, three different platform display sizes, horizontal and vertical scrollbars, and some other cosmetic changes.
In the mobile trading platform, CMC will be redesigning its charting tool for iPhone and iPad to include several drawing tools, new chart types, and new technical overlays. The factsheet will be redesigned in iPhone to be in line with iPad and the web. And an important improvement: watch lists and settings will now be synchronized across all platforms, making it easy to change from platform without losing data.
Finally, the order ticket was also enhanced in order to allow the user to further customize it to his needs. The user can set default limit order preferences such as expiry and distance from current market price, or set default take profit and stop loss distances to speed up the trading process.
The complete list of new features and enhancements introduced by CMC Markets is long and clearly shows the company is investing heavily in the development of a platform that is really unique. The customization options available in both the web and mobile platforms are huge satisfying each trader tastes.