Best Thread Capital Spreads

[capitalspreads]

we are currently quoting FTSE 250 stocks on the phone but not yet online. If you have a request, e-mail ( [email protected] ) or phone (02076000110) us and we will add it to the online platform. As you might imagine adding all the FTSE 250 for dec and mar when 98% will never be traded is a) a pain in the b** and b) rather wasteful of price engine capacity.

We have no plans yet to quote energy contracts, aside from the oil already quoted although yet again if we have a specific request we would do our best to comply.

Simon

 

[neil]

Simon
Why not hold a poll here and select "X" number of volatile US and UK shares for daytrading ie. positions must expire at end of that day?

That would make it easier for you to offset/hedge trades and a tighter spread for us daily traders.

Um - with a tight spread of course 🙂

 

[stevet]

capitalspreads

did you get a response from your IT people about API access to your trading platform?

 

[capitalspreads]

niel

we are quoting about 100ish daily markets of the most volatile UK US and German stocks online at the moment. Unfortunately they are not on the simulation site (there is a limit to my talents!).

If there is demand, as I say, for further specific shares please do start a poll. The worst I can do is a 'Tony Bair' and completely ignore it (unless, of course, you happen to be George Bush).

Simon

 

[jklondon]

Hey CS - API API API !! . Would be very interested to know if you have one OR planned to provide one. Would be a first for a SB company to my knowledge.

 

[capitalspreads]

jklondon

In conversation with our platform IT developers they felt that at this stage we did not have the ability to do this. I have put it on the list of desirables but....?....

I hate to be negative about any potential development but I dont think that this one is going to happen in the near future.

Sorry
Simon

 

[moneyfac]

little extras

Capitalspreads,

Are you goingf to add ftse 250 companies in at some point?

Also, on a technical issue, why is it that on the volatile indices you can trade large sums but on the shares it is often limited to 40 points?

Thanks in advance.

 

[moneyfac]

oops

Ignore question 1 !!

 

[capitalspreads]

moneyfac

the reason for this is that the indices are very liquid markets and we, as a company, can easily get some kind of reasonable hedge away even if the market is moving against us. In the individual stocks we sometimes find that the market size can be quite small and in hedging the client business we are actually moving the market and in an adverse situation we could find ourselves unable to hedge.

Remenber a £40 bet equates to 4000 shares and in most shares that represents a sizable worth.


Simon

 

[kevin546]

JKLondon

Regarding IGIndex I know they have a wider spread on the FTSE than most other SB companies but is your statement correct, the price you request from your order is the price you get. Have you noticed if this still applies to different size deals. ie D4F produce instant fills up to £25 pp thereafter you get a re-quote of 2 points. Would IG still be able to provide the requested order price on deals above £25 pp. I suspect that all SB companies provide good fills when dealing in smaller units

Kevin

 

[capitalspreads]

Like all SB companies we would try to accept all deals (right up to our maximum) every time, but we (and our clients) have to be realistic about this. no matter how fast your computer systems are there is no way that any SB can get the exchange info ..put it into its own price engine ...send it out to the clients....recieve the deal back from the customer.... and then apply human reaction times from the SB dealers etc before the client (who may recieve the initial exchange information at the same time as the SB) can react.
So that if the client trades in £200 a point on the Dow over a Non Farm payrolls number he is unlikely to get the trade as this could hand an immediate 6-10k loss to the dealer! You have to ask yourself "would I accept it?".
We have yet to disallow any market hours indices trade (including several £200 a point bets on our daily FTSE price which is only 3 points wide) even though nominally there was not the market size available to hedge. But that does not mean that we would never do so.
I cannot comment on IG policy as a) I dont work for them and b) I have never traded online with them. In general I have found them a perfectly reasonable company to do business with.

You have to ask whether for the very few times you might miss a trade is it worth the guaranteed extra spread that you have just paid on every deal.
If you are a regular £20 a point player (the average size) every single time you trade in the Indices Markets with IG you are paying at least 1 extra point and often a great deal more in wider spreads than with us. Or put another way you are paying a minimum £20 fee for the priviledge of dealing with them.

As I have already stated all we can do here at CS is give you the markets, if you wish to continue trading with our competitors that is entirely your decision.

Simon

 

[kevin546]

Capitalspreads

I accept your comments and grateful for you taking the trouble to explain your companies position. You have already stated your case. My question was to JKLondon in respect to IGIndex.

They may provide a wider spread and to be frank that is why I have avoided them, however I have heard some good things about them. So I would be interested in the policy they follow.

As I have said I trade with D4F and like you they have a 3 point spread on the FTSE, in fact this appears to be a popular spread as it is also offered by TradIndex and Finspreads.

I can only comment on my experience with D4F but any deal over £25 on the FTSE was delayed costing 2 points sometimes more, yet they promised instant fills. I accept the market moves and D4F method is easy to see why a delay takes place. One would assume all companies have similar methods but if IG have a policy of the price you request is the price you get then that could just prove to offer better value, even allowing for the spread.

Lets remember that this will not affect the vast majority of customers as I suspect most are not daytraders. It is only daytraders that are concerned with quick fills. You have already said that you may also have to deal with market moves he only difference is that should that apply you would cancel the deal, as yet this has not happened. Do you therefore allow your clients the odd 2 point move. Returning to IG and the spread, if as JKL states they do provide the price requested then the only thing that matters thereafter is if their price moves up or down by as many points as D4F or whoever. If the price moves are exactly the same then the company that provides the price requested offers the best value and certainly better than D4F because I know from trading with them at best I could expect a loss of 4 points from a round trip from the price I request. The other companies I have mentioned and your own remain to some extent an unknown quantity.

If you are able to offer prices without change as described then you would offer better value on spread to that of IG. The test is how reliable are your prices and how frequently do you either not offer a deal or give the client a 2 point + or - from the original price. If you do not produce a different price then you are the first SB company that I have come across to do this. I would add that the others promised instant fills up to £300 but it just is not true so beware how you respond. I will probably give your company a try when you are more established and have a bit of spare time. I would add that others have been very positive like your own approach only to fail to come up with the goods when tested with larger deals.

Kevin

ps JKLondon I would be interested in your comments re IG

 

[jklondon]

As far in my dealings with IG the price I have 'clicked' on is the price the trade was done at. Note , I normally trade <10 per point. I was told on the phone this is their policy but there was nothing in writing ! So who knows. Generally happy with IG for now dont have the time to move.

In terms of 'strange' behaviour on prices as I understand is a frequent occurance with D4F(?) I have not seen this on indicies/stock but only one with binary prices.

Slippage: IG are ok on this , remeber unless you do a guarenteed stop loss you are subject to slippage - this occurs when your stop gets hit - a trader at IG gets a popup to close your bet - but is unable to close the bet at your stop price since the market has moved futher against you.

Not looking to move , unless CS were to offer an API 🙂

hope this is informative

 

[kevin546]

JKLondon

Thanks for the reply. Certainly in the case of D4F trades on the index under £25 are always traded instantly and without price change (save for very busy times particularly around 1.30pm).

When I moved over to SB I had intended to trade in the region of £50 - £100 but for daytrading purposes found this was not practicable. In the case of D4F there would always be a delay even when there own price remained unchanged during the 30 second delay. You only tended to get the price you requested if during the delay the price moved against you.

I accept this may not be the case with other companies and would be interested when I have time to monitor IG and CS. Trading at £10 I doubt there would be any problems.

I think it is a shame that SB is unable or unwilling to provide the same level of service in filling orders when you compare how you are dealt with through a Direct exchange broker or trading in shares online. I did use both Halifax and TD Waterhouse when trading in shares and when you selected a quote this price was held for 15 seconds during which time you could accept or refuse the order. At least you knew what you were getting and find that most SB companies will match this service when you trade at the lower range. But above certain levels which appear much lower than NMS you get delays.

The SB companies already have wider spreads than the real market so they already have a hedge facility in my humble opinion. The way they organise there dealing process by selecting a price once they get the market price appears they are having a second bite of the cherry, especially when they all seem able to provide you with the price you requested when dealing in lower amounts. Why they cannot extend this level to something like NMS or contracts in line with the general market then I would have no gripe with them.

I appreciate you mention guaranteed stop loss which I do not use as I monitor my own deals throughout the time they are open and close manually.

Kevin

 

[kevin546]

JKLondon

You keep mentioning API what is the benefit of this feature and could you explain it in 'laymans terms' how it works etc.

Kevin

 

[jklondon]

API - Application Protocal Interface.

Its basically a set of commands / functions that (lets use the context of of SB here) would allow a developer to write an application to send orders / trades , get prices etc ( all depending on what the SB company allowed you to do i.e. what functionality they expose through their API).

It could allow you to get more sophisticated with your trading.

From my view its useful since I have 'good' trading ideas but dont have the time to monitor the markets all the time , hence if I can capture my idea into a logical sequence , a program can be written and with an API from a SB company that could execute these ideas when a condition is met.

( This is not just opened to techie traders since you could get a developer to write it for you for reasonable cost abroad actually , as long as you get the specification spot on and are very clear on what you want )

Anyway I know a few developers in the industry and theres no way anyones going to offer an API for the fear of getting screw*d through the arbitrage opportunities that may present themselves between two SB companies , given that both had an API. ( sure Simon from CS would agree 🙂 ) .


Hope this explains things a bit Kevin !

JK

 

[kevin546]

jkLondon

many thanks for explaining I did not know until now what this process was called but basically I have considered the same process for producing an audible signal from the computer when a set-up appeared. I like the idea of adding the dealing process when away from the computer however I would not like to leave the placing of the order in complete control of the SB as I have some doubts. Some people have experienced problems with limit orders etc.

Kevin

ps If you ever get further with this let me know as I would be interested.

 

[kevin546]

jkLondon

I had a look at the IGIndex site and found what is on offer quite good for a SB company, however it would appear that for good service it comes at a cost. The spreads shown certainly for the main index are very wide, I realise the figures displayed today maybe out of hours spreads but nevertheless in the case of the FTSE 8 points is a long way from the 3 provided by D4F or CS.

When I first used SB I signed up with CityIndex, this was before they moved over to online trading so I was using the phone and have not experienced the online service. I mention this because they appear very similar to IGIndex. I cannot fault the service they provided, BUT they did have wide spreads.

D4F do produce fluctuating prices but the dealing process is good (below £25) the trading platform is designed for the active trader being able to reduce or display prices or order ticket over a chart page and moving from shared accounts from a drop down menu on the order ticket. I find the set-up better than IB (direct access broker) in this respect. However it does seem that to trade at a higher level with + or - 2/3 points per order D4F could be considered to widen the spread from the stated 3 points. This could put them on a par with the likes of CityIndex who do have a 5 or 6 point spread during UK market hours and also in line with IGIndex if they reduce to 6 points during the session.

Capitalspreads did suggest that there could be a move like this when making orders due to the process of getting a market price and then displaying the SB price before an order could be completed so it would seem that CS COULD produce similar fluctuations in price as experienced with D4F. It maybe that those SB companies that offer the narrower spread on the FTSE do produce more frequent price movements as a result while the wider spreads given by CityIndex and IGIndex have more room to secure a fixed price when ordering.

At least Capitalspreads has been fair and frank with the comments made and maybe could explain why the SB companies are unable to follow the service provided by basic execution only brokers when it comes to placing an order. As far as I am aware most if not all such online brokers will provide a market price on shares (maybe index with futures or CFD's but I have not traded these instruments with online brokers0, my only experience is with shares. When considering an order all that was required was to enter the size of deal and then select a buy or sell button. Immediately a quote would be provided and the client would then have 15 seconds to decide if they wanted to enter the market at this price. The price displayed would be honoured for the 15 second period unless the size of deal was above the Normal Market Size (NMS). Provided you confirmed the order before 15 seconds elapsed then your deal went through at the price, if you delayed then after 15 seconds you would need to apply for a new price and the process would begin again. I would be interested to hear why SB companies are unable to provide this sort of service where for a short period the market price stands still for the client, especially for deals that are well below NMS or contract size on an index such as the FTSE.

Only when SB companies offer this level of service will they start to regain some confidence away from the direct access broker IMHO.


Kevin

 

[capitalspreads]

Kevin

a 2 point move in the market is not going to bother us one way or the other , frankly we will win as many as we lose so why annoy a customer with such a trivial move. It is the bigger gapping moves that SB's are unable to confirm fills.

You have also answered your own question re execution only brokers. The broker merely fills your order in the market , if he misses the price that you have just tried to hit that is tough. You must try to hit a new price etc. As they are subject to best execution rules if they get a better fill then that is passed on to you but the quid pro quo is that they cannot be held to a quoted price.
SB companies are actually market makers, you ask for a quote and then trade on that price (I do the same thing all day long in the stock markets) when I /you try to trade on that price there may be a price move in the split second that it takes to confirm a trade and thus the price is missed. As market makers and as SB companies we are not subject to the best execution rule (naturally as it is the customers choice as to whether he wishes to deal or not).

Regards
Simon

 

[darrren]

Simon

I'm not sure I understand your reply to Kevin about Brokers and why they can hold a price for several seconds but SB's cant.

Would you please clarify again why you can't and a broker can.

Darren