minx
Well-known member
- Messages
- 328
- Likes
- 10
Spreads on Grains
The grains are now trading electronically quite successfully with Corn at 1 tick spread with a few hundred lots on either side, Wheat is 1-2 ticks with good size, as are Soybeans. Bean oil and Meal are a little wider but nothing too bad there and still easily tradable. My question is whether you'd consider looking at your spreads for some of these as they are pretty wide compared to the actual mkt: Corn is 8 ticks, Beans and Wheat are 16 ticks 😱 . I'm sure you can come way in on these and still allow for a good margin of error and profit for CS.
Any interest?
The grains are now trading electronically quite successfully with Corn at 1 tick spread with a few hundred lots on either side, Wheat is 1-2 ticks with good size, as are Soybeans. Bean oil and Meal are a little wider but nothing too bad there and still easily tradable. My question is whether you'd consider looking at your spreads for some of these as they are pretty wide compared to the actual mkt: Corn is 8 ticks, Beans and Wheat are 16 ticks 😱 . I'm sure you can come way in on these and still allow for a good margin of error and profit for CS.
Any interest?
capitalspreads
Experienced member
- Messages
- 1,452
- Likes
- 79
minx
i will get the dealers to look at the electronic markets and hopefully pull our spreads in in response
Simon
i will get the dealers to look at the electronic markets and hopefully pull our spreads in in response
Simon
capitalspreads
Experienced member
- Messages
- 1,452
- Likes
- 79
minx, jbat
the mini contracts on these markets are quite new (relatively). Minx is correct in that these are not exactly huge markets for us (probably becus of the spread). If we can hedge reasonably then the spread come in. When we launched, back in the dim distant past, these markets were open outcry in the pit in chicago and the price feeds were poor to say the least. Now the information is better and we can legitimately cut our spreads.
In general we are client responsive in these instances becus we (quite frequently) do not notice the feed improvements as they as not heavily traded by our clients. As information improves across the globe you will find SB companies much more likely to pass on these upgrades.
Pear
the reason that we do this is because of the tax situation. If a client owns a share that is going to have a big dividend (on which he will have to pay 25 to 40% tax) it would be much better for him to sell the shares before ex-div date and take a spread bet out as he would then get 100% of the dividend in a price reduction and then on the day after the ex-div trade back into the shares . We reduce this to 80%. When you take into account spread/dealing costs etc etc the 20% reduction in the dividend removes this temptation(!). Otherwise the IR would be on our backs!!
Simon
the mini contracts on these markets are quite new (relatively). Minx is correct in that these are not exactly huge markets for us (probably becus of the spread). If we can hedge reasonably then the spread come in. When we launched, back in the dim distant past, these markets were open outcry in the pit in chicago and the price feeds were poor to say the least. Now the information is better and we can legitimately cut our spreads.
In general we are client responsive in these instances becus we (quite frequently) do not notice the feed improvements as they as not heavily traded by our clients. As information improves across the globe you will find SB companies much more likely to pass on these upgrades.
Pear
the reason that we do this is because of the tax situation. If a client owns a share that is going to have a big dividend (on which he will have to pay 25 to 40% tax) it would be much better for him to sell the shares before ex-div date and take a spread bet out as he would then get 100% of the dividend in a price reduction and then on the day after the ex-div trade back into the shares . We reduce this to 80%. When you take into account spread/dealing costs etc etc the 20% reduction in the dividend removes this temptation(!). Otherwise the IR would be on our backs!!
Simon
minx
Well-known member
- Messages
- 328
- Likes
- 10
capitalspreads said:
They arent mini-contracts, they are the same as the pit traded ones, just traded electronically. Think they went side-by-side in either Aug or Sept, before that they were out of pit hours only. (I used to trade them thru the pits and exit electronically when I forgot about agri report announcements 🙄 )
FXSCALPER2
Established member
- Messages
- 964
- Likes
- 281
hi Simon,
How come you are so late to return your accounts which were due in December 2005? I just looked at your records at Companies House.
How come you are so late to return your accounts which were due in December 2005? I just looked at your records at Companies House.
capitalspreads
Experienced member
- Messages
- 1,452
- Likes
- 79
minx
what i meant was 'electronic contracts of whatever form'.. we tend to find that the electronic contracts (when created) eventually take over the whole market. Dow / S&P / oil / gold / LSE etc etc. The luddite activities over in some of the US exchanges in their desperation to hold onto open outcry (and all its little 'perks') smack of that famous tidal display by King Canute.
Simon
Simon
what i meant was 'electronic contracts of whatever form'.. we tend to find that the electronic contracts (when created) eventually take over the whole market. Dow / S&P / oil / gold / LSE etc etc. The luddite activities over in some of the US exchanges in their desperation to hold onto open outcry (and all its little 'perks') smack of that famous tidal display by King Canute.
Simon
Simon
capitalspreads
Experienced member
- Messages
- 1,452
- Likes
- 79
fxscalper
we delivered our 2005 numbers back in february and our half year statement in september ...if you click on technical analysis on our platform and then search for LCG you can find all the data there. I will have to ask accounts why companies house does not have this data.
Pear.
We do not pay dividends .. we make a debit/credit to reflect dividend price action.
you must remember that this is a bet, you do not actually own any shares. you may get 90% of the dividend via a cfd but you will then have to pay tax on this whereas with the bet you get 80% flat. If i was you i would ask why you dont get 100% on the cfd as you then have to pay tax on it.
To have no tax on earnings you would have to be earning less than £5000 (approximately) and we would then not then give you an account anyway.
simon
we delivered our 2005 numbers back in february and our half year statement in september ...if you click on technical analysis on our platform and then search for LCG you can find all the data there. I will have to ask accounts why companies house does not have this data.
Pear.
We do not pay dividends .. we make a debit/credit to reflect dividend price action.
you must remember that this is a bet, you do not actually own any shares. you may get 90% of the dividend via a cfd but you will then have to pay tax on this whereas with the bet you get 80% flat. If i was you i would ask why you dont get 100% on the cfd as you then have to pay tax on it.
To have no tax on earnings you would have to be earning less than £5000 (approximately) and we would then not then give you an account anyway.
simon
Phil Mibbutz
Experienced member
- Messages
- 1,860
- Likes
- 58
capitalspreads said:
That doesn't quite seem fair. No doubt all SB companies have lots and lots of clients who make millions tax-free, yet they might still be 'earning' less than £5000 a year in the odd moments they're not counting their money or buying Caribbean islands...
the logic is simple.........and has nothing to do with Capital Spreads acting in the interests of "poorer" clients.
In short, the more a client earns, the more Capital Spreads are likely to take from them. Higher earning clients are much more likely to be more profitable for spreadbetting companies
In short, the more a client earns, the more Capital Spreads are likely to take from them. Higher earning clients are much more likely to be more profitable for spreadbetting companies
Jbat001
Active member
- Messages
- 197
- Likes
- 5
Phil Mibbutz said:
There is a more brutal side to it as well, I would imagine. If you have capital but no earnings, and you blow out your account, CS would have to give you a margin call to bring yourself back into the black. If you have no earnings, how are you going to meet the call? The rules might be different if you were going to deposit significantly more margin perhaps, but it seems like quite high risk to the bookie otherwise.
I spent ruddy ages trying to establish the position of spreadbetting with the revenue, and in the end it was pretty clear - perhaps this will ring true with those who have investigated this with the revenue themselves? If you have a 'subsistence income' (i.e. enough to live off) from an independent source that you pay tax on, then HMRC can't tax you on your spreadbetting activities. It's only if you have no other source of income and you use it for your primary income source that the tax advantages may disappear. Spoke to the revenue office in Nottingham with a technician there, who specialises in people who make a living from gambling, so I guess he knows his stuff. He deals with people playing the horses, dogs, poker, even casino games (how the feck you make profit out of that?).
The vast majority who spreadbet, I would opine, do not do it for a living, and therefore they are completely safe from taxation. Those who do do it for a living have enough cash to hire clever accountants who sort it all out for them. Nothing to stop a millionaire trader having a self-employed 'subsistence income' from a bit of consultancy work that he pays tax on. The revenue can challenge it, but due to the nature of current legislation, they're unlikely to win. Thing I discovered after starting work in the FS inductry is that tax law is much more open to interpretation than I ever imagined beforehand!
Not majorly worried, as I'm nothing like rich enough to be making a living off this game 😎
Last edited:
capitalspreads
Experienced member
- Messages
- 1,452
- Likes
- 79
jbat's comment here is very pertinent. Spread Betting is only tax free if it is not your main source of income. For that reason it is probably not wise when opening a spread betting account to put your job description down as 'day trader' or 'trader' as it would then be rather difficult to claim at a later date that trading was not your main income if the IR was to query where you made your money.!!!
pippin
this is not entirely fair as, if it was up to me (given that we only give deposit accounts) i would give an account to whoever wanted one .. why not? £1 from a small account is still the same as £1 from a big client. In fact at capital spreads we prefer the small medium accounts to the big ones because with small accounts the 'market risk' is with the client but with a big client taking big positions the market risk then defaults to us.
The reason we do not accept clients below a certain income level is because we must ensure that we are within regulatory rules (which are suitably vague) and which we therefore take a very conservative view of. We do get a few complaints from prospective clients saying that this or that SB company gave them an account so why wont we. In response I would say that this is why we have had not one bad debt this year and only a couple of margin calls in the entire 9 1/2 months. ( and I can tell you there have been some hairy days this year, remember May! )
In the end i comes down to what kind of internal risk the SB company is willing to run..we have a very low risk criteria and this is likely to remain our policy. This should be of some considerable comfort to our existing clients.
Simon
pippin
this is not entirely fair as, if it was up to me (given that we only give deposit accounts) i would give an account to whoever wanted one .. why not? £1 from a small account is still the same as £1 from a big client. In fact at capital spreads we prefer the small medium accounts to the big ones because with small accounts the 'market risk' is with the client but with a big client taking big positions the market risk then defaults to us.
The reason we do not accept clients below a certain income level is because we must ensure that we are within regulatory rules (which are suitably vague) and which we therefore take a very conservative view of. We do get a few complaints from prospective clients saying that this or that SB company gave them an account so why wont we. In response I would say that this is why we have had not one bad debt this year and only a couple of margin calls in the entire 9 1/2 months. ( and I can tell you there have been some hairy days this year, remember May! )
In the end i comes down to what kind of internal risk the SB company is willing to run..we have a very low risk criteria and this is likely to remain our policy. This should be of some considerable comfort to our existing clients.
Simon
Jbat001
Active member
- Messages
- 197
- Likes
- 5
capitalspreads said:
Glad you mentioned this actually. We're pretty familiar here with the CS money management system that makes it pretty damn difficult to get a margin call, but would it happen a bit like this?:
A trader has £1000 in the account, for example. He decides to bet £3/pip long on USD/NOK (for example) and ponies up the £600 IMR. He can now go up to 133 pips down before he is stopped out, correct? What if the price suddenly gaps down for some reason, and gaps through this level (down by say, 200 pips)? He has shot his stake and margin in an instant, and would presumably then get a call?
Admittedly, he would be very silly to stake £3/pip with so little margin, but it takes all sorts.....is this about right, or is there some other explanation?
