Best Thread Capital Spreads

[lurkerlurker]

...........there is no time limit on trade error corrections and this is not because the SB companies wanted it that way but because the regulators insisted. For those of you with longer memories, there used to be a four day closure on errors with SB companies which meant that if you did not spot the error in that time then tough luck. The regulators quite rightly shut this very unfair cut off time down but the rules work both ways ... a palpable error is just as binding on Capital Spreads as it is on a client. (i.e if we had stopped out a client at a 7000 point error and he only noticed a year later, it would still be a pricing error and we would have to refund the client his money)

....the time limit on price errors is effectively infinite because that is the only fair (on both client and broker) way to apply it.


harryhill

i notice that there is no dispute as to the actual error, lest a new reader wonder, a 7000 point error ! (hardly one that anyone could claim he thought was correct).

Okay, a 7000 point error is a bit extreme, and I take your point that a client would have had some understanding that this was an incorrect price. However, this actually makes the situation look worse for your firm: allowing clients to trade on a price seven thousand points away from any underlying market you are supposed to reference your quotes to, and then failing to correct it for a month sounds nothing short of incompetent. Why are there no further checks in your system which would allow you to spot that at the time? You imply that Harry was trying to, as you put in your earlier post, "get a good deal from you". If this is the case, and the error was this obvious, I am sure there were other clients who were able to do this. For what it is worth, I recall a day within the last month when I had a CS account where you briefly offered the Dow at 6000-something. Naturally, I did not buy, and I was about to telephone your desk when they pulled the market. Your dealers were aware of that issue on the day, so taking a month to notice the oversight is nothing short of unacceptable. To call that "fair to both broker and client" when the error is entirely your fault is also unacceptable. Under these circumstances, I would think that the client was aware of the issue, but had it been a 70 point misquote at £10pp perhaps a client would be genuinely unaware.

I have posted a message to Mr Harryhill privately which, if he wishes, I shall add to this thread.


Very occasionaly I listen to telephone recordings of conversations with clients who claim that a dealer/customer services personel was impolite or rude. On assessing the conversations it is almost always the case that the Capital Spreads staff member is unfailingly correct in their telephone attitude. Our staff are trained to be impartial, polite and curteous against even the most extreme provocation. Just because they may not agree with the client does not make them rude.

Simon, on this point I cannot disagree with the statements you make, but would add that I felt a change in attitude from your staff over the last month, and some of it was bordering on rude. I would never be discourteous to your staff. More than one person has commented on this thread that they feel your staff have been brusque. You admit yourself that they were not "their usual sunny selves" recently.

I listened to one where the client was literally screaming abuse at one of our female dealers and then had the gall to complain about her being rude.

This is utterly inexcusable. I would hope you closed the account in question immediately. I am sorry this has happened - it is somewhat inevitable in any job which involves contact with the public, but that merely makes it a sad reflection of the state of our society. I hope that this is not representative of how your staff are spoken to on a regular basis by punters. If it is, then perhaps that explains their differing attitude of late.

There are cases where we make errors and we are happy to pay for them (well maybe, happy, is not quite the right word !).. but in this case where is our error?... what have we done wrong? Pricing errors are defined, meticulously, on our T&C's and our T&C's have been inspected by the relevent regulatory body .. As I have mentioned before (quite recently on this thread) if we do not spot a trade error going against us that is our problem. I do not expect a client to get all altruistic and inform us (although I would hope that they would). BUT if we do spot it then I do expect the client to at least admit it and not go whinging about how unfair we are.

Well, some of your clients would. I have called in more than once in the morning to check that you were aware of rogue FX prices in markets I had not even traded. I almost called in about the half price Dow, but noticed your dealers had noticed and pulled the market. In this case, the error appears obvious, however I would hope that you would exercise discretion in reversing profitable trades from such a long period of time ago when the errors were less obvious. You do admit that you make errors from time to time, however we have the right to expect that spreadbetting winnings which we have had for a period of time are ours, and should not be adversely affected when your firm cannot make a market correctly, nor have sufficient checks to ensure that errors are spotted promptly.

On this particular matter this will be my last comment, no matter what is subsequently added

Simon

I think for the most part we are all being reasonable here, and the commentary is valid. I see no reason for you not to respond in more detail to the points I raise. I think that it is good that you are prepared to enter into discourse with us regarding a variety of matters. I think it is fair to say that the tone of this thread has changed recently, with less compliments and suggestions and more complaints being posted. If this is representative of how your customers are experiencing trading with you, I suggest you fix some things. This is not simply a case of one or two punters seeing a good deal, taking it, and whinging when you spot the mistake. There is much more to it than that, and there have been other issues posted. I note that you have still not chosen to respond publicly following Ian's question about the reason for clients being put on dealer intervention.

 

[Splitlink]

As a matter of interest, as 7000 points has attracted your attention, what would be your
minimum limit---the point where you can see that there is something wrong---- for any form of spike? 1000, 100 points? Because there are probably others who have been stopped out who might be interested.

Split

 

[capitalspreads]

splitlink

if the pricing error is against the client we would always, without fail, correct the error in their favour (i.e if a stop was incorectly activated).

If the error was against us then it would just depend.. in reality we should correct them all but the bad will this would generate would be counter productive.

the problem with pricing errors against us is that, unless we spot it the client is unlikely to come forward and tell us, and frankly why should he/she? It is our job to protect ourselves not our clients.

lurker lurker

your point about checks and counterchecks is well made... we do have these in place. I have been less than complimentory to the dealing desk over this oversight which has led to an embarrassing thread here.

recent weeks have been stressful not just for punters but for SB staff as well. We do our best to be as polite and impartial as possible but in the current environment where a long telephone conversation is just not possible (there are invariably other calls waiting) the desk may have appeared somewhat brusque. If this is the case I can only apologise but at the same time, in sitting here listening to the dealing activity levels, I am also quite proud of the way my staff and trading platform have held up under the exteme pressure.

simon

 

[lurkerlurker]

As a matter of interest, as 7000 points has attracted your attention, what would be your
minimum limit---the point where you can see that there is something wrong---- for any form of spike? 1000, 100 points? Because there are probably others who have been stopped out who might be interested.

Split

The 7000 points barely attracted their attention by all accounts - certainly not something which was noticed immediately. I would think that all stoploss orders are checked manually by a dealer, in which case longs should have been refunded. I don't believe anyone manually sets a 7000 stoploss in the S&P, so if anyone had been long that on the day in question.

I would be very interested to know the reason for the spike. I recall that the price for the Dow also halved. Was there a brief "no bid" situation in the futures? (Simon said earlier that their prices are derived from the average of the best bid and offer, plus the spread - if one of the sides were missing, it could lead to a quote of 1/2 the underlying).

Again, I am aware that these markets were taken offline immediately on that error occurring. I find it hard to believe that CS were unable to check for clients who had traded on the bad prices.

I am much more interested in the dealer intervention issue than the odd mispricing though. Simon is yet to explain why a client would be placed on dealer intervention. Further, why is there not the option to cancel an order ticket when it is awaiting a "fill or kill" decision by your desk? You can cancel any pending order with CMC - even market orders which have been placed to a dealer. If you decide you don't want the trade before they fill it, you do can cancel. There is no such option with CS. Were one to be included, this would appear far fairer than the current system.

 

[chump]

"the problem with pricing errors against us is that, unless we spot it the client is unlikely to come forward and tell us, and frankly why should he/she? It is our job to protect ourselves not our clients."...and this makes perfect sense....'luck and it's opposite",in this case 'errors' are randomly distributed...if you only correct errors in one direction you skew the overall outcome...long ago I had a partner who thought it was the standup thing to call clients when they made an error in our favour so they could correct it...he couldn't understand that in effect his action would lead to such 'errors' being skewed against us because the 'errors' in the clients favour would remain uncorrected.....Simon, there will be quite a few I suspect who don't think you're being righteous here, but I am not one of them. Know just what you are saying.

 

[Splitlink]

"the problem with pricing errors against us is that, unless we spot it the client is unlikely to come forward and tell us, and frankly why should he/she? It is our job to protect ourselves not our clients."...and this makes perfect sense....'luck and it's opposite",in this case 'errors' are randomly distributed...if you only correct errors in one direction you skew the overall outcome...long ago I had a partner who thought it was the standup thing to call clients when they made an error in our favour so they could correct it...he couldn't understand that in effect his action would lead to such 'errors' being skewed against us because the 'errors' in the clients favour would remain uncorrected.....Simon, there will be quite a few I suspect who don't think you're being righteous here, but I am not one of them. Know just what you are saying.

You and CS are turning this into a moral issue.

Perhaps that paragraph should be entered into the rule book in big block letters so that widows and orphans are clear about it.

Split

 

[chump]

Split,
"moral"...not interested, if you have that perception it's your's ,not something I have raised..reread my post it's clear enough I think ....numbers that's it.

My explanation was rational within the context of business nothing more.

"widows and orphans"...need to pop out and get my violin
I'll leave you all to it.

 

[Splitlink]

Split,
"moral"...not interested, if you have that perception it's your's ,not something I have raised..reread my post it's clear enough I think ....numbers that's it.
As to the sarcastic crap just sent to me ...it's wasted , my post had nothing to do with your specific situation ,but your sensitivity to it is not my concern.
My explanation was rational within the context of business nothing more. Just out of interest how many of you girls out there would standup and notify the other party if they made an error in your favour..yes, I can just see you all rushing to get to your feet....hypocrisy ! None of this overrules whatever the legal position is that applies to a contract, but that only applies if such 'errors' are first uncovered.

"widows and orphans"...need to pop out and get my violin
I'll leave you all to it.

There aren't any angels around in spreadbetting, that's for sure, and I'm not looking for any. But when there is no pretence at straight dealing, its like putting your money into a pot and taking whatever is handed out by those who are supposed to be running some kind of accounting system. Skewed, indeed! I think there is a mistake, the word was meant to be Screwed.

 

[chump]

Split,
Let's not convert this thread into the same kind of crap that develops elsewhere.
You seem hellbent on taking my post into a different context than it was meant,but let's just leave it at that.

 

[Splitlink]

Split,
Let's not convert this thread into the same kind of crap that develops elsewhere.
You seem hellbent on taking my post into a different context than it was meant,but let's just leave it at that.

If I did not understand what you said in the context that it was meant, I'm sorry.

Split

 

[Slorm]

Had this error been commited by a bank or the Inland Revenue it could have been years before the mistake was discovered but they would still claim (and mostly get) their money back. Without an army of auditors to check every transaction I would not consider a month a particularly long time and a with a 7000 point difference it is a pretty obvious error to all parties concerned, so I do have some sympathy for CS on this one.

I'm surprised that CS don't have an automated end of day procedure to pick up spikes so that these things could be investigated more quickly, and would not be difficult to implement.

The real issue is whether both parties to a bet should be held to it regardless of an obvious error. This is a double edged sword and I can imagine to howls of rage in this forum had the positions been reversed.

I am not a great lover of the SB firms but you can't have have it both ways. Errors can either always be corrected or never corrected, what you cannot have have is a situation where errors are only corrected if it favours one party.

 

[Splitlink]

I've been trying to find a post I read months or years ago and I can't.

The nuts and bolts of it is that a company started a scheme which, on the face of it, seemed as moneymaking for the client as it was ridiculously impossible.

A new employee was being instructed on this scheme and he said " But this is impossible. What happens if someone asks for his money back" "Oh," said the boss, " we send it back to him, immediately".

When a company puts the onus on his clients to detect and complain about errors to his account, then that company is behaving in a similar fashion to the one in the story I told.

Whatever anyone may say, there is a moral issue involved. A company that has clients is morally bound to keep accurate books. It is not enough, in my opinion, to just correct the errors they spot and in no manner should they be permitted to deduct month old errors from clients' accounts without consultation.

Split

 

[capitalspreads]

lurker

we used to have the ability for clients to cancel new orders /amend stops after activation etc BUT a significant number of clients just used it as an opportunity to place two 'new' orders either side of the current market just before big data releases and then cancelling any losing orders before we filled them leaving them with just the winning order.

not exactly rocket science but very profitable for some punters before we stopped it.

i would like to see what the company you mentioned would do if you were acting in this fashion !

There are many reasons why clients can get put onto dealer intervention and it is difficult to innumerate all of them.. but the biggest reason is if a client is 'overtrading' his account. (i.e trading 20 30 times a day). .. or we suspect that a client is scalping fast moving markets. We cannot "scalp" a client so we do not really like clients to scalp us

Simon

 

[capitalspreads]

splitlink

I think that before we get carried away here, it might be advisable for people to read todays telegraph.. page 9 middle of page (probably reported in most other newspapers)

essentially the story goes.

bank made error ... credited single mum's account with £135,000 .... she then spent most of the money over the next three weeks... bank spots error (three weeks later)...the police prosecute.... account holder is now facing jail...

it is a criminal offence (not civil) to take money that you are knowingly aware does not belong to you even if you suspect that the other party will not notice and even if you may have brought the matter to the other party's attention.

the important word here is "knowingly"

morally and legally there is no difference between the above example and a client who removes funds from his account knowing that they were earned from a pricing error. Of course SB companies are very unlikely to ever go down this route and I have to believe that the bank in question here either had its hand forced or wanted to make an example of the person in question.

you might find this story interesting but a varient did happen to one of the SB companies and it involved a great deal of money. Before the error was noticed the client called customer services and removed the funds. The SB company had to use the law not the civil courts to get its money back.

We keep all records of every trade/every order/every change of any aspect of a clients account and we keep these effectively for ever. The point about errors is that they are just that.... 'errors' .. we find the vast majority but some get missed...then of the ones that get missed almost entirely all are against capital spreads as the ones against the client get picked up by him/her. (i am not going to tempt fate by saying all)


Simon

 

[ae589]

There are many reasons why clients can get put onto dealer intervention

Perhaps I can reverse the question - my trading pattern on the FTSE daily (not with CS, yet) tends to be around 4-5 trades a day, with 3 being 0 gains or small losses, and the other 2 being either small (1-5 points) or medium (5-15 points) wins, net result around 10-15 points a day. My positions tend to be held for between 15 minutes and an hour.

Does this count as scalping? Does the amount bet per point affect your decision?

Ps - it's extremely useful (and brave) to have your input here - hence the 332 pages - thanks.

 

[HarryHill]

The bank analogy does not stand up Simon and is a cheap shot if you don't mind me saying.You did not deposit funds into my account by accident.You entered into a contract with me which resulted in funds being credited to my account.Of course I traded with my account funds....they were "mine" afterall.The fact that your system failed you on several occasions is not my fault.Your platform offered me a price..I accepted it.Your platform credited my account.It wasn't until after 28 days you decided that you didn't like the contract you'd entered into and decided to deduct money from my account.The mistakes were all on your part and clouding the issue with an accidental bank credit quite frankly doesn't help.I have refrained from posting on this issue since you said you wouldn't be doing so any further.However you seem to have changed your mind..again!

 

[Slorm]

Whatever anyone may say, there is a moral issue involved. A company that has clients is morally bound to keep accurate books. It is not enough, in my opinion, to just correct the errors they spot and in no manner should they be permitted to deduct month old errors from clients' accounts without consultation.
Split

There is a duty of care on both parties not just on one. If you knowingly take advantage of anothers error do you also not have a duty to report it?

If I suddenly found an extra £10k in my bank account I'd be on to them pretty sharpish to find out how it got there., same for my CS account.

 

[fibonelli]

I agree with Simon that the E&OE legal concept will apply to any clients taking advantage of outrageous mispricing. Obviously, 10 pt skewing doesn't seem to be apply.

However, a couple of points which no one has mentioned

1. Were any clients refunded monies being on the wrong side of this mispricing?
2. It doesn't inspire much confidence when a quote is 7000 pts adrift. Unless the quote was for Sept2008 Dow Futures?

 

[Splitlink]

I"
then of the ones that get missed almost entirely all are against capital spreads as the ones against the client get picked up by him/her. (i am not going to tempt fate by saying all)


Simon

Simon, I want to say that my opinion is not personal and thanks for giving my post your time.

Can't you see that, with the examples that you give you are ,effectively , telling us what your opinion of us is? Two blacks do not make a white. What I fail to understand is how you can justify that argument! If you are being taken advantage of by mistakes that you make, difficult as it may seem to you, you cannot justify it by getting the money back from the rest of us, because "the rest of us"can be as honest as the day is long. You can't tell, we are not the same ones but, you seem to think so.

This is what irritated me when the statistical "skew" word was mentioned. Now , we have the argument that a trader wanting to point out a mistake in the SB firms favour, should not do so because it will upset the "skew".

Split

 

[stevespray]

Simon,

With all due respect, I think that the case of the woman finding money in her bank account is slightly different to that of a client benefiting from a dubious price. The main reason would be that the random appearance of funds in a bank account would be completely without reason or contract. A spread bet error is considerably different because the resulting funds are obtained through a legitimate exchange of contracts (given that spread bets are legally CFD’s of a kind). Most spread betting firms make it clear (in their T&C) that clients are betting on their prices and not that of the underlying market. All this added together makes the whole affair considerably different from the case of the funds wrongly credited to a bank account. If funds were to just appear in a spread betting account then that would be a different matter entirely and this would obviously be a kin to the bank account case. Generating profits from alleged incorrect pricing does not break any laws (since it is entirely up to you how you determine your price and also up to you if you contract at that price) and, at a guess, the withdrawal of said funds breaches no laws either since the client has two contract notes which give him clear title to the disputed funds.

Steve.