Best Thread CMC Markets owner answers your questions

[PC at CMC Markets]

Hi Shakone,
Thanks for your post. The only reason it isn't available is because we didn't build it that way. However, it makes no difference to us whether you open a buy or sell ticket before you trade, so I am looking at implementing a quick buy/sell at market without having to open up a ticket. I am still waiting to hear back how much work this will involve and when we can release it but should know reasonably soon. I think we have a quick fix solution but will let you know.
With a fully integrated ticket you are able to structure bets in silos by placing automatic stop losses based on margin with profit takes at same time. That is the logic behind the new ticket. it works very well for the majority of clients who place bets with stops and limits as ocos which is very popular. However, I do accept there are some spread betters out there that do not want to select buy or sell before they trade so we will look at a solution. that's it nothing sinister just tried to build a system that helps clients protect their cash and their positions.

thanks Peter

Thankyou for your response PC. I am happy for you to impose your choice of margin requirements, automated stop losses at fixed distances (50pips, 100 pips, etc), or percentage stop losses, and protect me.

Given that, I would like to open a ticket and be able to choose whether I buy or sell from that ticket (or if you prefer, open up a buy ticket and a sell ticket). Please explain to me why that isn't possible, given that I accept all the protection you're offering clients/regulation etc.

 

[6am]

I think we have a quick fix solution

Perhaps the quickest fix is to allow to have multiple tickets open for the same instrument. Then it will be possible to configure one ticket for sell, another for buy.

 

[PC at CMC Markets]

Hi 6am,
do you have a spy in the camp. working on it
but not sure how long it will take but shouldn't be too difficult.
tks pc

Perhaps the quickest fix is to allow to have multiple tickets open for the same instrument. Then it will be possible to configure one ticket for sell, another for buy.

 

[tar]

so I am looking at implementing a quick buy/sell at market without having to open up a ticket. I am still waiting to hear back

 

[hoodoo man]

But you have to accept that the whole trading environment around the world is changing. Regulators want built in safety tools to protect clients; there are so many complaints around the world that clients over leverage themselves. What we have tried to do is build protection in for the average spread bet client with all the above. I believe that this is the future for this industry and for the financial retail industry all round. The world is changing and our industry is changing and you have to see the bigger picture. The markets can be very volatile and there has been a major financial melt down around the world over the last three years and we as a company have to move forward with as much added protection for clients as possible. Regulators are demanding this around the world. I can give many examples but I will stick to one as this is not what this forum is for: minimum margins on retail forex in Japan are now 5 percent, they used to be 0.25 percent. Try to see the bigger picture because everything we have done is to try and keep the client on the safe side.

This is a very interesting comment. First, 0.25% margins are silly. That is 400:1 leverage. 5% is fine - very few traders should be using more than 20:1 leverage. The ones who are able to make good returns above 20:1 will soon exhaust liquidity and find themselves back down to 20-30:1 or less.

I would emphatically disagree that any of this is about protecting the client. It is about two things. First, regulators attempting to be seen to be doing some good, and making effective steps to make the financial markets safer for the public. This is empty political posturing.

The real reason is that the public absolutely cannot be permitted to lose their chips too quickly, all at once, or in a manner which prevents them from returning to the markets and contributing more. The entire industry, infrastructure, salaries, up to and including the massive profits extracted by very proficient individual and institutional operators is paid for by the bets of the uninformed public - from spreadbet gambling all the way through to ISA's, index trackers, and pensions.

A frightened public is a useful opportunity for the strong to take the chips of the weak, however a non participatory public is a disaster for everyone. The confidence must be restored as systematically as the panic was created in order for the world markets to keep functioning as they always have.

Simply put, the public have access to an increasingly sophisticated array of financial products (including leveraged products) and the regulator must ensure that too much harm does not come too quickly such that it discourages future participation. There are powerful interests at work. As such, spread betters must take all precautions to ensure that punters who are going to lose do so slowly. This benefits your industry also as client acquisition costs are a major factor. Better to have them turning over slowly than burning out quickly. (of course it is not the regulator or the bookie which makes a loser, but the losers must be encouraged to lose more over a longer period of time rather than all at once and then never again ... where would the financial markets be if uninformed speculators swore off risk...)

 

[Ross Spur]

Perhaps the quickest fix is to allow to have multiple tickets open for the same instrument. Then it will be possible to configure one ticket for sell, another for buy.

Another thing that would help for trading popular index/fx markets would be for the ticket to have default and/or user-defined settings for stake, stop/limit distance. I also like to be able to open trades with a trailing stop sometimes, but that could just be me.

 

[Truth Seeker]

Hi Shakone
Many thanks for the posting. One click only applies if you want to buy/sell at the market price you see on the screen without implementing any of the risk management functions. These other functions e.g stops have to be entered on the buy or sell side with all providers.
What we offer our clients on Next Gen platform, is a fully integrated ticket that automatically places (you can turn it off) margin stop losses and margin (double the margin) profit takes.
The big issue with spread betters is getting whip sawed out of positions and margins and so we tried to build in a fully integrated stop loss and profit programme. This is what you have at the moment.
If you want to place an order at the market price you see on the screen yes you have to click on buy or sell, but you can hold the ticket open and watch the market move up and down in front of you.
Then when you are ready to trade click confirm. It goes through instantly.
By having a fully integrated ticket we are building in all these protections. We have tried to help the majority of spread betters with 1. Protect their cash, 2, give them fully integrated tickets (auto margin stop losses and profit takes, place stops and limits from TICKET charts) .
We are trying to be as transparent as possible.
I am not promoting CMC Markets on this forum, I am just stating facts because
I can assure you 100 percent that all prices are generated by computer algorithms independently. No client positions are monitored or read before a price is generated
and we always endeavour to give you the market price you see regardless of whether the client is a buyer or seller. These are the facts.
Don’t forget also we pump real-time live prices through our demo system so you can play with the system before you sign up.
I do accept that there are some clients that do not want fully integrated tickets.
But you have to accept that the whole trading environment around the world is changing. Regulators want built in safety tools to protect clients; there are so many complaints around the world that clients over leverage themselves. What we have tried to do is build protection in for the average spread bet client with all the above. I believe that this is the future for this industry and for the financial retail industry all round. The world is changing and our industry is changing and you have to see the bigger picture. The markets can be very volatile and there has been a major financial melt down around the world over the last three years and we as a company have to move forward with as much added protection for clients as possible. Regulators are demanding this around the world. I can give many examples but I will stick to one as this is not what this forum is for: minimum margins on retail forex in Japan are now 5 percent, they used to be 0.25 percent. Try to see the bigger picture because everything we have done is to try and keep the client on the safe side. That is how it is now a-days.
Yes we will look at introducing market order tickets that are not fully integrated because there is a section of the spread bet and cfd community that is looking for it but the future of the industry has to be built around protection of clients and that is why we have done all of the above.
This is a much wider debate and it is wrong to assume that CMC Markets is acting independently in its own interests. No company can ignore regulatory changes, compliance changes, client money segregation changes, margin changes, pricing and execution changes. This industry is moving up to a higher level and we are moving up with it.

Please remember that spread betting is a leverage product. Losses can exceed your initial deposit, so ensure you understand the risks.

Many thanks Peter

Peter

Why don't you follow FXCMs lead by really protecting your clients in the form of account deposit protection? What FXCM do is never let any trade position go past their clients initial deposit. That way the worst damage they can ever do is wipe out their own account balance, and not ever have the added danger of owing money to the bookie like your clients currently have. I think all spread bet companies should follow FXCMs lead with this real customer protection.

 

[brasil2000]

Another thing that would help for trading popular index/fx markets would be for the ticket to have default and/or user-defined settings for stake, stop/limit distance. I also like to be able to open trades with a trailing stop sometimes, but that could just be me.

Hi PC at CMC Markets,

I would like this to.

Thanks

 

[Black Swan]

Black swan, because you can't or don't like to trade short time frames, nobody else can be successful at it.

No need to be confused, I can but I don't..

 

[PC at CMC Markets]

Hi Truth seeker,
Thanks for your post.
This is interesting issue because if the provider under writes gaps in the market on say shares, their whole capital adequacy issue comes into play.
For example, if a client buys £1000 worth of a non-liquid share with a guaranteed stop loss then what is the risk to the provider. It is unlimited and so the regulator would have to look at the open exposures of the provider not the client. big issues to be looked at by the provider. it can be quantified but difficult as each position would have to be measured against potential risk for the provider, not the client.

Also if you want to keep client margins low it is better this way around. Otherwise if you forced the provider to underwrite guaranteed stops they would have to put up more capital and in turn they would have to put up client margins. it is complex issue, however, it is possible to offer guaranteed stops but for the most part on liquid products like forex.

hope that helps
Peter

Peter

Why don't you follow FXCMs lead by really protecting your clients in the form of account deposit protection? What FXCM do is never let any trade position go past their clients initial deposit. That way the worst damage they can ever do is wipe out their own account balance, and not ever have the added danger of owing money to the bookie like your clients currently have. I think all spread bet companies should follow FXCMs lead with this real customer protection.

 

[PC at CMC Markets]

Hi Brasil
noted and on to it I promise
tks pc

Hi PC at CMC Markets,

I would like this to.

Thanks

 

[Truth Seeker]

Hi Truth seeker,
Thanks for your post.
This is interesting issue because if the provider under writes gaps in the market on say shares, their whole capital adequacy issue comes into play.
For example, if a client buys £1000 worth of a non-liquid share with a guaranteed stop loss then what is the risk to the provider. It is unlimited and so the regulator would have to look at the open exposures of the provider not the client. big issues to be looked at by the provider. it can be quantified but difficult as each position would have to be measured against potential risk for the provider, not the client.

Also if you want to keep client margins low it is better this way around. Otherwise if you forced the provider to underwrite guaranteed stops they would have to put up more capital and in turn they would have to put up client margins. it is complex issue, however, it is possible to offer guaranteed stops but for the most part on liquid products like forex.

hope that helps
Peter

Hi Peter
Thanks for the response. Yes I'm sure it's not straight forward but FXCM do offer that you cannot get in debt by a losing trade, the worst case scenario is your account gets wiped, but the added assurance is, that you will not end up owing money to the SB company as well as losing your total balance. I'm sure this happens or they wouldn't have made this point aware to me when i opened my account there. To me it was a great selling point. I think it would be a welcomed addition to your company to offer this customer protection too. The question is, (I'm sure it's in the small print) how many of your clients are actually aware that they could end up owing you far more than their deposit?

 

[Emini-mouse]

the new platform has transformed me into a highly successful profitable trader
ok im live and 50 quid up
but because of the one way order tickets i have started to work probable days direction and only bet that way
i feel as though im on to something here

 

[hoodoo man]

For example, if a client buys £1000 worth of a non-liquid share with a guaranteed stop loss then what is the risk to the provider. It is unlimited and so the regulator would have to look at the open exposures of the provider not the client. big issues to be looked at by the provider. it can be quantified but difficult as each position would have to be measured against potential risk for the provider, not the client.

No, the risk to the provider is not unlimited. It is the difference between the £1000 client exposure and what the client has on deposit with you. If you have done a guaranteed stop with the client, the maximum risk is the difference between zero and the guaranteed stop price, multiplied by the stake per point. CMC are effectively short a put. Potentially unlimited risk would arise where a client is short £1000 worth with a guaranteed stop, as CMC would be short a call.

I appreciate that guaranteed stops are essentially insurance for regulatory purposes etc, and there are various issues involved, capital adequacy being one. In any case, why offer for clients a completely synthetic "get out clause" which doesn't really exist in the real market? There are no guaranteed stops. To insure a position, do so with options, for which there is a liquid market for the major listed securities and commodities.

 

[PC at CMC Markets]

Hi Truthseeker,

So in effect you are being offered account guarantee regardless of what you trade. is that how it works or do they limit it by products or size of account holder.

I should imagine that if somebody came along and deposited a large sum, leveraged it up big time there would have to be some limit to it. there must be rules. because for example you could buy shares in a company that is weak, but might recover so the bet would be buy the shares as the downside is totally limited because you have account guarantee. this seems open to abuse to me so there must be parameters around it
pc

Hi Peter
Thanks for the response. Yes I'm sure it's not straight forward but FXCM do offer that you cannot get in debt by a losing trade, the worst case scenario is your account gets wiped, but the added assurance is, that you will not end up owing money to the SB company as well as losing your total balance. I'm sure this happens or they wouldn't have made this point aware to me when i opened my account there. To me it was a great selling point. I think it would be a welcomed addition to your company to offer this customer protection too. The question is, (I'm sure it's in the small print) how many of your clients are actually aware that they could end up owing you far more than their deposit?

 

[PC at CMC Markets]

Hi hoodoo man,

you are right but whatever way you look at it there is unlimited risk for somebody either the provider or client.
I also totally agree with you, when you trade the financial markets it has to be the real world. no bank would offer you a guaranteed stop loss on trading forex with them because they would have to underwrite any gapping in the markets. not going to happen.

in fact we used to offer guaranteed stops but the demand was so low we just didnt bother in the end. not sure how popular they are in the market place.
I find that clients are looking for tight spreads and fast execution.

tks pc

No, the risk to the provider is not unlimited. It is the difference between the £1000 client exposure and what the client has on deposit with you. If you have done a guaranteed stop with the client, the maximum risk is the difference between zero and the guaranteed stop price, multiplied by the stake per point. CMC are effectively short a put. Potentially unlimited risk would arise where a client is short £1000 worth with a guaranteed stop, as CMC would be short a call.

I appreciate that guaranteed stops are essentially insurance for regulatory purposes etc, and there are various issues involved, capital adequacy being one. In any case, why offer for clients a completely synthetic "get out clause" which doesn't really exist in the real market? There are no guaranteed stops. To insure a position, do so with options, for which there is a liquid market for the major listed securities and commodities.

 

[Ross Spur]

In any case, why offer for clients a completely synthetic "get out clause" which doesn't really exist in the real market? There are no guaranteed stops. To insure a position, do so with options, for which there is a liquid market for the major listed securities and commodities.

Isn't that the point? Spreadbet is a synthetic market, and one of the advantages for clients is that ultimately the provider is (or should be) taking the risk when your margin runs out.

 

[Truth Seeker]

Hi Truthseeker,

So in effect you are being offered account guarantee regardless of what you trade. is that how it works or do they limit it by products or size of account holder.

I should imagine that if somebody came along and deposited a large sum, leveraged it up big time there would have to be some limit to it. there must be rules. because for example you could buy shares in a company that is weak, but might recover so the bet would be buy the shares as the downside is totally limited because you have account guarantee. this seems open to abuse to me so there must be parameters around it
pc

Hi Peter

Here's a link and I have copied the relevant piece of information, hope it helps.

http://www.fxcm.co.uk/forex-spread-betting.jsp

No Debit Balances
Some spread betting brokers profit when a client is liquidated. If the broker has not hedged your position and you have lost all your money, theoretically the broker can keep that money even when your trades have not even left their trading platform. However, when you trade with FXCM, we hedge your position with a bank, a broker dealer or on an exchange. If you are liquidated, we simultaneously liquidate our hedge position.

FXCM will liquidate your trades only when your usable margin/free equity falls to zero. Therefore, we liquidate all your open positions in an orderly fashion, but still ensure that you have your initial margin intact for trading. Other spread betting providers will liquidate your positions when you have the equivalent of USD$100 left in the account, even though you may have thousands of dollars of open positions. In that case, although you were liquidated, you could end up with deficit balances, owing money to the provider.

=============================================================

So if they can manage to offer this, will you look into protecting your clients at this level too?

 

[forker]

Isn't that the point? Spreadbet is a synthetic market, and one of the advantages for clients is that ultimately the provider is (or should be) taking the risk when your margin runs out.

That is a terrible business model

 

[TomTom]

Dear PC & CMC

Can some one at CMC explain why my account was closed and then credited with £19,280 ?
Date on the statement 30th September.