Best Thread CMC Markets owner answers your questions
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So terrible that Peter Crudas is one of the richest people in Britain.
Exactly, hats off to him for doing it too. Without doubt you would do the same if the opportunity, backing, and investment were available. So don't hang the guy for good business. Admire it!
tar
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Admire it ?! some may disagree here ...
tar
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No i dont please teach me ! If i dont admire Ladbrokes that doesnt mean i dont admire Apple ...
Im starting to become a bit cynical myself of PCs sincerity on being on this forum now. The most basic concerns of some posters on here dont seem to be addressed, perhaps becuase to address them gives the punter too many tools he can use to his advantage. One such example...if you read enough posts, you will see pattern. A lot of successful traders want to trade shares, and shares of smaller and medium size companies on foriegn markets reward best (Canada...removed.....Russia removed...India, removed....China Removed, its becoming pointless!!!) reward the most for those that are willing to do their research(ie its not a punt, so spreadbetters dont want you to have access to them). In otherwords the trader can turn the odds of a win in his favour by doing some research and being prepared to hold a position open. Conveniently the instruments available seem to be less and less, and they are all the most highly traded shares, often traded in huge volumes by big players, using algos and all sorts, to take the small players money. These instruments are far harder to use to make money by a spread better as of course are currencies and indices....they are all being played by the big boys, and CMC now has a big boy stakeholder and things are changing in a way that seems to be for the big boys benefit, internal policies might well be being steered by alteria motives. Still no instruments added, still no user friendly watchlists...it all seems to be a bit convenient for CMC and their partners in my opinion, but in the end people will just vote with their feet I guess.
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hoodoo man
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CMC act as market maker. They make a two way price. They (and anyone with a similar business model) makes the most money by getting the highest possible level of two way business, keeping as close to a flat book as possible and earning the spread on the transactions. The fact that they offer only liquid markets which are popular with clients probably says more about their hedging costs and level of two way flow in those markets than it does about any conspiracy theory.
Firms are not obliged to make a product which suits you. If you want to trade those shares, there are plenty of venues to do it at. If I ran an SB firm, I would offer only the most popular products, and get as much business as possible by keeping the spreads as low as my flow and dealing model could support. There is a risk in market making and why bother to make prices in hundreds of instruments which get barely any flow. You need to ensure that all of your prices are correct etc, so each instrument added is an extra fixed cost. Even if they offered those markets, the spreads would probably be so wide that it would be uneconomic for you to bet on them.
Why not do a CFD, option, or underlying share instead of a spreadbet for these EM names?
tar
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I agree. If the vast majority of SB business is through five or ten indices and FX pairs that tend to self hedge, concentrate on those. Why take the risk of providing markets traded by a handful of clients.
tar
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PC at CMC Markets
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PC at CMC Markets
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Hi Truth Seeker,
What you have posted is the company's liquidation policy, there is nothing here to say your account is guaranteed not to go over drawn.
I have not studied the details but I think they are saying that they will liquidate you on a position even if you have the full margin to carry that position. They do this because your overall net equity has moved into negative. I may have misread this, I have not studied the company's terms of business I am just commenting on the text you posted. I did not go to their linked site.
I think the issue about whether the spread bet provider has covered your deal or not is not really relevant. technically you are betting with your spread bet provider. technically if you win they write you a cheque, if you lose they keep your losses. then they settle their NET hedges.
Do not want to comment on competitors on this site, it is not fair and I am just giving a view based on what you posted.
Before you spread bet please make sure you understand all the risk. You are welcome to call our support desk any time to understand our liquidation policy.
Thanks for your post. Peter
What you have posted is the company's liquidation policy, there is nothing here to say your account is guaranteed not to go over drawn.
I have not studied the details but I think they are saying that they will liquidate you on a position even if you have the full margin to carry that position. They do this because your overall net equity has moved into negative. I may have misread this, I have not studied the company's terms of business I am just commenting on the text you posted. I did not go to their linked site.
I think the issue about whether the spread bet provider has covered your deal or not is not really relevant. technically you are betting with your spread bet provider. technically if you win they write you a cheque, if you lose they keep your losses. then they settle their NET hedges.
Do not want to comment on competitors on this site, it is not fair and I am just giving a view based on what you posted.
Before you spread bet please make sure you understand all the risk. You are welcome to call our support desk any time to understand our liquidation policy.
Thanks for your post. Peter
Well Peter (if you are Peter, I find it hard to believe from 1 or 2 of the comments) you have certainly changed your tune in a few short months....follow this thread back to pages posted in April and all your promises of adding new instruments. Which have not materialised.
You can of course run any business model you want, honest, dishonest and HooDoo is absolutely correct on that point. So if your business model is to move away increasingly from bets you find harder to make money from, that is course exactly the same model as your punters I guess, so don't be surprised to lose a few (thousand)
I find Hoodoos apparent business acumen really insightful. Talk about state the bloody obvious!
So simple question then Peter are you adding more instruments or not ?, Or do I now have to close my CMC account (after a good number of years) and move onto someone who IS going to give me the instruments I want to trade?
tar
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FWIW
"Although the margin call feature is designed to close positions when account equity falls below the margin requirements, there may be instances when liquidity does not exist at the exact margin call rate. As a result, account equity can fall below margin requirements at the time orders are filled, even to the point where equity account becomes negative. This is especially true during market gaps or volatile periods. FXCM will not hold traders responsible for deficit balances in this scenario, but clients should be cognizant that all funds on deposit in an account are subject to loss. FXCM also recommends that traders use stop orders to limit downside risk in lieu of using a margin call as a final stop."
hoodoo man
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That calls into question the financial integrity and capital adequacy of FXCM. Lets say that all client funds are segregated. This does not mean that client funds are safe or guaranteed, just the client funds are not commingled with proprietary FXCM funds. Equally, client funds should not be used to satisfy creditors of FXCM.
However, consider the following scenario. Some large clients have a large position in the market leveraged 100:1. In a highly illiquid environment, or a gap scenario, the underlying market moves 3% before positions are fully liquidated.The client loses their margin deposit (1%), and FXCM is on the hook for an amount 2x what the client deposited. FXCM have undertaken not to enforce debit balances, so the company eats the loss.
If in aggregate, FXCM funds do not cover these losses, the other clients (including the profitable ones) get stuck with it, as total segregated funds are now < FXCM liabilities to clients. Remaining clients get paid off at something like 70 cents on the dollar or worse. The losing clients may well have had additional assets which could be used to satisfy the debit balance, however FXCM has waived any claim on these.
So why should traders have their account equity put at risk by insurance offered to those who have blown out their accounts and incurred further liability to FXCM? I am glad CMC does not do this. As Peter has stated here, that offer doesn't exist in the real market and you couldn't get such a guarantee from a bank. Spread betters who want this are in fantasy land, and should not speculate on a leveraged basis if they are unable to satisfy margin calls and resulting debit balances. Just because the leverage is there doesn't mean you have to use it. You can deposit £7,000 and buy the FTSE at £1pp so your gains are tax free, rather than investing the same £7k in a FTSE tracker fund. This does not give you leverage or a risk of debit balance if you buy FTSE at under index level 7000.
If you want a guarantee of protection on leveraged positions (like a guaranteed stop), use options to give you the right to close your underlying at a known price. Example - Long 1 FTSE 100 future at index 5,800 + Long 1 FTSE 5,200 Put. At any time before put expiry, max loss on the position = 600 FTSE points at £10 per point + the premium paid for the option. This will be between £6 and £7k max loss, on a position with a notional value of £58,000.
Should there be a proper financial literacy test for spreadbetting accounts (in addition to the cursory tests which currently exist)? A leverage licence? In am not in favour of government regulations and other constrictions on freedom generally, and for the successful traders it will not be good to limit the number of "fish". However one does wonder at times...but in the end analysis it is down to the individual to project their financial security and understand the products dealt.
I should add one more point for HooDoo. Who mentioned anything about conspiracy theories? I would of thought the facts speak for themselves don't they? Banks are in business to make money. They wouldnt take a stake in a SB company to lose money would they? They have advantages you and I don't, and one of those is billions of dollars to push the market around squeezing smaller players out left right and centre the moment they try to leverage themselves to wealth, which is incidently the exact same means by which these guys got where they are in the first place. If you had billions of dollars what would you rather risk it on HooDoo? A small unknown business with a medical idea, or maybe sitting on unproven resources under the ground....or would you rather find a simple mechanism to take a small slice of the hard earnt cash of every man woman or child that ever dare dreamt of the possibility of making some easy money? Believe me HooDoo thats no conspiracy thats just the nature of the game your involved in and if you dont know that I suggest you dont trade.
hoodoo man
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That is what I do. I am a trader. I am proud of every penny I have earned in this manner.
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