the hare
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Its a classic Black Swan event.
Its a classic Black Swan event.
SabreTT
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Its bad for business same for any SB company. They dont want you to just sit there, volatility days where it swings high and low is where people are forced to trade
SB is same as a casino, the dealer always wins on average but they do need the higher trade volume to justify the rent, etc
For what its worth I think people are over reacting. They are obliged to suspend the shares till they know the books are legitimately balanced.
Now there could be a big gap or a small one or most likely its messy. I imagine they will be forced to refinance or report to their creditors first, this may lead to asset sales and possibly loss of equity to share holders.
None of that effects me directly except they are not running now. So they better sort it quick smart or sell their customer books to someone who can deal the positions.
It shouldnt drag on because this causes loss of goodwill and asset value. If its just the same in 1 week then yea take a grim view because its costing them to do nothing so it has to be serious the longer its left
Apparently there is a former CMC guy who might be doing a deal, a former WS boss. Not sure how close he is to either company, etc
ZEN archer
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SB companies don't need to do anything (not even hedging) and they would still make profit as most of the clients are losers (one of the SB guys said that some time ago). Spreads, slippages, delays etc. just add extra profit.
True.
That's a total fabrication and you know it. I myself made £3.87 on a £1 per point VOD short in 2008 and it only took WorldSpread's IT boys a week to isolate the problem and dial in some extra slippage.
The Leopard
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betting-bible
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Keep checking the site for updates too, we'll try and put info on there as soon as it becomes available -WorldSpreads
Extract from above link by Foley from his end of February profits warning about the cause and anticipated remedy for this years Worldspreads P&L loss:
"We continue to review the returns delivered by our trading strategy and are confident that the recent trend in our clients' trading results will reverse over the medium term."
That simply says to me that their clients net heavily beat them in recent times (W/S being the direct counterparty Principal to the trade). And W/S claimed to hedge all trades. How depressing.
The rally may have reduced their volume, but it will have tripped a lot of stops gradually raised by naive people who think the markets are overdue for a big drop. (Don't ask how I know
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"allegedly mixed client funds with its own, allegedly leaving a substantial shortfall that is unlikely to be met from its cash reserves" -- sounds like a miniature version of M F Global.
Can't see how they recover from this, unless a big investor comes forward to refinance them.
Can't see how they recover from this, unless a big investor comes forward to refinance them.
Anyone who has money with them should get it back. There is a big story to come out here. I have been chasing them since last September. My wife won over £30000 off them after 600 trades. When she asked for the money all of a sudden there were manifest errors and she wasnt doing the trading on her account. The money they said they sent doesnt arrives then Dominic Bacon their compliance man starts saying he is conducting an investigation. To cut a long story short they dont payout. FOS complaint is launched which they take 7 weeks 6 days to reply to out of the 8 weeks. Then it gets delayed at FOS.
Last week I got a reply from FOS that they were finally going to make a decision but get this
"We do not normally contact the FSA about a customer's concerns unless we ourselves are satisfied that there is a general issue about the business that the FSA should know about, and I do not believe that we have reached that stage at this time with your case."
That is the reply from FOS adjudicator. Oh dear!!
I have got copies of other emails that I sent to the FOS warning that something was very wrong. I also contacted their bank- no interest!
I think FSA enforecment might take a bit of interest now!
Last week I got a reply from FOS that they were finally going to make a decision but get this
"We do not normally contact the FSA about a customer's concerns unless we ourselves are satisfied that there is a general issue about the business that the FSA should know about, and I do not believe that we have reached that stage at this time with your case."
That is the reply from FOS adjudicator. Oh dear!!
I have got copies of other emails that I sent to the FOS warning that something was very wrong. I also contacted their bank- no interest!
I think FSA enforecment might take a bit of interest now!
A quick search on the forums will reveal many, many people with similar problems. Kind of reminds me of another Irish company which routinely rips off its customers.
I have an account with WS but its at zero balance. I use the same strategy at CS but found on average i would earn just over 4 points less (or lose just over 4 points more) per trade with WS than CS so i moved my money. This was when i started and was trying out different platforms.
The cheeky bods at WS phoned me early last week offering me 0 spreads or cash back if i deposited at least £500 with them. Glad i didnt. Thing is although this is a bit of a worry about the integrity of the whole spread betting thing i have for a long time considered WS to be a dishonest cowboy outfit (or more of one compared to the others) and get the feeling most other people do as well.
The FSA have some very serious questions to answer. Any company that offers zero spreads is quite clearly at it. They are only going to lay bets to losers and pray that they dont lose too much to others before they do multi requotes. It is very shabby dealing at best. The fact I warned them and all the directors months ago that I thought they had a cash flow problem should make sure they cant deny knowledge.
Yes, you'd think the FSA (or even the Advertising Standards people) would at least have been concerned that the claimed zero spreads were a nonsense in practice.
Anyone who has read the CS thread will have read Simon commenting over and over again that they make money on the spread only without needing to rip off customers with slippage etc. I dont know if they actually stick to that but if you think about the model for a spread bet company and how they only need to hedge net exposure (over a certain risk level) this seems feasible enough.
If a company offers 0 spreads it stands to reason that they are either making a loss on every trade (they still need to pay spread on any hedge) or they are making up the balance by other means (Slippage, not paying out etc). Looks like at Worldspreads it is a nasty mix of both.
If a company offers 0 spreads it stands to reason that they are either making a loss on every trade (they still need to pay spread on any hedge) or they are making up the balance by other means (Slippage, not paying out etc). Looks like at Worldspreads it is a nasty mix of both.
The worldspreads issue is an accounting irregularity - not a trading loss - has nothing to do with slippage/not paying out etc.. this looks like a company specific problem and not a reason to panic about the industry in general - accounts are going to be covered by FSA protection if it comes down to it - most accounts are probably below the £50k mark anyway.
Lightning McQueen
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oh, mixing client funds with their own only a small irregularity then.
...and only a small hole in their accounts, nothing to panic about either.
"The London-listed company allegedly mixed client funds with its own, allegedly leaving a substantial shortfall that is unlikely to be met from its cash reserves. The suspected shortfall in the client accounts is estimated to be £10m-£12m, says one person close to the situation."
Worldspreads finds accounts irregularities - FT.com
if i had anything other than small amounts deposited across spread betting accounts. i'd def be setting about the task of getting ready to close any open positions and pruning drastically amounts on deposit sunday night/monday morning from all of them.
Rotten to the core, the lot of them.
