FuturesBetting was originally launched in 2005 but has re-launched in 2008 under the 'London Capital Group' umbrella branded as ProSpreads. It is the first overseas-based spread better (based in Gibraltar) to enter the UK market, at a time when the UK FSA is tightening its scrutiny of the industry's sales and marketing practices in the UK.
I think they're in Gibraltar for their own tax reasons. The company has been set up by a number of successful futures traders who I suspect are about to get a lot more successful in the near future. I used to know one of the founders when I worked as a local on the floor of LIFFE. Many screen based locals trading these products are going to switch to this platform since it saves them a lot of overhead costs and dramatically reduces the income tax they have to pay.
The firm is using the Ubix service (from www.ubitrade.com) to provide their back office settlement systems, market access is provided by FFastFill which gives access to four futures markets - Liffe, Eurex, CME and Cbot. The full list of markets on offer is available here
The minimum deposit is usually £10,000 and the company is regulated by the Gibraltar equivalent of the FSA. However, the company has recently introduced mini accounts which allow you to get started with £5,000
Interesting in that they appear to be direct access but in a spread bet wrapper. They state all trades will be placed on the exchange, so no messing with prices or lack of hedging issues.
In fact, they claim that all bets are hedged in the underlying market and that they do not take positions against their clients. Additionally, they do not vary the spread according to market conditions but offer a fixed spread!
Essentially you are trading futures on the exchange but by calling their commission and clearing fees a SPREAD you get to do it tax free and at the same time they chuck in a comprehensive list of extras you normally have to pay for if you are registered with a normal clearer.
The site is designed primarily to attract these people's business away from trading arcades and clearers who charge for front end access to the exchanges as well as charts, desk space etc.
ProSpreads has a sliding scale of spread width depending on the volume traded. You can check their transactions costs and spreads here
From their site: To the customer the spread is a transaction cost. ProSpreads.com narrows the spread and reduces the transaction cost according to the volume of bets made. We maintain that spread relative to the underlying contract bid/offer irrespective of market conditions.
In fact even at our lowest volume band our spreads are some 1/4 of those offered by the current most competitive spread betting company! But when the spread is measured as a transaction cost, we are able to offer similar, if not better, prices than the direct access providers.  |
The basic spread is competitive with other spread betting companies and the lowest spread for high volume traders is better than IB (InteractiveBrokers).
e.g. The S&P has a best spread of 0.020 points which equates to $1 per side although I doubt many will be able to trade the required volume.
Although they are based in Gibraltar - clients' funds are held in a UK bank (Barclays Bank PLC) and are segregated from other client monies.
Personally I would like some feedback on how they perform over the next few months.
If you can get tight futures spreads combined with the tax free advantage of spreadbetting this looks good to me.
The service is only provided on an 'execution-only basis' and offered only to clients that they deem to be market competent which means this is not for you if you are new to the business; i.e. you must have sufficient experience of trading or betting in financial markets or you won't be accepted as a client here (i.e. you will be considered an intermediate client which is not something I like as it implies waiving some protection). The gains remain tax-free as is usual for spread betting and they also offer telephone-based betting (but they will charge an additional fee of £0.50p per lot for the service).
You can fund the account by Wire Transfer, Telex Transfer or by cheque and no interest is paid on account balances.
The minimum bet size is the equivalent to 1 lot in the underlying market that you are betting on. Betting outside market hours is not currently offered.
The market orders offered are:
GOOD 'TIL CANCELLED (GTC) - Conditional Orders can also be placed as Good 'Til Cancelled. A Good 'Til Cancelled (GTC) order means that your order will remain in the market until it is either executed according to the terms of that order, or is cancelled by you.
LIMIT ORDERS - A Limit Order can be used to either open a new bet position or close an existing open position at a predefined price set by you, which may be more favourable than the then current price for that instrument. Limit orders are executed at the price you specify.
STOP ORDERS - A Stop or 'stop loss' order is an order normally placed to limit the loss on an open position. It is therefore good practice to place this type of Conditional order to control any potential losses of your open position(s) should the market move against you.
STOP LIMIT - Same as the stop order but with a limit on the price that will be traded.
ONE CANCELS THE OTHER (OCO) - This is the combination of both a 'Limit' and a 'Stop Order'. It is an order that can be used to take a profit if the market moves favourably to the open position or to limit the loss if the market moves against the open position. The execution of one order will automatically cancel the other order.
MARKET ON OPEN (MOO) - Market on Open (MOO) is an instruction to deal in the opening period of the market. Market on Open orders can be placed only through our dealing desk. Clients are able to place Market on Open orders on all bets.
MARKET ON CLOSE (MOC)
Market on Close
If this formula proves successful then all the existing spreadbet companies will either follow suit and offer a similarly competitive package or...
This represents a whole new level of competition which, as we all know, is a good thing for the punter on the street.
