London Capital Group Interview

Interview with the Managing Director of London Capital Group

Charles-Henri Sabet is an Swiss entrepreneur: After he occupied senior positions in trading rooms at Crédit Agricole then at Swiss Bank Corporation (now UBS) where he managed the foreign-exchange and treasury desk. Charles-Henri invested in London Capital Group at the end of 2014 and after an extensive restructuring, the company now operates under the name of with a brand new technology.

'I have worked in this industry for over 25 years and have encountered and surmounted many challenges within that time. Experience counts for a great deal with regards to running London Capital Group. This coupled with an experienced senior management team which can help develop strategy is the path to success. You learn what works and what does not work very quickly and if I have made any mistakes in the past I have learned from them and use this to my advantage. As the CEO, I ultimately set the direction and ensure it is implemented well. It’s important to have a strategy in place with respect to which markets the company enters, how we compare with our competition, what product lines to focus on as well as ensuring that the company differentiates itself in such a competitive space. All these decisions ultimately lie with me and it's as a result of my experience and that of my management team within this industry that will enable us to make the correct decisions and face up to any challenges in order to run this business successfully.'

 While still important, being aware of what clients want is a bigger priority than what competitors are doing. 

Financial-Spread-Betting: Hi, can you introduce yourself and your company to our readers? Please tell us a little about the founders' background.

Charles Henri Sabet - Managing Director of London Capital Group

Charles Henri Sabet: My name is Charles Henri Sabet and I am the Managing Director of London Capital Group, which is the Spread Betting division of London Capital Group a well-established financial institution based in the City of London.

Financial-Spread-Betting: What do your day to day responsibilities within LCG involve?

Charles Henri Sabet: I take quite a hands-on approach to the business. I think it's important to be involved in all aspects and I make sure I speak several times per day with my direct reports and with all employees regularly. Good communication, idea generation and implementation are the cornerstones of any successful business and while there isn't really a traditional job description for any CEO; my main objectives are to set strategy and direction, ensure a profitable business model and foster a positive work culture.

While I get lots of useful input from the senior executive team, it is really down to me to ensure everything is running well. So my day to day responsibilities are broad and can vary but I place a priority on risk management, adherence to FCA regulations and the ongoing improvements in our business flows.

Financial-Spread-Betting: LCG is a leading provider of online trading services. In general, what types of client are you catering for?

Charles Henri Sabet: Our main segment is private clients that we reach directly or indirectly. Our product offering suits institutional, HNWI and retail clients. FX and indices are the predominant and most traded products but as we expand, we intend to be more balanced. Our latest commission free offering on FTSE100 and Dow Jones constituents is working. What with the massive rout over the past two months in risk assets there are definite bargain hunting opportunities. Having some of the tightest spreads in the UK for FX and these individual share derivatives gives us an edge over our competitors and indeed our active trading clients also gain an edge with cheaper trading costs.

Contracts for difference and spread betting; both versatile instruments and can be used for speculation or for hedging purposes. The ability to short gives traders double the number of trading opportunities. Over the last few years other asset classes have become more popular amongst the traders, notably commodities like gold and Oil and FX. I think the financial crisis opened up possibilities to the non-financial set, people are interested in how markets work and moreover how to gain a profit from them.

Financial-Spread-Betting: What core range of financial trading products does LCG currently offer?

Charles Henri Sabet: LCG allows its clients to trade in its new world class multi asset trading platform LCG Trader or the popular MT 4 platform. Our clients benefit from the ability to trade either CFDs or spread bet on a wide range of over 7,000 financial markets across forex, indices, shares and commodities. As we build our client base and grow our brand globally, we always strive to improve our offering for our clients, whether it's via our price improvement technology or our industry leading spreads in order to make sure that we are always ahead of the competition.

Financial-Spread-Betting: What do you see at the key strengths of LCG and the reason why increasing numbers of clients are choosing to trade with the firm?

LCG: We have a new cutting edge trading platform and because we are fully cognisant of the fact that many traders like to place and check trades on the go, we also provide an excellent mobile solution. We provide best in class pricings in OTC products such forex and CFDs. Our technical analysis and economic research is some of the best in class. Our latest commission free offering on FTSE100 and Dow Jones constituents, launched very recently, is working and attracting new business.

What with the massive rout over the past two months in risk assets there are definite bargain hunting opportunities and our clients, both existing and new, recognise this and are well placed to take advantage. Having some of the tightest spreads in the UK for these individual share derivatives gives us an edge over our competitors and indeed our active trading clients also gain an edge with cheaper trading costs. We offer a range of different educational material such as on-demand videos and e-books and regular online trading webinars which aim to both educate and inform.

Financial-Spread-Betting: Last year LCG undertook a major restructuring of all parts of its business. What was involved with that and how will it help you to achieve a clearer strategic focus?

Charles Henri Sabet: We had to replace 100% of the technology, rebuild the organisation, and implement new, more efficient processes. I have had to rethink capital allocation, rebuild the brand and have a new website built from scratch.

We had to replace 100% of the technology, rebuild the organisation, and implement new, more efficient processes. I have had to rethink capital allocation, rebuild the brand and have a new website built from scratch.

All of this necessitated us having to select the best people to work with us and as would be expected, an overhaul of this scale implicates a very large turnover in staffing.

Having the right organisation allows LCG to be scalable in all business areas, more nimble and more adaptive to any material changes. The fact that we offer our own trading platform as well as MT4 gives us great scope.

Financial-Spread-Betting: LCG recently launched a powerful new multi-device platform called LCG TRADER. Why was the company so committed to building this and what new functionality does it offer?

Charles Henri Sabet: Having done the research and asked for client feedback, we wanted to offer the latest new technology to our clients. Fast trade execution, an excellent mobile trading app, and regular, relevant actionable trading research is about providing the complete package to active traders. Our technology will allow us to offer many more useful tools that are currently being tested and we plan to put live in the next few months.

Although the UK remains your primary market what steps will you be taking to expand the LCG brand internationally and what plans do you have for extending your client acquisition efforts into new regions around the world?

The UK will continue to be a core part of our market especially since spread betting is still a product very much in demand and with volatility reigning supreme since the beginning of the year, we would expect that to continue in the run-up to the Brexit referendum. We may also look to more actively extend this service into Ireland. We already have a core client base there. We have launched in Italy, Poland and Germany and we plan to build on this quite quickly. The comprehensive digital marketing strategy that we have employed has helped us to identify and realise where the best opportunities lie. I will also tell you that we like Eastern Europe and Asia; and the Middle East is also on the radar for future expansion.

Financial-Spread-Betting: Founded in London in 1996 as a proprietary trading business, LCG is a firm with a long heritage. What are your key objectives for the business over the next few years and where do you hope to take it?

Charles Henri Sabet: We intend to take the best parts of the old heritage while embracing the future. We have recently moved our Headquarters to Knightsbridge which underlines my vision for LCG. We look to build a brand that reflects and builds on this. As one of the UK’s leading spread betting companies we will continue offering great value for money and an unrivalled customer service to our clients..

Following up with a quick-question questionnaire interview below:

Financial-Spread-Betting: Where exactly is your business located?

LCG: London Capital Group is based in the heart of the City of London, in Knightsbridge.

Financial-Spread-Betting: What are the minimum/maximum stakes?

LCG: Minimum stake size is either £1, $1 or €1 per point/tick

Financial-Spread-Betting: What is the minimum deposit required to open an account? Is there a maximum deposit?

LCG: We do not require a minimum deposit. You must just ensure that you have sufficient funds on account before you open a trade. You can calculate the min deposit required by multiplying your stake by the Min IMR (initial margin requirement) for each product. This information is found on the information button provided for each product, or on our market information sheets which can be found on our website.

Financial-Spread-Betting: Are accounts denominated only in GBP or can clients also trade in USD or EUR?

LCG: You can open a £, $ or € account. You can make this selection when you complete the application form.

Financial-Spread-Betting: What is the Initial Margin Requirement (and general margin requirements)?

LCG: The Initial Margin required for each product varies considerably in accordance with the general volatility of the individual market concerned. Our general minimum margin requirements generally compare favourably to our rivals.

Financial-Spread-Betting: Do you offer Stop Losses/Credit Betting/Demo Account? Can Stop Losses be activated when you are closed? Do you apply slippage?

LCG: We do offer normal stop loss orders as well as guaranteed stops and trailing stops. You can then amend your stop to suit your needs i.e. you can move it closer to your position, or further away within the limits of the funds available on your account.

We do not offer credit accounts. This is how we are able to offer such great value spreads, as Credit control is a very expensive business!

There is a Demo Account on our site, which gives you a very good idea of how our live site works. When you sign up, we forward a step by step guide with pictures to help coach you through the trading platform.

Stop-losses are not activated when we are closed.

Financial-Spread-Betting: Please explain how you handle re-quotes and order confirmation times. And fast markets?

LCG: We do not make requotes, either a trade is accepted or not. Clients will know within a few seconds as to whether their trade has been accepted. If there is a problem with trade levels the trade will be declined and the client will then have to trade again at a new level. In fast markets (as with the real financial markets) trades are only accepted if they are compatible with the current market price.

Financial-Spread-Betting: Do you accept deposits by BACS? Which other payment methods do you accept?

LCG: Yes, you can pay directly into our bank account if you wish. Most clients pay by credit or debit card online or over the telephone. You could also send us a bankers draft or personal cheque made out to London Capital Group

Financial-Spread-Betting: What is the maximum amount you can lose? (do you take bets on credit?)

LCG: In general the maximum you can lose is the maximum you choose to deposit with us due to our stop loss policy. But there may be situations where a market gaps through your stop level. As per my previous answer we have yet to make a single margin call to any client.

Financial-Spread-Betting: Do you accept international clients?

LCG: We have clients all over the world. As stated before you can open an account in £ sterling, US dollars or Euros. We cannot offer accounts to US citizens as spread betting is illegal in that country.

Financial-Spread-Betting: Are there any general safeguards for clients - protected accounts for clients' money or segregated accounts...etc?

LCG: London Capital Group are regulated by the FCA - Financial Conduct Authority. They ensure that we hold all client's funds in a segregated account. The segregated funds are held by Barclays Bank.

Financial-Spread-Betting: Are you regulated by the FCA (United Kingdom)? What protection does this give to clients?

LCG: Yes, as stated earlier we are regulated by the FCA and our clients are thus covered up to around £40K over and above the fact that client funds are held in segregated accounts.

Financial-Spread-Betting: How wide are the spreads? How do they compare to other spread betting firms?

LCG: Our spreads are some of the tightest in the market. Check the comparisons table on the London Capital Group site.

These examples are taken from the official published Market Information of each organisation and do include short term special offers.

Financial-Spread-Betting: What are your unique selling points?

  • Gearing - deposit far less than our competitors to open a position
  • Tighter Spreads - about the tightest spreads you will find
  • Speedy account opening* - your account can be open within 15 mins of completing the form. Then deposit funds into your account online and trade!
  • Complete online trading facility - including amend your stop-losses and placing orders/limits
  • Exceptional customer service
  • Wealth of knowledge and experience
  • Trade in one of 3 currencies
(*subject to status and within normal business hours)

Financial-Spread-Betting: What instruments are available to bet on at London Capital Group?

LCG: We quote on over 3000 products including: Main indices, currencies, commodities, bonds & interest rates, FTSE 100 & FTSE 250 shares, DOW 30, S&P 500, Nasdaq 100 and the Dax 30. If you cannot find a product you wish to trade on our site, we will generally add them on request.

Financial-Spread-Betting: As of now, what trends do you see in the markets people choose to trade?

LCG: In general clients will trade in the most volatile markets and so for the moment the Forex markets are very popular. As equity markets have been very quiet recently the volumes here have been lower than normal but individual stocks as they come into the news are still very active.

Financial-Spread-Betting: Are there certain markets that clients seem to prefer?

LCG: Indices & Forex

Financial-Spread-Betting: Do you think this will change over time?

LCG: We do not expect this to change too much because these are the most volatile markets and therefore the most popular.

Financial-Spread-Betting: Do you ever see the tax-free advantage of spread betting disappearing?

LCG: Possibly, but there are still many other advantages to spread betting. You do not pay commission or fees. You can trade in one currency. You do not need to deposit large sums of money as margin. You can trade an enormous variety of products all in one place.

Financial-Spread-Betting: We have heard some traders complain that spread betting allows easy leverage but that it comes at a cost - high maintenance and fees. What are your comments on this?

LCG: It is not expensive, particularly if you compare costs to a stockbroker. There are no fees to pay and the maintanence costs are non existent. If you trade in rolling daily bets the cost can become prohibitive if you hold long term positions but with London Capital Group prices on the quarterly markets being so tight there is every incentive to take longer term positions at minimal cost.

Financial-Spread-Betting: Getting beyond the up-front process, how do your people actually execute? Do you have principles of execution?

LCG: In general we execute trades if the deal price is within our spread at the moment that we receive the trade request.

Financial-Spread-Betting: Are there traders who make a living through spread betting at London Capital Group? What is the trading style and methods that these traders use for winning consistently?

LCG: Yes, we have a number of clients who trade professionally. We could not possibly comment on their style or trading methods. But the one thing traders should never do is slide a stop. Choose your stop level for whatever reason and stick to it!!

Financial-Spread-Betting: Do you hedge the client aggregate positions or bear the risk yourself?

LCG: Yes we do hedge our clients positions in the market when those positions reach a certain level of exposure (for example we will hedge all positions in oil over £100 a point) every market has a limit set against it and we also have overall limits in each sector (indices, shares, FX etc)

Financial-Spread-Betting: Are there issues of competition between spread betting firms and conventional firms where the products they offer carry similar economic exposure but where best execution is applied differently?

LCG: As we are Market Makers we are not subject to best execution. Our clients make a bet on our price as 'requested' by them.

Financial-Spread-Betting: There are many sayings in the markets, do you have a favourite one?

LCG: The markets will move in whichever direction causes the greatest amount of pain to the greatest amount of people!

Financial-Spread-Betting: What challenges do you see ahead?

LCG: Rising to challenge the big three SB companies and taking more market share by demonstrating to clients how badly they have been treated in the past.

Financial-Spread-Betting: Any remarkable incident/ trade that happened you could share with us?

LCG: The only trades I remember are generally the losing ones. Losses always linger in the mind. But my best one was a Friday in the UST Long Bond many years ago before the low interest rates of recent times. I was short of the Long Bond and was going on holiday for the next few weeks. The bond was rallying to new highs so I cut my position and left. When I came back two weeks later the Bond had fallen a few big figures and it was only when I looked at the charts that I realised that I had paid the ALL TIME high. ARRRGHHH. So for the next 4/5 years my high print was preserved for all to see.