IG Index Review

IG Index, the granddaddy of the spread-betters, launched its first online trading site in 1998. The latest version, which relies on the same back engine as the one used by a major European bank for its online global trading, was unveiled earlier this year.

IG Index provides both spread-bets and contracts-for-difference (CFD), but again, for regulatory reasons, these cannot be accessed over the same site or account.

The company offers numerous different instruments, including bets on house prices, and has just launched a new product called 'binary bets'. This will effectively translate option prices into fixed-odd bets. If successful, the idea is bound to be copied by rivals.

IGIndex's latest platform has auto-fed live prices, which update constantly rather than closing down after a time-out period. The position portfolio does show all trades but, as yet, it does not show a customer's net position, though the next version will remedy that gap.

It is extremely easy to close out an open position. This is done by clicking on a position in the portfolio blotter. If a customer is long, the system defaults to a 'sell' when closing out, which removes the risk of dealing the wrong way around by mistake.

IGIndex provides its customers with streaming tick charts, although these are not interactive. This means analysis, such as trend lines, cannot be drawn on them. However, the site also has historical charts, which do allow this.

Other features include news from Dow Jones and some fundamental research from Salomon Smith Barney. Clients can obtain online statements to transfer cash when IG Index requires money. The firm also makes its prices available on personal digital assistants (PDAs), and it says it will soon provide a PDA trading facility for customers on the move.

Commission costs for CFD trading is around 25 bps a trade. Funding charges are based on Libor, with buyers receiving Libor (London Interbank Offered rate)-200 bps, while buyers pay Libor +125 bps .CFD financing is normally against a benchmarked overnight rate. Most use Libor, as used by the money markets, while others use the Sterling Overnight Index Average, which is used by the swaps market. Most of the time, there will not be a significant difference between them. However, as is common practice, the more actively you trade, the lower the commission charges. For around at around £30 a month, IG also provides private UK CFD clients with London Stock Exchange Level II data.

Update 15 June 2004 - Recently IG Index have launched www.spreadright.com with which they seem to be targeting the lower end of the market (i.e. small bet sizes 50p etc). It still seems they want the big players to use IG Index.

IGIndex seems one of the few companies currently offering bets on the FTSE 250 albeit with large spreads, and although I also use City Index and Cantor they don't offer bets on this index. Their charting package is from from it-finance.com (the 15min delayed package)

Did you know that the letter 'G' in IG Index refers to gold? An index based on gold was the first product offered by IG when the idea of financial spread betting was first mooted in 1974.

History of IG Index

1974 IG Index founded by Stuart Wheeler to enable UK residents to speculate on the price of gold.

1975First bets taken in UK.

1976 Betting extended to cover all commodities traded in London.

1979 IGIndex takes bets on the movement of American markets for the first time.

1981 Betting available on FTSE and Dow Jones indices following the introduction of stock index futures in America.

1988 IG becomes authorised and regulated in the UK by the AFBD, later absorbed into the SFA, in turn absorbed into the FSA.

1993 Sports spread-betting department established.

1995 First bets taken on individual shares.

1996 Foreign Exchange dealing business started.

1998 Internet dealing service starts.

1999 Margin Trading on shares using CFDs introduced.

2000 IG Group floats on London Stock Exchange in the Speciality and Other Financial sector. Within IG Group, IG Index offers financial and sports spread betting and IG Markets offers CFDs and Foreign Exchange trading.

2003 New internet dealing platform launched.

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