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IG Index - What's on offer online -:

IG Index is the largest and longest-running spread betting firm, established since 1974, and offering prices in a huge range of indices, currencies, commodities and options, as well as thousands of individual shares.

Corporate History

IG Index, the original IG Group company, was founded by Stuart Wheeler in 1974. 'IG' originally stood for 'Investors Gold' (this was because IG Index catered to people who wanted to speculate on the gold price but for whom it was difficult to do so because of exchange controls). 'Index' refers to the underlying index upon whose movement the customer speculates (the original index being the price of gold). Eight years later, IG became the first company to offer spread bets on the FT30, which was the major index at the time before the creation of the FTSE 100 in 1984 and in 1995 IG Index was the first to offer bets on individual shares. In 2000 IG Group was floated on the London Stock Exchange. In 2003 the group was de-listed following a management buyout led by Nat le Roux, the current CEO, and backed by CVC Capital Partners. In May 2005, IG Group Holdings plc was floated on the main list of the London Stock Exchange. Since then it has been promoted to become a member of the FTSE 250 and currently has a market capitalisation of around £1 billion with offices in 11 countries.

The business is a spread betting operation that allows its clients to bet on a large range of financial markets, including stock indices, shares, currencies and commodities, and sporting events. IG Index claims to be the world's leading online and offline spread betting firm by both profitability and turnover. The spread betting side of the company is pretty innovative (being one of the first to offer 'binary bets' on a lot of financial markets), and the dealing platform gets updated quite regularly. The Company was the first to offer bets on the FT30 in 1982, the first to offer spread bets on individual shares in 1995 and the first in the UK to offer an online dealing platform.

IGINDEX Today

IG Index is a long established company listed on the London Stock Exchange (as IG Group Holdings plc, IGG.L), valued at about £1bn and are the 167th largest listed company in the UK. At present IGIndex enjoys an extremely healthy financial position; as at 30 November 2007, on the latest published balance sheet IG Group had total assets of £833 million, no debt and own cash of £109 million.

General Points (we will strive to keep this review up-to-date)

1. Account Types: Two types of trading accounts are offered - the Plus Account and the Limited Risk Account. The Plus Account comes with tight dealing spreads and full PureDeal functionality including DealThru Charts, Trailing Stops and one-click dealing for faster execution. The Limited Risk Account comes with guaranteed stops on all trades (so maximum amount you can lose is limited to amount invested) but you will pay a little more spread on each trade for the privilege.
2. Deposit Requirements: Initial Account Size can be zero. You can have a credit account with IG (if you show them evidence of sufficient liquid funds) so don't need to have funds on account. Less hassle than having to constantly make margin payments. An administration fee of 1.50% of the amount deposited applies for credit card deposits (as this carries a cost to IG) - note payments made using debit cards are free of charge.
3. Customization: The IG Index platform allows you to build up a watchlist of the markets you wish to bet on. The watchlist shows you the real time prices being offered for buy, sell +/- on day...etc. Sometimes the price may not exactly match the underlying market, although in my experience IG are always pretty close. If you use quarterly bets the prices drift further away from the daily price as the spread increases to incorporate a financing charge. The additional spread or charge that IG adds to any trade is shown when you click on the deal button in the watchlist.
4. Accessibility: Finding your market on PureDeal is very easy/fast using the PureDeal search feature.
5. Fees: There is no inactivity fee on accounts you can leave money idle in the account for as long as you wish.
6. Rollovers: The daily rollover time is 8pm UK time, 2 hours earlier than most other firms. To check market opening times, one logged in, click on the down arrow which is on the right of the trade, and go down to 'Get Info'. This will display the market opening and closing times.
7. Stops: Stop and limit orders are now based on the bid or offer of IG Index's quotes (as opposed to the market price as they were in the past...).
8. Unusual Markets: Currently you can spread bet on the average house price in Greater London and the UK. IG Index offers prices just two quarters ahead, compared with four originally, reason being that it is harder for IG to make a price for longer periods and they are not able to hedge the underlying risk. Another novelty market is the carbon market which measures carbon emissions and started trading as a result of the Kyoto Protocol in which signatory countries agreed to specific targets for cutting environmentally harmful emissions. The market is quoted 7am to 5pm with £2 a point being the minimum bet and margin being 150 times the stake. It is notable that carbon credits are directly related to the price of oil - as this increases companies will switch to cheaper (more polluting) alternatives and buy in the extra carbon credits.
9. Particularities: IG Index have a unique feature allowing you to open multiple positions in different directions within the same market as long as you tick the so called 'Force Open' function on any new deal ticket that might affect an existing position. For instance IG will allow you to open a March short and a Sept long in the same instrument (CMC do not allow this). You can also do the same for a position which is the same. For instance you could place £5 a point going long in a March contract and £5 a point going short in a March position. To do this, you will have to make sure the 'force open' button is selected on the deal ticket.
10. Multilateral Trading Facilities: IG now provides connectivity to Multilateral Trading Facilities (MTFs) like Turquoise and Chi-X Europe as opposed to just the London Stock Exchange which means that clients are not dependent on a single exchange for prices and this means they receive a more transparent service with the best possible prices.
11. Binary Bets: They offer binary bets. These are starting to be offered by more spread betting firms now, but IG Index still have a very good range. These are basically bets which can either be right or wrong, e.g. FTSE 100 will be up on the day - this either happens, in which case you win a fixed amount of money, or it goes down, in which case you lose your stake. It's based upon the use of options, but made much more user-friendly. Try it if you want, but it's more like betting to me than investing.
12. Education: Recently IG Index launched the TradeSense six-week training package for those new to spread betting which reduces dealing sizes for new clients. In the first 2 weeks of the TradeSense programme, clients can bet a minimum of just 10p a point, which rises to 20p by week three. By week five, spread betters can bet 50p a point until week seven, when the course is over and traders are expected to pay the minimum £1 a point for their deals.
13. Seminars: IG Index host some 15 one-hour webinars (online seminars) every month as well as two-hour real-life seminars presented by David Jones, the company's chief market strategist. There is also an office based presentation almost every week.

IG Index PureDeal Platform.

Comparing some Popular Market Spreads at IGIndex

Good Points

1. Widest Markets Coverage: IG Index makes prices in a huge range of indices, currencies, commodities and options, as well as thousands of individual shares and other exotic bet-types - in fact IG quote some 7,500 different markets.Only spread bet company that handles emerging markets (and not many others even handle iShare futures). Extensive pairs range.
2. Access to Small Caps/AIM/Sectors: IG also offer lots of small caps and shares quoted on AIM (quote prices on nearly all UK stocks with a market capitalisation of over £10 million). Like CMC, IG Index also offer sector bets on UK shares which are useful to avoid the annoying predicament of believing in a group as a whole, yet trading just one stock that happens to underperform against its peers. These can be found on the dealing platform at Indices -> UK Sectors.
3. Reasonable Spreads: Low spreads (0.1%) on major shares (platform -> market list -> UK Major shares and US Major shares).
4. Competitive Margins: IG have lowered their deposit requirements on more than 3750 global shares. Deposit rates now start at 5% with some 650 shares at this lowest rate. Thus, a spread bettor wishing to go long on Unilever Plc at 1,612p for £10 per point would pay an initial margin of 5% of 1612 x £10 = £806.
5. Futures: They do lots of far months, e.g. now you can trade March, June, September (some spread betting companies don't offer the September far month).
6. No Minimum Deposit: As I stated above you do not need to deposit funds into your IG Index account to use the full features of the platform! You can just open a limited risk account, which isn't too much hassle, and check the platform for yourself. If you want to trade, call them up and have them upgrade your account to a standard account, register your card details, make a deposit, and trade.
7. Sophisticated Platform: Sophisticated online, mobile and PDA platform. IG's dealing screen is simple, very clear and easy to use/navigate. Trading interface is nice with with key technical support information on many stocks. Overall, a great platform when it works the way it should... Platform works better on faster computers. Have recently introduced trailing stops which is a handy feature allowing you to lock in profits.
8. Execution: Fills are usually quick compared to some other providers - I like this because it is just scary waiting to see if the ticket is going to come back, wondering if you have been filled or not...etc. For this reason i can't use a platform that constantly leaves orders 'hanging'.
9. After-Hours Trading: IG are open 24 hours a day from when the markets in the Far East start trading (Sunday evenings London time) through to when the New York Stock Exchange shuts (Friday 9pm London time).
10. Guaranteed Stops Availability: Guaranteed stop losses are available at IGIndex on most markets (except binary bets and options). Minimum and maximum levels where a guaranteed stop loss can be placed depends on the market you are trading on, there is no set rule, the levels will be stated on a deal ticket when you selecting your stop level. No cost is incurred for moving a guaranteed stop, but you will pay a premium for the initial use of a guaranteed stop - this is factored in to the spread of the market. So, for instance, if you were short selling Rank Group and the sell price was 55.86 when you select a deal ticket to open the trade, and then select guaranteed stop, you will see that the extra spread incurred on the use of a guaranteed stop in this particular market is 0.169. So, in this example, as you are selling to open you would subtract the 0.169 from 55.86 to get your actual opening level of 55.691.
11. Solid Commitment to improving their Platform: IG always seem to be improving things and offer plenty of widgets to help you trade - for instance text alerts allowing you to set a trigger when a share price hits a certain level so that you receive an SMS (or e-mail) as soon as your chosen level is hit (which comes in handy when you are away from your screen) and DealThru charts allowing you to place trades directly by clicking on a chart and change orders such as stops and limits without having to go back to the trading platform. They also introducted one-click dealing and more recently Bungee bets which are trades with a fixed stop loss.
12. IG Index accept rolling cash bets without expiry dates (not all companies support this), allowing you to refresh a position (without incurring a new spread) for a small daily charge. Effectively a rollover charge is a concession as it is cheaper for the client to use a roll over rather than close out a position and then re-open it the next day. An example for you of a rollover concession on a bet on the FTSE with a guaranteed stop is: close at official closing price and re-open with 1 extra point spread.
13. Price Improvement: IG Index have launched a new platform dubbed PureDeal which is no longer Java-based, making it easier for people to access. The PureDeal trading platform is browser-based so you do not need to download any software and do not have to worry about conflicts with firewalls. Clients using the new platform can choose whether they view price in the 'Pairs' format - how real traders view prices - or in the current way they are presented in the firm's existing platform. Tim Hughes head of sales trading at the company says that the PureDeal platform includes a price improvement technology. 'One of the checks that every trade goes through compares the selected trade with the current market level at the time that we receive the order. If it is outside a certain range, such as in a fast-moving market, for instance, the trade is automatically rejected. PureDeal will, when the market movement favours the client, accept the trade at the improved price rather than rejecting it. No other spread betting firm does this,' he says. A comment on IG's price improvement - I suppose it is better than being filled at the original price but this is a big claim we will have to see in the coming months whether IG Index lives to its promises. An analogy would be when you get foreign currency to go abroad and they shout "we buy your unused currency back off you for ZERO commission"...yeah right, you don't charge me any commission but your buy back exchange rate is enough to make me projectile vomit over your cubicle... I feel it would be much better if they simply reduced their spreads...
14. Excellent Charting: IG currently have three chart levels - basic quick charts (for those who just want to view the recent price activity and do some basic analysis), advanced charts and (pro)realtime charts. IG's 'real time' charts are provided by ProRealtime and does everything that a commercial technical analysis package does including backtesting. You could also get a light version free from the ProRealtime website (google it). ProRealTime must be the best free multi-chart platform on the net - in the free version you don't get the intraday data - you would have to pay for that and IG Index are quite generous in providing it for free to clients who place at least two trades a month (otherwise it is £30). Basically you get 50 videos on everything from setting trend lines to multi indicator scans and easier than sharescope data mining plus back testing facility. Worldwide exchange coverage including forex, bonds and commodities. FTSE top 200 but no smallcaps. Included in the charting package are some 70 preset indicators all displayed in real-time with full customization with top movers, portfolios and lists, drawing capabilities and historical data. The site is owned by IT-finance. On IG you can even customise the display so as to open several charts and watchlists at the same time meaning you can check multiple charts and quickly identify trading opportunities. There's 2 things missing from IG's real time platform that would make it, IMHO, the best package by a mile. The first is volume with the appropriate volume indicators, and the second is a Level 2 plugin.
15. Supplementary Tools: IG is now offering a new great tool; IG Chart Pattern Recognition (Autochartist) which which can be used to scan thousands of stocks. IG's Autochartist (availble free of charge to client) is a technical analysis tool that will scan your selected market for almost any pattern you would wish, either technical analysis or Fibonacci related. Start with their settings and have a play. Put your own in and have even more fun.
16. Fundamental Analysis: Equity fundamentals include overview of a stock with all related key financials. This includes consensus estimates, per-share data, valuation ratios, dividend-per-share, sales and profit estimates as well as recent news about the company, snapshot charts and a summary of the company's structure and core businesses. You can also get up to five years' financial data for each company, including revenue, income and EPS data, along with a broken-down cash flow history. All this is provided free to clients.
17. Market Research: Independent experts 'Trading Central' supply technical commentaries on equity, index, fixed income, forex and commodities markets identifying trend and associated pivot points, as well as highlighting key support and resistance levels on each market. A detailed analysis of the foreign exchange (FX) markets and UK equities is also provided by Investors Intelligence.
18. Streaming Newswires: Live Streaming news from Reuters through an integrated news service covering all markets and reports on international equities as well as complete coverage of economic releases. The feed is fast and accurate, it being updated continually and provides unbiased information. You can access it in three ways: Newflashes, Browse and Search, for you to keep up with the latest events.
19. Good Customer Service: I used to email them quite often in my early days as a client of theirs, and they were always excellent in their response.
20. Suitability: Good for both intraday/long term/futures & spots (not for scalpers, use ProSpreads if you wish to scalp).

Bad Points

1. No Demo: No virtual 'play' trading account.
2. Spreads: They usually do not have the best spreads but they make a market in more companies than the rest so sometimes I use them. For the bigger cap stuff there are definitely narrower spreads out there. For instance their spread on the FTSE and Dax is 2 points and for Crude Oil it is 4 - that's quite a bit more expensive than some other spread betting providers.
3. Limited Risk Account: May only let you have a controlled risk account (instead of the ordinary one), the controlled risk account comes with increased spreads. However, the limited risk (i.e. controlled risk) account isn't much good. Unless you are trading shares or commodities, you don't really need a guaranteed stop, which is a form of insurance (which you pay through the nose for). You can still use a GSO when required on a Standard Account. On a Limited Risk account, you must use it each time, which is bad for trading indices or currencies which are liquid enough. If you don't qualify for a Standard Account, try elsewhere...
4. Currency Exposure: With IG Index, you can have your account in Euros and trade stocks in countries which have the Euro (Ireland, Germany, Spain...etc) in Euro but you can't do that for others like UK, US stocks. What happens is that they take the deposit you need for the trade and convert it into pounds or dollars and therefore you have a currency risk for the period of the trade.
5. Platform Stability: Platform can be unstable during news times or times of high volume meaning you could get caught up in a negative wave without having access to your position.
6. Shorting Stocks Info: Even if a stock is listed on the IG site as being a acceptable SHORT it may not be accepted by IG. Also, they do not forewarn you if they are unable to accept any further bets on a particular stock (this is normal but its annoying to find out that you can't deal...). Happens usually with small cap but ruins your mental capacity before a trade.
7. More Transparency: I'd like more transparency up-front on each trade in terms of minimum/maximum bet size and minimum stop loss distance. I've had lots of trades rejected because I miscalculate these.
8. Margins: Looking at margin requirements, you need a lot more margin for IG trades (than for CMC for instance). It reduces if you place stops, but you still need to keep more money in the account to cover the trades. I take income, rather than upping my stakes, but have to leave quite a bit more in the IG every time.
9. Not for Scalpers: Reports of clients put on manual execution - spread widens on news releases. Screen updates can be slow when executing stops/entry orders. Hence when the market is moving rapidly you can be left 'praying' for a minute or more that your order/stop has been executed. In fairness I have never experienced non-execution of orders though slippage at volatile times has been quite wide. Not a problem for me though as I tend to trade at market rather than with orders. But they do say that as long as their quote touched that price then that's the price you get.
10. Some Slippage: You can get substantial slippage in a fast moving market, primarily because if between you clicking a price and it getting filled the price has moved, then it takes you to a new screen saying 'sorry but...', and by the time you get back to the trade screen you've missed out. Note though that slippage can also occur on a limit order whereby you would obtain a more favourable place so this cuts both ways really.
11. Guaranteed Stops Cost: The spread charge for using a guaranteed stop varies depending on what market it is one is betting on but isn't what one can refer to as 'cheap'. For example the guaranteed stop spread charge for betting on the daily FTSE is 4 points while the guaranteed stop spread charge for betting on GBP/USD is 18 points. Check the online dealing handbook to view all their spreads: http://www.igindex.co.uk/content/files/dealing_handbook.pdf
12. Daily Bets Expire on Daily Basis: Daily bets are opened and closed every day so profits and losses are crystallized at the end of the trading trading even if you let the position roll over. I consider this a disadvantage since it can create confusion as the entry level is changing every day. Some other providers will not close rolling bets on a daily basis but will leave them open until the position is closed manually, this is better as it is more transparent and you can see the physical finance posting every day.
13. And of course IG like other spread betting providers have a disclaimer in its standard terms and conditions of website use to protect them against price discrepancies - so, it's down to you to watch out for this type of event that can seriously damage your pocketbook. Also, prices are usually slightly delayed but they insist that the graphs are indicative.

Generalities

IG is one of the leading suppliers of speculative investment products to retail and professional investors here in the United Kingdom, and in Australia whilst expanding its footprint into Spain, Germany, France, Singapore and the United States. Arguably IG Groups' main rival is CMC Markets, which is number two in the UK, and is market leader in Australia.

Two years ago the company was on average, opening 650 U.K. spread betting accounts and 350 CFD accounts worldwide per month. Both figures have increased progressively and over the last quarter it averaged more than 1,900 spread betting accounts and around 1,400 CFD accounts opened per month. In its latest update IG Group was opening about 2,000 new accounts a month in Britain, about 700 a month in Australia and 300-400 in Singapore. The firm, which has 550 staff and more than 32,000 customers in the UK and new account openings remained strong over the last quarter (up to March 2009) at 18,700.

To get an idea of the acceleration of sign-ups in the last year David Jones, Chief Market Strategist at IG Group, is quoted of saying 'from May 2007 in a typical month we opened 1,000 UK accounts: in September 2008 that number was nearer 3,000'. It is interesting to note that in October 2008 a record number of spread betters opened accounts with IG.

As of January 2009 IG has 33,000 spread betting accounts, and 25,000 CFDs ones. Typically, a further 100 new British customers are signing up every day to try their hand at making a quick return.

In December 2007 the company completed its acquisition of HedgeStreet Inc, which is a U.S. exchange regulated by the Commodity Futures Trading Commission ("CFTC"). The first step in the development of that business will be to re-open the exchange with its existing, relatively limited, offering of binary options.

'Market volatility undoubtedly played a part in the growth that we have seen in the last six months,' Chief Executive Officer Tim Howkins said in the statement. IG is opening about three times more new accounts for so-called spread bets every month on average compared with two years ago, he said.

Sales have tripled in four years as IG has signed up more customers in Britain, its main market, expanded elsewhere and taken more online bets. Financial-market bets generate 93 percent of revenue, and the rest comes from sports wagers, the CEO said.

IG's average customer is a professional male aged between 35 and 45 who typically spends about 250 pounds per trade, giving control over about 5,000 pounds worth of shares because of leverage, according to Howkins. Most clients are not traders, who are barred from making bets by workplace compliance rules, he said.

Regulation

IG Index and IG Markets are authorised and regulated by the Financial Services Authority (FSA). IG Markets is a member of the London Stock Exchange (LSE).

The Group's Australian operations are regulated by the Australian Securities and Investments Commission (ASIC).

Verdict: IG Index are fine (at least for modest size, even if not the best spreads), one of the best spread betting platforms with excellent charts (I notice in IG's annual accounts that they spend an absolute fortune on new IT equipment and support) and the fact that they make some 100 Million $ net profit annually means that they can handle big winnings and big size traders.

If you are located in the UK you can request a free no obligations brochure from some leading spread betting companies and the products and services they offer by clicking here

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