Interview with Marvin Sones, Senior sales dealer at WorldSpreads Group Limited E-mail us for questions or to suggest an interview at traderATfinancial-spread-betting.com
Financial-Spread-Betting: First and foremost I want to thank you for being patient with me and taking the time to do this interview for our Financial-Spread-Betting.com readers. How's everything on your end?
Marvin: Things are fine and I am very optimistic especially considering the markets growth rate over the past few years. I started in the spread betting market in 2000 and from day one the markets just went one way, lower. It was rather depressing to see a lot of clients that were taken out of the markets towards the end of 2001, however things have changed quite significantly.
Financial-Spread-Betting: Before we get to your service, can you give us a quick run down on how you first got involved in this industry and for how long? Please introduce yourself and your company to our readers and tell us a little about the founders' background and the company's history.
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Marvin: I have been a stock trader with a traditional stockbroker since 1995, and I was consistently making money on some of the blue chip stocks. For 5 years it was easy to go long stocks and close out a week later for a profit. I kept all my contracts and certificates and in 5 years of trading up until 2000 I had traded about two thousand times, in about 500 different stocks. I worked out the costs had come to £60,000 in this period. I started in the spread betting industry in 2000 with Financial Spreads, based in Cannon street and a fairly smallish company to start with. As soon as I started in the spread betting industry my stock trading worsened. I had been sucked into some of the major flops like Marconi, Telewest and Energis. My trading downfall was not because I joined a spread betting company but because one got greedy. That is why I am still working and not sitting on a boat in Barbados.
Our COO is Kevin Taylor
Kevin has been involved at the very top of the spreads industry for 17 years, first between 1988-92 as Senior Manager at the AFBD/SFA (now FSA) responsible inter alia for its regulation, before becoming Head of Operations at spreads firm City Index Ltd in 1993, and establishing City Index Sports in Australia in 1996. In 1998 he left to found and be Managing Director of Financial Spreads Ltd, the first new financial spread betting company for 15 years, and which was an instant success. It was bought by IFX plc in 2002 where he became Chief Operating Officer and expanded the Finspreads.com operation into the European mainland. He resigned in 2004 to co-found the WorldSpreads brand and establish its London operation.
Chairman is Lindsay McNeile
With a background in investment advice specialising in property and oil industry services, in 1991 he was a co-founder of Sporting Index. Ten years as Managing Director during which the Group became the largest sports spread betting company in the UK, he moved on to become MD of Global Currencies Limited, a City of London based company specialising in trading exotic currencies in emerging markets, whilst joining the WorldSpreads Group as a non-executive director. In 2004 he became full-time Chairman of WorldSpreads London. Holding other senior management positions ranging from Non-Executive Chairman to Director in four other companies he was educated at Eton, the University of Pennsylvania and the Sorbonne.
Financial-Spread-Betting: Ok to start, when did www.worldspreads.com first open for business? How big is World Spreads?
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Marvin:
WorldSpreads was launched in November 2005, but actually started 6 months prior to that. It probably took us 1 year to get an FSA licence and to build our trading platform. After 5 months of trading we have 6 dealers who look after over 500 clients and 100 Regency accounts. We have offices in London's Regent Street, Dublin Ireland, Athens Greece and representative offices in Spain and Hungary.
Just to explain, our Regency accounts are our higher net worth clients and WorldSpreads client's trade mostly on the online trading platform. We are not the largest of the spread betting firms, but I believe big is not always beautiful. Our Regency service is offered to those individuals that are trading with perhaps an established firm, however feel they are not currently receiving a decent service. I think this has been lost over the past year as spread betting firms have gone through a price war.
Financial-Spread-Betting: Tell us about your product offering
Marvin: Worldspreads is FSA regulated in the UK and we offer a spread betting service both over the phone and online. We are currently offering 1 tick spread on FTSE, Dax and CAC as well as 1 tick spreads on the rolling spreads for EURO/$, USD/JPY & USD/AUD. We also offer 2 tick spreads on GBP/USD and the Wall Street Rolling Future.
Financial-Spread-Betting: Tell us why you decided to plunge into the spread betting business.
Marvin: I was bored of trading stocks at home and decided to take the plunge and work in a growth industry that I was interested in being apart of.
Financial-Spread-Betting: Where exactly are you offices located? Are our readers welcome to visit your offices?
Marvin: Our UK office is located on Regent Street, in Walmar House. Please view the multi map below, always welcome but please call us to arrange a meeting!
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Financial-Spread-Betting: Why would I, as a private investor who over the years has bought and sold my Vodafones, Glaxos and BPs, want to start doing spread betting on all these different markets?
Marvin: The main incentives are the following, gearing, a large variety of markets, lower margins, credit facility and the ability to hedge your portfolio.
Financial-Spread-Betting: What types of underlying investments, markets and events can I trade on? Can I trade different types of vehicle through a single account?
Marvin: With one account you can trade any of the markets we offer. Please view our market information sheet online or call to discuss. We offer Equities, Indices, Currencies, Commodities, FX, Bonds, and Interest rates.
Financial-Spread-Betting: What dealing platform do you use? What would you say really stands out about it?
Marvin: Our dealing platform has been designed for simplicity and ease of use. As one client pointed out to me, all I want is a platform to deal on that allows stops and limits and cheap spreads. The outstanding functionality of our system is that it very rarely goes down and it is very easy to use. Do not take my word for it please apply online and check it out.
Financial-Spread-Betting: What is your company's main activity?
Marvin: We are proud to say we are 100% a spread betting company and we are industry professionals with many years of experience. We are also looking to offer Sports Spread betting in the UK and CFD trading from our London office.
Financial-Spread-Betting: What is the procedure for opening an account? How much do I need? Is there a maximum deposit?
Marvin:
Opening an account is a simple procedure, one must log into our homepage www.worldspreads.com and in the top right hand corner click on 'Open an Account'. Please read the terms and conditions.
Over 90% of our clients open online, however if you would like to fill out a physical application, do not hesitate to email us and we will be happy to send an application form to you.
Financial-Spread-Betting: What are the minimum/maximum trade sizes?
Marvin: The minimum trade size is £1 per point in any of the markets we offer and the maximum is dependent on the market size or your accounts position.
Financial-Spread-Betting: Do you accept international clients? Do you accept deposits by BACS? Which other payment methods do you accept?
Marvin: We accept international clients from any country based on a deposit account only. Except in the USA as spread betting is illegal. Methods of payments include BACS/ CHAPS/ and card payments, please find these details on our website.
Financial-Spread-Betting: Are clients treated as intermediate clients or private investors?
Marvin: Because we segregate our client funds, our clients are regarded as private clients. Spread betting clients are not investing in the markets they are in general speculators. Having said that investors do hedge their portfolios with WorldSpreads
Financial-Spread-Betting: Are the commissions negotiable? i.e. are traders who trade bigger amounts or more frequently eligible for discounted commission rates or other perks?
Marvin:
Of course, one great thing about WorldSpreads is that we are flexible and will happily negotiate with all our clients. We do have extremely tight spreads in comparison to the other spread betting firms, however we are also attracting many clients that trade the underlying futures.
We will also pay a very competitive rate on unencumbered funds greater than £20,000 on deposit.
Financial-Spread-Betting: Do your products involve telephone or online dealing, or both? Is there a cost difference if both are offered?
Marvin: Our spread is the only charge that is incurred in any transaction with WS. You may deal via our London dealing desk by calling +44 207 290 0550.
Financial-Spread-Betting: Do you offer credit facilities? Can accounts be overdrawn?
Marvin: One of the benefits to spread betting is a credit facility, and WS will offer a credit facility to UK clients based on proof of funds. Please ask us if you would like a credit facility.
Financial-Spread-Betting: Do you quote all UK companies or only those within a substantial market cap? What kind of notional risk can one expect on a typical market? Can one trade outside market hours?
Marvin: You may trade UK stocks on a rolling/ futures contract with WS. We typically go down to a minimum market cap of £30 million or a minimum NMS of 3000. Please do ask as our dealers.
Financial-Spread-Betting: Is interest paid on the balance of the accounts? If yes, what are the rates? Are dividends paid out?
Marvin:
We would like to think most clients use their trading accounts, having said that we would be happy to pay interest on unencumbered funds great than £20,000. The interest rate payable is negotiable and competitive.
At present we pay dividends as shares go ex-dividend, however we are developing a system that will price all dividends into our futures contract.
Financial-Spread-Betting: What is the typical level of risk involved with your products? What is the potential risk and reward level?
Marvin: Sorry, this question is rather silly as the markets that our client's trade will depict their risk or reward. Most of our clients trade FTSE cash and our average trade size is £5 per tick, therefore with a daily scanning range of 100 the average risk reward would be £500 per trade.
Financial-Spread-Betting: Please detail the kind of stops and market orders being offered by World Spreads. Do you offer guaranteed stops?
Marvin: We offer stop orders and limit orders basis market price or quote price. These orders can be guaranteed or left un-guaranteed. A guaranteed order will incur a nominal charge that will be debited from your account upon leaving the order.
Financial-Spread-Betting: What is the Initial Margin Requirement (and general margin requirements)?
Marvin:
Initial margin for our main markets are FTSE cash 100, which reduces throughout the day to 30. Our daily rolling margins in GBP/EUR/JPY rolling currencies are 150. Initial margins on FTSE 100 shares are 5% whilst 350 stocks are 10%. Smaller stocks have varying margin rates.
Check out our market information sheet online for all the contract specifications.
Financial-Spread-Betting: Are there any general safeguards for clients - protected accounts for clients' money or segregated accounts...etc?
Marvin: Clients funds are segregated and held in a Royal bank of Scotland bank account. The FSA assure clients up to £40,000 so you are in theory protected up to this amount. However we must assure you that your funds are segregated and your funds are not used in order to hedge positions.
Financial-Spread-Betting: Are there traders who make a living through spread betting at WorldSpreads? What is the trading style and methods that these traders use for winning consistently?
Marvin:
At present we have a large number of day traders that are trading for a living. A lot of ex LIFFE traders have opened to trade the FTSE on a 1 tick spread and the rationale behind this is that it is a tax free alternative to trading the futures contract.
The trading style of a winning trader is simple, know your markets, know your trading system, be aware of market data, grind it out and don't look for the one winning trade, and finally make money.
Financial-Spread-Betting: What has been the clients' reaction?
Marvin: Exactly the above, but we are reducing our spreads massively across the board. We are hoping that these changes will benefit our clients. They want to trade more with us, and I have noticed that clients that have opened with us are generally trading more frequently. The reaction has been very positive and we hope it continues to be mutually positive.
Financial-Spread-Betting: What type of client and what type of uses are your particular products most suitable for? Can it cater for those looking into short-term trading or scalping or is it more suitable for those wishing to take longer time views (weeks or even a few months)?
Marvin: Both we hope, we offer tight spreads on daily and rolling contracts and we also offer competitive rates on the Quarterly contracts. We also offer credit which suits swing traders and for the scalping client you can nick quick profits on our index or currency contracts.
Financial-Spread-Betting: Who is predominantly making up your customer base at this time? Also, what kind of people are your customers - i.e. do they tend to have City experience?
Marvin:
At present the majority of our client base consist of full time to semi full time traders, with experience of trading in the spread betting industry. City experience does not necessarily mean you are going to be a better trader, but it may mean you know the markets a little better. We do have a lot of city financial traders and risk managers that trade with us, they prefer to trade with a smaller less established company because they get better service.
Alpesh Patel has introduced many of his clients to WorldSpreads, these clients are typically customers that have been to his seminar and are in the process of learning.
So in answer to your question, we do have a broad spectrum of clients and that is the nature of the financial spread betting industry.
Financial-Spread-Betting: Are there any other fees which our readers need to be aware of besides your commissions? Do you charge a quarterly trading account fee or an account inactivity fee or a fee for cfd trades made over the phone...etc? Are there any charges for telegraphic transfers and late payments...etc?
Marvin: The only other fees are the daily rolling contract fees, which are +/- 1.5% Libor for UK stocks and the rolling of futures contracts that incurs a small fee.
Financial-Spread-Betting: What services are you offering that others aren't? Why should clients choose WorldSpreads as their spread betting firm of choice?
Marvin: 1 tick spread in the FTSE/ a private banking approach to spread betting/ and a cracking service, we hope!
Financial-Spread-Betting: How do spread betters make money? There is a conspiracy theory that companies only make money by clients losing money.
Marvin: Spread betting companies make money from spreads, that is our margin and risk premium. Most clients that I talk to ask me the question, "Do you make money from my losses". I do insist to clients that spread betting firm's pool risk because we cannot hedge a £5 trade on the FTSE for example. So with that in mind spread betting firms do win or lose - to spread betting clients. I always remind clients it is hard enough trading the markets + having to concentrate on the spread betting firm making or losing off you. Do not trade emotionally just trade the price.
Financial-Spread-Betting: What are the common hurdles a new spread better faces?
Marvin: Getting wiped out quickly. I hope this tip stops people from getting wiped out quick, 'do not punt a view but study a trade'.
Financial-Spread-Betting: As of now, what trends do you see in the markets people choose to trade? Are there any sectors, contracts, currencies, indices, particular markets where your clients are clearly more or less successful? Do you think this will change over time?
Marvin:
Clients have been taking a much greater interest in commodity and currency plays recently. This is only natural as they have been the more volatile markets which provide traders with larger daily/ medium term swings. In the 80's and 90's stocks were the major trading instrument, and now a lot of our business flow is concentrated on the dollars movement! Trading in commodities and currencies has become far cheaper. I was actually discussing this with a client and he said it was true for commodities as the currency markets have stabilized recently with the markets getting use to the Euros value. The reasons why clients trade currencies are because they can move a lot more in tick value than equities, and are more sensitive to macro data.
Currency trading will take off massively in the UK and we have seen the tip of the iceberg so far.
Financial-Spread-Betting: There are many sayings in the markets; do you have a favourite one?
Marvin: "The gambling passions lurk in all of us" - Honore de Balzac
Financial-Spread-Betting: Any remarkable incident/ trade which occurred and you could share with us?
Marvin: Me being long Marconi on the day it fell from grace and the whole financial spreads desk laughing at me...
Financial-Spread-Betting: Do you provide any training for new clients? Are there any virtual trading facilities?
Marvin: Demo account if you want, but if you are a genuine trader and want to take advantage you have come to the right place.
Financial-Spread-Betting: What challenges do you see ahead?
Marvin: Lots we hope.
Financial-Spread-Betting: Any books and resources you would recommend to fellow traders? Any other comment you want to make?
Marvin: The Bible.
Financial-Spread-Betting: Do you have any special sign-up trade offers for our readers who decide to go ahead and open an account at WorldSpreads?
Marvin:
SPREAD BETTING IS A LEVERAGED PRODUCT AND PUNTERS CAN LOSE MORE THSN THEIR INITIAL DEPOSIT. PUNTERS SHOULD ONLU ALLOCATE A PORTIION OF THEIR INVESTMENT FUNDS TO LEVERAGED PRODUCTED SUCH AS SPREAD BETS AND CFD'S AND SHOULD SEEK INDEPENDENT ADVICE IF NECESSARY.
ALSO, NEED TO MENTION THAT THE FSA DICTATES THAT WE REMAIN EXECUTION ONLY. WE ARE NOT PERMITTED TO GIVE SPECIFIC TRADING ADVICE. WE CAN MENTION CERTAIN BASIC STRATEGIES BUT CANNOT ADVISE A CLIENT WHETHER TO BUY OR SELL A PARTICULAR INSTRUMENT.
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