Our hands on experience of CMC Markets backed by reader comments, general experiences and observations -:
General Points (we will strive to keep this review up-to-date)
- Market Coverage: Spread bets on more than 7,000 instruments offered in 30 global markets, including global shares and indices, as well as other major financial markets such as currencies, commodities, sectors and treasuries via the CMC's Market Maker download platform. The new NextGen Platform which is designed to supersede the Market Maker platform has less markets (around 3000 instruments) but we are led to believe that this is a gradual process and in turn more and more markets will be added.
- Sectors: Traders can also take a view on the performance of major UK stock market sectors. These are made up of a selection of five to 100 companies in particular industries as a weighted average of their share prices (say telecoms or pharmaceuticals) and spread betters can then use them as a speculative or hedging tool, depending on how other aspects of their investment portfolio are constructed.
- Account Types: Two types of accounts are available - fixed risk accounts (aka as limited risk accounts with other providers) where all stops are guaranteed (but come at an extra spread for the 'insurance premium') and regular accounts (no guaranteed stop losses). You can also open more than one account or open a Joint Account and/or Company Spreadbet account. A Demo account that runs on live prices is now also available (without having to open a real-money account).
- Credit: Credit facilities are available for accounts that hold more than £10,000 on their accounts.
- Deposit Requirements: Accounts (including a joint account option) can be opened on-line and funded with the usual cards. The minimum trade size across all the website's spread betting products is then £1 per point. The minimum account opening deposit is now £200, the minimum stake is £1 per point, and they don't specify a maximum as this will depend on market liquidity. CMC requires you to have a minimum of £200 deposited to open an account. And do keep in mind that you need to maintain £100 in the account, if your account goes below this all your positions are closed.
- Interest: CMC pays Libor minus 2 per cent on amounts over £10k.
- Fees: There are no maintenance fees nor inactivity fees but there is a 1.8% fee on credit card deposits albeit CMC say that they can waive this fee for the initial deposit. Note that credit card deposits are expensive for merchants as they have to pay processing credit card fees so they are basically passing on the processing fees to the client - a better way to fund your account would be by BACS or wire.
- Execution: On their original Market Maker platform there are different rules for different stocks depending I suppose on their liquidity, how gappy the order book is and also how popularly they are traded by clients. Some have a widened spread, such as SVT, WOS and EMG when the spread is tight on the orderbook, and others seem to have a requirement of a minimum number of shares on the orderbook before CMC will offer you market price, such as XTA and RIO. The exact amount they need to see on L2 does vary, sometimes from minute to minute. Basically their rules are not hard and fast, and can be difficult to predict. The new CMC Next Gen platform which has been released fairly recently carries some bold claims though as the platform is designed to automate pricing and execution while having no requotes and ticket cancellations (no dealer intervention).
- Particularities: With CMC if a trade is declined you get a re-quote meaning that a box jumps up showing the next best bid or offer (depending on whether you tried to buy or sell), and a chance to either deal on the price or not. If you do not deal, nothing gets done. With CMC you can also add to your existing positions, eg. buy, and buy again later (before you eventually sell), but it will not be treated as 2 separate positions, it will just be increasing the exposure on an existing position. You can do this as many times as you like. Clients can see CMC Markets' top 10 levels of price depth for the instrument corresponding to the size of the trade they are placing, where available. Price depth ladders also allow clients to view a single price available to them for their selected trade size and instrument.
- Spreads: No difference between the CFD trading and the spread betting offerings...apart from the tax exempt status of spread bet gains...a CMC sales guy said to me recently that CFDs were used mainly by overseas clients who did not have to pay UK taxes.
- International Clients: CMC have ceased offering spread betting accounts to people located outside the UK & Ireland since they say that the tax free benefits are unavailable to anyone outside of UK and Ireland (in which case you can open a contracts for difference account).
- Education: CMC Markets have launched a new initiative, Trading IQ, which is probably one of the best education packages available in the spread betting market place. The Trading IQ programme covers all the basics with a comprehensive manual and an accompanying 40-minute DVD presented by actor James Nesbitt showing how to use the software and manage the risk. This programme includes a day's free trading on the FTSE 100 index (at £2 per point) at CMC's London office if you would like to attend. On this free one day course you get to keep your profits with CMC Markets absorbing any losses. More advanced traders also get access to a number of online videos covering a range of trading topics and video tutorials that provide a guide to the desktop and mobile platforms; and a comprehensive library of trading literature.
- Seminars: CMC Markets do a range of free and paid-for seminars and workshops by its in-house analysts. The paid-for ones cost around £100 to £200 and they teach you a lot on diverse subjects such as technical analysis and risk management. There's no need to pay thousands for certain other trading courses! CMC has also an eight-week training program called Trading IQ presented by actor James Nesbitt. This programme includes a day's free trading on the FTSE 100 index at £2 per point. You get to keep your profits and CMCMarkets will assume any losses...
- Social: CMC has introduced chart message boards where CMC's UK clients discuss, share and swap charts and technical analysis via interactive message boards. These are embedded into each instrument available on the platform and other users can then view, comment and rate. Note that traders need at least £1,000 in their accounts to post. A key feature for CMC is that if a user sees analysis or a trade set up on a message board that fits in with their trading strategy, they can paste this analysis directly into their own live charts. Historical data is also available at the user's fingertips, so a traderís past posts, analysis and charts can be compared with what actually happened. The longer a trader has been actively participating in the system, the more useful this is to their peers, as they can measure their success (or lack of it) over time.
- Developments: At the time of writing (December 2012) CMC have released a revamped trading platform ('Next Generation Platform') which is designed to replace the flagship 'Market Maker' which platform comes under a new system of 'precision pricing' of spreadbets to 5 or 6 decimal places (1000th of a pip), real time prices, real time news and chart pattern recognition tools. Mr Cruddas claims that there are no requotes with the new system - 'There are no requotes - you click, you trade,' he explains. 'It's like trading with a bank. If we trade forex with Goldman Sachs, we see a screen and get a deal.' CMC has also added a pattern recognition scanner, which CMC says has been developed in response to the growing technical sophistication of retail traders, who require extensive and detailed charting software. The latest version includes a scanning feature that automatically scans over 120 major instruments every five minutes, to find new potential technical trade set-ups across all major asset types. Users can view both emerging and completed patterns.
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