Financial Spread Betting News
10/09/2008 Cantor predicts 19% house price fall by 2010
09/09/2008 UK spread better IG says Q1 revenue up 29 percent
23/08/2008 Spread Betting No Fad
19/08/2008 GFT Hires Currency Strategists Kathy Lien and Boris Schlossberg
09/08/2008 Delta Index to expand overseas
07/08/2008 City Index launches new trading platform in the UK
07/08/2008 London Capital Doubles Dividend As 1H Pfts Jump
04/08/2008 CMC Markets to cut jobs
24/07/2008 LCGH re-launches FuturesBetting.com
24/07/2008 Asian-facing Pan Index upgrades platform
22/07/2008 IG bets on profitable US business
06/07/2008 UK trader transparency 'to be boosted'
06/07/2008 Royal police lose fortune in betting ring
02/07/2008 London Capital sees H1 pretax up 50 pct
02/07/2008 CMC benefits from market volatility
01/07/2008 PartyGaming launches financial spread-betting service
30/06/2008 CMC Markets to launch education package
18/06/2008 FSA demands short selling disclosure for stocks doing rights issues
11/06/2008 Worldspreads profit rises 81%
04/06/2008 IG Growth Story Continues but Betting Duty Hitting Margins
27/05/2008 London Capital Group buys FuturesBetting.com For GBP0.4M
22/05/2008 Scotland reaping growth for CMC
16/05/2008 IG Index launches Trailing Stops
Cantor Spreadfair, the housing spread betting firm which allows investors to bet on the Halifax House Price Index, is predicting house prices will fall 19% by 2010.
It predicts the average UK and Greater London house price will be £141,500 in December 2010, a 19% drop on the current £174,178 average on the Halifax index.
This represents a drop in value of approximately £33,000 over the next 27 months.
The average traded price on Spreadfair for the Dec ’10 average UK house price during August was 141.5 (which represents £141,500) against an average traded price of 137 (£137,000) in July. This represents a month on month rise of just over 3%.
James Lippett, head of sales at Spreadfair, says: 'The green shoots of recovery for the housing market are still taking life on the Spreadfair betting exchange. For the second month in a row the future price of an average UK home in Q4 2010 has crept upwards. August has seen the average traded price rise by 3%, with the average monthly prediction of £141,500.'
British spread-betting firm IG Group said its first-quarter revenue rose 29 percent, helped by continued growth in client numbers.
IG said revenues for the three months to Aug 31 were 53 million pounds ($94.54 million), up from 41 million pounds in the same period last year.
The improvement came as IG attracted more customers, with new spread betting and CFD (contracts for difference) accounts for the quarter up 45 percent on the year.
"The board remains confident of the group's prospects for the current financial year and that IG is competitively positioned for further growth," IG said in a statement.
Spread betting volumes more than doubled in the first half of 2008, compared with a year earlier, even as share trading volumes fell, according to a survey of wealth managers by ComPeer, the industry analyst.
Trading volumes for the high-risk derivatives hit record levels during the stock market’s dismal first quarter, before coming off this high in the three months to the end of June.
By contrast, share trades by private investors fell 8 per cent to 2.2m quarter-on-quarter to the end of June, while the first-half figure was 15 per cent lower year on year. “Turbulent market conditions have hit direct share investment,” said Roger Colletta, ComPeer managing director. “While spread betting is higher risk, it does at least offer the opportunity to make money in falling markets.”
Tim Hughes, head of sales trading at IG Index, the biggest spread betting firm, confirmed that market volatility had prompted an increase in “shorting” – trades aimed at profiting from price falls.
“Whether it’s to hedge or speculate is unclear,” he said.
However, in the three months to end-June, funds were the only investment category in the wealth management industry showing quarterly growth in transactions.
Ada, Mich., August 18, 2008 — GFT, worldwide leaders in online trading announced the addition of Kathy Lien and Boris Schlossberg to its currency research division.
As two of the forex market’s most respected analysts, they will serve as GFT’s new directors of research, boosting the company’s forex analysis and commentary with new ideas and techniques for trading, while also delivering new educational tools to the marketplace.
GFT President and CEO Gary L. Tilkin said that the addition of Lien and Schlossberg is a huge step forward for GFT, which is already one of the largest and most esteemed forex dealers in the world.
'Their credentials, reputation and integrity complement our core values and commitment to providing our customers with the highest level of service,' he said. 'We’re looking forward to working with them to advance our initiatives as the premiere company in online trading and trader education worldwide.'
'I’ve had my eye on GFT for quite some time,' said Lien. 'Their phenomenal growth over the last 10 years is a testament to the strength of the company and the people who work there. I’m very excited to join the team.'
Schlossberg echoed Lien’s comments, adding that the pair has a lot of new ideas to help GFT and its customers.
'In addition to the analysis and strategies we’ve been using for years, we’re getting ready to unveil some new techniques that may help forex traders enhance their trading strategies and identify more trading opportunities,' he said.
Before joining GFT, Schlossberg was a senior currency strategist at Daily FX. His career began more than 20 years ago with Drexel Burnham Lambert and he has experience trading forex, equities, options and stock index futures. He is the author of several market analysis books and is a regular guest on CNBC and Bloomberg television. His daily currency research is regularly quoted by Reuters, Dow Jones and Agence France Presse newswires.
Lien was chief currency strategist at Daily FX prior to her new position with GFT. She is an internationally published author and forex professional with nearly a decade of experience using technical and fundamental analysis to trade spot forex and options. She has worked for JP Morgan Chase’s cross markets and foreign exchange trading groups, and she is frequently quoted on CNBC, Bloomberg, Fox Business and Reuters.
Together, they use a unique combination of technical and fundamental analysis to offer possible strategies and trade ideas. They’ll be responsible for providing analysis to GFT’s global network of individual and institutional customers, as well as financial media outlets.
Lien and Schlossberg will make their debut at the 2008 Forex Traders Expo in Las Vegas, September 12-13. Expo attendees are invited to stop by GFT’s booth to meet Lien and Schlossberg and find out more about how they can obtain their exclusive research through GFT.
Founded in 1997, GFT is a world-leading provider of real-time currency dealing, pricing and comprehensive services for retail and institutional foreign exchange traders. GFT has served a global customer base in more than 130 countries through its DealBook® 360, DealBook® WEB and DealBook® Mobile trading software and 24-hour, 5.5-day-per-week dealing desk operation. The company’s world headquarters is based in Ada, Mich., with global offices located in New York, Chicago, London, Dubai, Tokyo, Singapore and Sydney (London office operated through GFT Global Markets UK Ltd).
GFT refers to Global Futures & Forex, Ltd. and all of its divisions, branches and subsidiaries, including Global Forex Trading and GFT Global Markets UK Limited. Each investment product is offered only to and from jurisdictions where solicitation and sale are lawful. Trading of foreign exchange contracts, contracts for differences, derivatives and other investment products which are leveraged, can carry a high level of risk, and may not be suitable for all investors. It is possible to lose more than the initial investment. In Australia, GFT means Global Futures & Forex, Ltd. ARBN 103 508 461, AFS Licence 226625. A Product Disclosure Statement (PDS) is available at www.gft.com.au. You should read and consider the PDS before making any decision to deal in GFT products.
FINANCIAL SPREAD betting firm Delta Index is investing €3 million in its online trading platform and creating new jobs in its IT development team over the next three years as it expands its business overseas.
Investment in technology development at Delta Index will take place at the rate of €1 million per year, and will see the Dublin-based firm’s in-house technology development team double to 20 people over the next 18 months.
The Irish-owned company is planning significant growth once it has secured a regulatory licence to offer its services to clients outside of Ireland. Joint managing director of Delta Index Michael O’Shea said the company expects to get regulatory approval within a matter of weeks. Expansion will initially take place in the UK, Germany and Hungary, with other countries such as Spain, France and Italy targeted next year.
Beyond that, the company is hoping to expand outside the EU, eyeing up territories such as Hong Kong, Singapore, Canada and Australia as potential markets.
'While today and for the last five years we have been limited in our ability to sell financial spread betting (FSB) and contracts for difference (CFD) to just Ireland because of the regulatory status those financial products have, because of a change in the regulatory status, we can now export those products overseas into other jurisdictions and throughout the European Union,' says O’Shea.
'This is something that we had expected and anticipated, so we had built the systems in order to facilitate that.
'We’re essentially an internet company. We can sell and market over the internet; we deliver the service entirely over the internet. So having built the systems once to serve the Irish community, there’s no additional build requirement in order to sell into the UK, Germany, Spain or other jurisdictions, other than to localise the front-end webpage, such as the relevant language or currency if it’s outside the euro zone.'
The company is planning to build up a network of partners overseas, but will start off by selling directly into the markets.
'Initially in the UK and in Germany we’ll be starting by selling directly. Part of the reasoning behind that is by selling directly into the local market we can establish a credibility that then leads to partners. One leads to the other,' says O’Shea.
It also plans to introduce 'white label' products for the financial services sector that will allow banks and brokers to provide customers with branded products in the FSB and CFD sector, dealing with the sales and marketing of the products while Delta Index handles the trading side of things.
O’Shea says the FSB and CFD markets in Ireland and Europe are poised for significant growth in the coming years.
City Index, a provider of trading services to individuals, has launched its new trading platform and website.
It offers access to a range of instruments and indices including foreign exchange, CFDs, options and in spread betting in the UK.
The new platform allows access to 12,000 markets worldwide, 24 hour trading in currencies and indices through mobile and online platforms and tight spreads on popular markets.
Joshua Raymond, market strategist at City Index, said: "We are excited to launch this new platform for our clients, offering a range of enhancements to improve our clients' trading experience with us.
"With even greater price transparency, more flexible order types, and integrated research, the platform provides traders with everything they need to make the most of fast moving global markets".
LONDON (Dow Jones)--Online financial spread betting and trading company, Capital Spreads (LCG.LN), Thursday doubled its dividend after announcing a 52% rise in pretax profit on higher revenues driven by a jump in client wins.
In the six months to June 30, pretax profit excluding sare-based payment expenses was GBP5.94 million, up from GBP3.90 million in the previous year. Revenues rose 54% to GBP12.51 million, from GBP8.13 million, predominantly driven by the company's spread betting division.
At 1350 GMT, London Capital's sares were up 6 pence, or 2%, at 295 pence.
The results were "excellent" and showed the company is comfortably on track to meet full-year pretax forecasts of GBP12 million, Cenkos Securities said in a note to investors.
Chief Executive Officer Frank Chapman said second half trading to date had been strong and, although mindful of current market conditions, the group was optimistic for the remainder of the year.
The company admitted that trading slowed in the second quarter from the first as the credit crunch made customers more risk averse and trade in smaller volumes.
Key growth drivers in the first half were an acceleration in client acquisition rates and record client monies on deposit, said Cenkos. This was in contrast to the latter half of 2007 when growth was primarily driven by extraordinary levels of trading activity, the broker said.
A 96% increase in client wins to 25,853 was partly due to contributions from Paddy Power and Betfair, which featured in the results for the first time. London Capital runs so-called white-label spread betting operations under the Paddy Power and Betfair brands in exchange for commission-based payments to these companies.
Cash balances of GBP9.7 million were sufficient to enable London Capital to increase its interim dividend to 2.5 pence, from 1.25 pence.
The group had no debt at the end of the half year. Strict risk management controls, including a policy of not offering credit and placing automatic stop losses on all retail client positions, has meant minimal bad debts across all group divisions of only GBP8,000, it said.
Chapman said the company is focused on organic growth, having increased headcount in the U.K. and abroad and doubling the size of its head office.
Last month it launched a new spread betting platform in Germany, another white-label offering with a Betfair interface. The German product is the company's first proprietary trading platform that was developed in-house rather than by its U.K. IT partner. The company is also currently developing an international CFD platform.
But London Capital said it was able to gain fast, cost-effective and low risk access to other markets by offering its non-proprietary solutions to partners in other jurisdictions rather than setting up its own operations.
The company's policy of partnering through so-called white-label arrangements with high profile operators will enable it to further accelerate growth despite difficult market conditions, Cenkos said, adding that it thinks London Capital's growth potential is at least that of industry leader IG Group, if not better.
CMC Markets, the financial trading business majority owned by one of the City's richest men, is cutting just over 10 per cent of its workforce.
CMC, founded by its executive chairman Peter Cruddas, whose family still controls approximately 85 per cent of the business, informed about 130 of the 1,200 workforce in London just over a week ago that they would lose their jobs.
The cuts are part of a restructuring of London-headquartered CMC, which said it was "reviewing its resources as part of its normal business process". The review could lead to further redundancies, though it did say it might employ more people in new offices in Europe. CMC is best known in the UK for its spread-betting business but is focused globally on contracts-for-difference (CFD) derivatives.
Goldman Sachs bought 10 per cent of CMC in November for about £140m, in a deal that is thought to have pushed Cruddas's personal fortune to over £1bn. At the time, CMC said it hoped the investment would help fund its growth by opening up new markets.
London Capital Group Holdings, the online financial spread betting and trading company, has announced that FuturesBetting.com, the Gibraltar-based financial spread betting business it acquired in May, has re-launched and is now open for business.
FuturesBetting.com provides traders with a professional trading platform that offers fast and reliable financial spread betting execution on major indices, currencies and commodities.The platform is aimed at individual professional traders as it offers specialist direct market access functionality which is unavailable on many other spread betting platforms.
LCG said it intends to expand FuturesBetting.com's high net worth client base by leveraging its existing Capital Spreads and Capital Forex customer base and by targeting more sophisticated and experienced investors.
Frank Chapman, CEO of London Capital Group, said: "The FuturesBetting.com spread betting platform is a key addition to the group and opens doors to a new area of the market for us."
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IG Group, the UK’s biggest spread-betting company, saw 'no signs' of a slowdown in customer activity in spite of a deteriorating UK economic outlook as its full-year earnings rose 40 per cent.
Tim Howkins, chief executive, said the company expected its US business to approach being profitable by the end of this financial year, following recent expansion into the region including the purchase of Hedge¬Street, an off-exchange foreign exchange platform.
Market volatility helped drive earnings before interest, tax, depreciation and amortisation to £98.5m (£70.4m) in the year to May 31. Revenues rose 51 per cent to £184m (£122m) and the pre-tax profit was £97m (£68.9m). The results were in line with analysts’ expectations.
IG offers financial derivatives products ranging from simple spread bets to 'trailing stops' and 'bungee bets', allowing investors to make bets on future movements in stocks, foreign exchange and on sports, entertainment and political events. Mr Howkins said even as IG benefited from volatility, it was 'encouraging to note that our best month’s revenue in the year was achieved in April, which was not a volatile month when compared to the preceding nine months'.
The company had recruited more than twice the number of spread betting and CFD (contracts for difference) clients compared with the previous year and over three times the number the year before that.
IG’s client base is mostly in the UK but the company has been expanding internationally, opening offices in Paris, Madrid and Chicago.
In December, IG completed its purchase of HedgeStreet, a dormant US exchange offering binary options. IG reactivated it in February and has been carrying out IT upgrades to allow it to expand its range of markets and opening hours.
Earnings per share rose from 14.67p to 20.62p and the dividend was lifted from 6.5p to 9p, giving a total pay-out for the year of 12p (8.5p) – an increase of 41 per cent.
Shares in the group fell 14p to 305p.
Investors who take out a stake of larger than three per cent in a company using Contracts For Difference (CFDs) are to be forced to disclose their actions in the UK.
City regulator the Financial Services Authority (FSA) is to implement the requirement in order to expose firms who take up "synthetic" positions, boosting transparency in the sector.
CFDs are a type of financial instrument used to "own" shares without the obligation of paying a type of tax known in Britain as stamp duty.
Commenting on the announcement to the Times newspaper, Sarah Bowles at Simmons & Simmons said: "This comes as a surprise."
An anonymous executive at a "major" investment house added: "It's a good thing. Give the FSA a tick."
As part of its drive for greater clarity in the financial sector, the FSA announced last month that firms who took up short-selling positions in companies which were undergoing rights issues at the time would also be required to make their moves public.
Dozens of royal protection officers have run up serious losses after investing in a spread-betting syndicate that was operated secretly from inside the royal palaces.
Scotland Yard has been investigating an officer at the centre of the syndicate, which gambled millions of pounds of officers’ money on the currency and commodity markets.
Documents show that the syndicate lost more than £1.1m in just one of the spread-betting firms they used. MPs are calling for an inquiry into how senior managers allowed the syndicate to flourish for six years and its impact on royal security.
The Sunday Times has learnt that the syndicate was run from within Buckingham Palace and St James’s Palace by royalty protection officers (SO14) who guard the Queen and her family. A key member of the syndicate disclosed that armed officers used police cars to courier tens of thousands of pounds in cash winnings between the palaces while on duty.
Security cameras were turned around so there would be no photographic evidence of the men receiving envelopes stuffed with money. The syndicate, known as the Currency Club, eventually involved more than 130 police officers of all ranks across the country.
"It was a machine for churning out lots of money. It was mega money," said the source. "Sometimes in my house I would have £100,000 in cash laid out on the floor [ready to be handed out]."
The scheme collapsed last year, leaving many officers with substantial losses. One has been charged in relation to a company connected with the spread-betting syndicate, but he is said to have claimed that he is being made a scapegoat.
The disclosures raise questions about how the royalty protection squad is managed. The source also describes a wider culture of ill-discipline in the squad which has implications for royal security.
Yesterday Patrick Mercer MP, former shadow minister for homeland security, called on the home affairs select committee to investigate the affair.
"This sort of activity leaves individuals like this open to blackmail and corruption, yet they are engaged in some of the most sensitive duties of any police officer . . . This indicates a gross lack of oversight," he said.
The source – a royal protection officer with a detailed knowledge of the syndicate – said the spread-betting started in 2001. It was initially run by a constable from his lap-top in a locker room at Buckingham Palace.
The first officers bet stakes of between £5,000 and £10,000, although this grew to £50,000 and more within a year. The money was gambled on movements in foreign currencies and oil and gold prices.
A series of betting accounts was set up with companies such as Ladbrokes, William Hill and CMC Markets. As word spread of the money to be made, officers from the royal residences at St James’s, Kensington, Windsor and Balmoral also joined in.
Commission payments were made to officers who brought others into the syndicate. It grew to include officers from other specialist Metropolitan police squads and spread to regional forces such as Kent, Hampshire, Manchester and Lothian and Borders.
"It was a gravy train and everyone was on it," said the source. "They wanted the cash in envelopes – a nothing-seen, nothing-heard scenario and that’s how it was."
One Buckingham Palace officer managed the betting account while colleagues carried out his duties for him. He was eventually allowed to take leave which totalled almost three years to run the syndicate full-time. "His file fell down the back of a cupboard because he was making money for everyone," said the source.
Winnings were distributed at the palaces in cash. Police cars transported the money and would also act as escorts when nonpolice vehicles were used.
A Range Rover with blacked-out windows became a common sight at St James’s Palace. "It was an ongoing joke down at St James," said the source. "The Range Rover would drive up and the barrier would come up. It was like an ice-cream van. Everyone would leave their posts and begin queueing outside for their dough.
"The [security] cameras would be turned away from the car so it was not on camera. Money in envelopes would be stuffed into officers’ security vests."
However, the officers lacked the market knowledge to keep generating winnings. Heavy losses caused infighting between officers at Buckingham and St James’s Palaces. Complaints were made which forced Scotland Yard to launch Operation Ascerio, an investigation into the officer at the centre of the syndicate.
In January, a 37-year-old constable who served at Buckingham Palace for 10 years was sacked over his role in the spread-betting operation. He was later charged with fraud and money laundering – which he strongly denies.
Last night a spokesman for the Met said: "We have no knowledge of an investigation into numerous officers at SO14 spread-betting." He would confirm only that an individual officer had been investigated.
Andrew MacKinlay, the officer’s constituency MP, said he had been concerned for some time about the impartiality of the Metropolitan police internal investigation system and expressed his misgivings about the stewardship of his constituent’s case.
The constable is said to have documented the names of syndicate members, their holidays and car benefits in three notebooks, which were apparently seized by detectives searching his house. His lawyer says the police are now claiming that they do not possess the notebooks.
MacKinlay said: "I have no confidence in the ability of the Met to deal with things relating to its own brethren. Any such investigation should be done by an entirely outside independent body."
Contrary to the Met’s statement, The Sunday Times has seen documents which show that a large number of officers were involved in the syndicate.
The source highlighted several issues which he claimed showed a lack of discipline in the squad. He claimed that one officer had forged his firearms certificate after failing a fitness exam, one ran a porn video club from the locker room and another operated a pyramid selling scheme.
One officer is alleged to have become so drunk while guarding a senior member of the Queen’s family that the royal drove him home. The source added that some officers would turn up to work drunk and others were caught sleeping at their post.
London Capital Group Holdings Plc. said it expects its first-half pretax profit to be about 50 percent ahead of last year and significantly ahead of its original expectations, as it has continued to deliver a strong performance.
The financial services and online spread betting company, Capital Spreads, said the improved performance is a result of a rise in revenues and volume growth. Current market conditions continue to favour the business model, it said.
London Capital intends to double its interim dividend to 2.5 pence a share from 1.25 pence paid last year, reflecting its 'earnings, cash flow and potential'.
The company will announce its first-half results to June 30 on August 7.
CMC Markets, the financial trading business majority owned by the City of London’s richest man, has emerged as one of the main beneficiaries from the recent volatility in global markets.
CMC, founded by its executive chairman Peter Cruddas, whose family still controls approximately 85pc of it, saw profit before tax increase almost three times to £57.2m in the year to March, up from £21m the previous year.
The profit uplift came on the back of a 64pc rise in revenue to £181.5m for CMC, which is best known in the UK for its spread-betting business but is largely focused globally on contracts-for-difference (CFD) derivatives.
Chief executive Jim Pettigrew acknowledged the role of volatility in producing record profits but said it was difficult in such businesses to extrapolate whether it was volatility or business growth that is responsible.
He cautioned that volatility in the current year may be 'slightly off', but said that 'over a five-year period it remains at decent levels'.
CMC has been expanding its global presence at a rapid rate in recent years, opening six offices in the past financial year, with Mr Pettigrew pinpointing Europe, in particular Spain and Italy, as a focus for the current year.
London-listed PartyGaming, the online gambling company, has launched an online trading platform for derivative-based transactions including financial spread-betting and contracts for difference in alliance with City Index Group.
Under the terms of the alliance, City Index will develop the platform to provide PartyGaming customers with access to global financial markets through which they can trade CFDs in the UK, Europe and Asia, with the additional option of financial spread betting for UK residents.
The PartyMarkets.com service will plug a gap in PartyGaming’s online gaming portfolio. It will sit alongside other brands including PartyPoker.com, EmpirePoker.com, PartyCasino.com, PartyBingo.com, PartyGammon.com, PartyBets.com and Gamebookers.com.
City Index aims to gain access to a large number of new and potentially lucrative punters, as a result of the deal. John O'Malia, PartyGaming’s group managing director, said: 'Our agreement with City Index enables us to develop an exciting new group of products for our customers that will be exclusive in the online gaming market. Derivative trading on financial markets is already a multi-billion dollar market and we believe this will prove to be a popular addition for our customers.'
The Gibraltar-based PartyGaming Group was founded in 1997 by Ruth Parasol and her husband Russ DeLeon, who were ranked at 97 on this year’s Sunday Times Rich List. In June 2005, PartyGaming floated on the London Stock Exchange at a value of £4.64 billion ($8.46 billion).
City Index provides retail derivative trading through CFDs, foreign exchange, options and, in the UK, spread betting. The group trades primarily under the City Index, Finspreads and FX Solutions brands and also provides a fully outsourced white label solution to numerous partners.
Clive Cooke, chief executive of City Index, said: 'We are delighted to be working with PartyGaming in opening up the financial markets to a wider audience, and are excited about developing what we expect will prove to be popular new products as part of the PartyMarkets offer over the coming months.'
CityAM says spread betting company CMC Markets is set to launch an eight-part education package called Trading IQ that will give "newcomers to the game a step-by-step guide to spread betting". The accompanying DVD will be introduced by TV start James Nesbitt in an effort to attract a wider audience to the product. According to CMC’s website, the company will be starting its roadshow tomorrow in Leeds with its 'Learn to Trade Financial Markets Workshop'.
The FSA is going to make investors disclose short positions in stocks undertaking a rights issue if they amount to an interest above 0.25%.
This applies to investors short selling, or who hold instruments such as contracts for difference or spread bets which give rise to an equivalent economic interest, and comes into effect on Friday 20 June. Investors will have to disclose positions above 0.25% via a Regulatory Information Service by 3.30pm the following business day.
The FSA said it is introducing the measure because in current market conditions there is increased potential for market abuse through short selling during rights issues, and this has resulted in severe volatility in the shares of companies conducting rights issues.
These include FTSE 100 banks Royal Bank of Scotland, Bradford & Bingley and HBOS, whose shares plummeted 17% on 19 March. The FSA put this down to unfounded rumours about UK financial institutions in the London market sometimes accompanied by short selling.
This was before HBOS announced its rights issue on 29 April.
The FSA also said that in these circumstances non disclosure of significant short positions gives the market a false and misleading impression of supply and demand in the securities concerned.
David Buik of Cantor Fitzgerald said: "Basically speaking you have to respect what the FSA are doing but to expect too much out of this is unrealistic. In a free market people have the right and ability to express opinions, and whether you can prove someone is doing it for insider reasons is very hard."
"There has been a lot of discussion of this in recent weeks but inevitably as the public loses confidence you can expect short selling."
He also stressed that CFDs and spread bets are already highly regulated.
Guy Sears, director of wholesale at the Investment Management Association (IMA) stated: "IMA, whose firms manage 45% of the equity market, welcomes the FSA's leadership in this difficult area. Manipulating rights issues is not a game; it damages the wider economy and jeopardises mid-term recovery."
"Banks have been told to come clean and raise capital where needed. Rights issues should be the mechanism of choice."
"Shorting so as to suppress the share price below the underwritten price, knowing this will force underwriters to sell at a discount, is fuelled by an absence of transparency. If banks cannot raise capital, house-builders and other major contributors to the economy will suffer."
"It will no doubt surprise many that the FSA has changed the rules at such short notice and it will cause operational headaches in the short-term; but that is a price that a few short-sellers, and not the FSA, have forced upon the market in these exceptional times."
The action is part of a FSA review into how capital raising by listed companies can be made more orderly and efficient. The regulator also wants to implement immediate measures to maintain market confidence and prevent potential abuse during rights issues.
The FSA said volatility during an issue is potentially damaging not only to the issuer but also to confidence in the overall fairness and quality of the UK market, and can be particularly prejudicial to the interests of small investors.
The problem is compounded by the length of time taken to complete rights issues.
The FSA believes that improving the transparency of significant short selling in such shares would be a good means of preventing the potential for abuse.
In addition to the new disclosure regime, the regulator is considering whether it might be necessary to take further measures such as restricting the lending of stock of securities in rights issues for the purposes of enabling short selling; and restricting short sellers from covering their positions by acquiring the rights to the newly issued shares.
Buik said: "I would be against any restriction but in fairness 0.25% is a substantial amount of a quoted company. But restrictions on amount are not good for the market as a whole."
The Alternative Investment Management Association (AIMA) is unhappy with the FSA provisions. It said the industry is surprised that this measure has been introduced without any prior consultation.
Andrew Baker, deputy chief executive officer of AIMA stated: "The FSA has an obligation to follow a consultation process with industry when new measures of this nature are set to be introduced. This measure appears to be in response to the need to recapitalise the banking system."
"This seems to be a rushed measure to assist a single sector and undoubtedly sets an awkward precedent for the future."
But the FSA asserted that it views short selling as a legitimate technique which assists liquidity and is not in itself abusive.
Comment: I haven't really got any problem with the idea of disclosure (though why should the threshold for short positions be 0.25% when that for longs is 3%?). However, it's a bit rich for the FSA to blame short sellers for the banks' (and maybe the housebuilders') big price falls. Could it be that it's not short selling that makes the price fall, rather it's the poor decisions made by the companies concerned, e.g. massive over-borrowing (in the case of Barratt) and well-documented failures on the part of the banks? Short sellers have spotted the problems in these companies balance sheets and are taking advantage of that to make a profit. Not essentially different from those who spot good companies and make money on the price rising. I.e. it's not short sellers that have created the problems that the banks and the housebuilders face.
Market abuse and manipulation is almost built into the markets, and is not specific to short sellers - it happens in both directions. The FSA in itself said that short selling is a legitimate technique, which assists liquidity and is not in itself abusive.
Worldspreads, the Dublin-based spread trading company said net profits rose 81 per cent last year as the number of customers betting on stock, commodity prices, currencies and interest rates increased.
In a statement Worldspreads said net income grew to €1.9 million ($2.9 million), or 5.4 cents a share, in the year to March 31st, up from €1.05 million, or 6.3 cents while pre tax profits rose to €3.5m. Sales increased by 87 per cent to €12.3 million.
The company said profit was boosted by the opening of a derivatives unit during the year. Increased market volatility spurred more gamblers to open accounts, enabling the company to predict better-than-forecast annual earnings when it reported a doubling of first-half profit in November.
Spread trading works by paying the person who places a bet for every point by which the market being wagered upon deviates from a specified range. They can also lose money if the markets move contrary to their bet.
The company was set up by Conor Foley and Brian O'Neill eight years ago and has offices in London and Athens, and joint ventures in Spain, Germany, Austria, Hungary and South Africa. Worldspreads joined the junior market IEX on May 15th.
Mr Foley said the advances in its financial spread betting product have not been repeated in sports which had reported a disappointing year.
He said sports revenues for the year were €1.6 million, representing 13 per cent of total group revenue, down from f €2.3 million or 35 per cent of in the comparable period last year.
Mr Foley said sports spread betting industry appears to have fallen behind financial spread betting in terms of popularity and that a decision on the future of this division will be made in August.
Despite the turmoil in world markets Mr Foley said the company remained confident that it would continue to expand into 'selected international markets within the EU and beyond'.
Worldspreads fell 1.5 pence, or 1.3 per cent, to 111.5 pence in London trading yesterday. The shares cost 47 pence each when they were first sold to investors last August and have advanced 36 per cent in 2008.
LONDON (Thomson Financial) - Spread betting company IG Group Holdings Plc. said it has continued to see strong growth across all its financial businesses throughout the year.
The company said it expects to report an increase in revenue of over 50 percent to about 184 million pounds with an EBITDA margin of about 53 percent for the year to May 31, 2008.
It said its Asia Pacific business expects to report revenue growth of more than 115 percent.
IG Group Holdings said it is positioned for further growth and that current trading remains strong adding that it is confident of its prospects in the new financial year.
Costs have however advanced because of expansion, said IG, which opened French, Spanish and U.S. units during the year.
An increase in betting duty to about 6 percent of sales from 3 percent a year earlier also will hurt the margin for earnings before interest, taxes, depreciation and goodwill, which will shrink by 4.7 percentage points to 53 percent, the company said.
The company expects to announce its results for the year to May 31 2008, on July 21.
London Capital Group Holdings, which operates Capital Spreads, a spread betting company, announced Tuesday that it has acquired FuturesBetting.com, a Gibraltar based financial spread betting business.
The consideration consists of an initial GBP200,000 paid on completion plus a maximum of a further GBP200,000 dependant upon performance over a three year period.
The acquisition has been financed out of existing financial resources within the Group and will not require any external debt or equity capital.
Launched in 2005, FuturesBetting.com provides experienced traders with a professional trading platform that offers fast and reliable spread betting execution on major indices, currencies and commodities. The platform is particularly popular with individual professional traders as it offers unique DMA (Direct Market Access) functionality which is unavailable on other spread betting platforms.
LCG will operate FuturesBetting.com as a stand-alone platform with its own marketing and brand positioning. LCG expects FuturesBetting.com's position to be strengthened by leveraging LCG's customer base and bytargeting more sophisticated and experienced investors.
The FuturesBetting.com platform will go live shortly.
FINANCIAL spread betting company CMC Markets has seen the number of clients signing up for accounts in the Capital double its targets.
The company, which opened its first Scottish office at 40 Princes Street in January, said around 60 people a month were attending introductory stock market sessions held in its office.
The firm, part of a global company that last year had a turnover of £110.5 million, estimates that there are around 25,000 "active" investors in Scotland who take a regular hands-on approach to trading in money markets.
And it said its Edinburgh office has benefited from growing interest among investors in hedging against their exposure to current market volatility.
Mike McCudden, CMC's Edinburgh manager, said: "Our growth has well exceeded expectations and client feedback has been very positive. We are extremely committed to the Scottish market – that's why we signed a ten-year lease.
"In the south-east of England, spread betting is very popular and people even talk about it in the pub. Edinburgh is the second financial city in the UK and a market we can benefit from."
The company offers the training sessions to open up the seemingly mysterious world of financial spread betting and trading Contracts for Difference (CFDs).
Both are ways of investing, in which individuals speculate on whether prices of the likes of shares or oil will go up or down.
It holds free evening training sessions in its office in a bid to educate people about the markets before they decide to sign up. It is also to introduce lunchtime sessions that allow business people to learn the basics over a buffet lunch within one hour.
The company said that its client base was predominantly around the 45-65 age group.
"A lot of the new clients have higher disposable incomes, and they usually have a pension," said Mr McCudden. "They've also often got an underlying portfolio of shares and they are seeing the market volatility and want to use spread betting to hedge against their exposure through their underlying portfolio."
Mr McCudden said he expected the growth of the market to continue throughout the year.
IG Index's new trailing stops, press release follows -:
Our new Trailing Stops track your profitable positions automatically – and close your trade should the market move against you.
This new type of Stop Order prevents you having to monitor and move your stops constantly. You set the conditions for your Stop to move automatically, should the market move in your favour. Trailing Stops can be used on long or short trades, helping you to secure your gains as the market moves.
How does it work?
When you open your position you specify two numbers:
Stop distance - how far away from the opening level your Stop is placedSay you buy our Wall Street Cash contract at 12820/12824, choosing a Stop distance of 30 points and a Step size of 10 points.
The Stop initially sits 30 points behind your opening price, at 12794. Immediately Wall Street starts to rise. Very soon our sell price has risen to 12834 (10 points above your opening price) and your Stop 'steps' up by 10 points to 12804 to re-establish a 30-point distance from the new market level.
The rally continues and by late-afternoon the US blue-chip index is trading at 12889/12893. Your Stop has therefore moved automatically five more times, so you are now sitting on a healthy potential profit with your Stop waiting 35 points behind at 12854.
A surprise news announcement suddenly sends stocks plummeting and within minutes the index is trading back down at 12830/12834. Your Trailing Stop has kicked in and your position is closed 35 points below the recent high – at 12854, still well above your opening price of 12824.
With a conventional Stop Order you would still be in the market, looking at a relatively small paper profit. By contrast with a Trailing Stop you are able, in this scenario, to profit from a volatile market – and take a break from your computer too.
Trailing Stops can be added when placing a trade, or attached to open positions at a later stage. Please note they are not 'Guaranteed': like standard Stops they may be subject to 'slippage' in illiquid or fast-moving markets.