Don't forget to read the Small Print!

I was spreadbetting way before 2006, but only as an addendum as it were to trading the underlying markets. Risk statements about losses exceeding capital were on display even back then. More importantly there have always been caveats in the terms and conditions regarding stop losses and their limits. Today, risk statements are even more in your face the moment you bring up the platform website. There's no excuse for missing them.

The problem is most people are very quick to trade (think visions of Eldorado /easy money to be won) and they are very slow to take the time to read through pages of terms and conditions. This issue is not just peculiar to spreadbetting. People do the same with financial contracts in a generic sense. Then after the event they cry 'foul'. This reactive process has now led to most T&C becoming hugely top heavy as the firms try to protect themselves against legal blowback from idiots. The rest of us though have to suffer wading through ever greater tomes of blurb. The winners are the legal guys who make a living writing the terms and conditions up.

Here are some extracts from the terms and conditions of two typical spread betting companies, Delta Index and Cantor Index. Read them through carefully and take a particular note of the following:

Remember spread betting companies may not really want you to read the full terms and conditions which may include loopholes or disclaimers which need attention
  1. The precision, or lack thereof, of the definition of settlement terms. The settlement terms are of the utmost importance when a position runs to its expiry date and is thereby closed automatically. You should make further checks with the spread betting company you are considering doing business with, to ensure that they have some sort of objective criteria to define settlement times and terms.
  2. The reservation of the right by the company to place an upper limit on the size of any stake (see the section above about Important Personal Habits and the comments about compounding).

Delta Index Terms and Conditions:


  • Subject to all other provisions of these terms:-

    • each bet can run until its expiry date or the occurrence of the relevant event (as applicable);
    • bets can normally be closed at any time during the Delta Index trading hours in the relevant underlying market (as set out in the Product Information Pages);
    • for markets whose Delta Index trading hours are not set out in the Market Information Sheets bets can normally be closed during the hours of 8.00am to 5.00pm on a business day but Delta Index Limited reserve the right to trade/quote outside those hours;
    • bets will be automatically closed (as the case may be) on the expiry date or at the time and date of occurrence of the relevant event.

  • Closing bets will be traded at the price dictated by the spread quoted at the time of closing, irrespective of the spread and price at the time of the opening bet, which may be larger or smaller.
  • Delta Index reserve the right to limit the maximum stake on closing a bet to the maximum stake quoted at the time of closing irrespective of the maximum stake quoted at the time of the opening bet, which may be larger or smaller.
  • "Up Bets" ('Buys') are closed by the Client selling at the lower of the then currently quoted spread. "Down Bets" ('Sells') are closed by the Client buying at the higher of the then currently quoted spread.
  • All bets automatically closed (under clause 10.1 (d)) will be closed on the basis of settlement quoted by Delta Index on closure.
  • If a bet has been closed automatically any subsequent purported closing of that bet by the Client (whether or not erroneously accepted by Delta Index) will be of nil effect and void.
  • Delta Index will not be obliged to check or have regard to any assumption made or expressed by a Client as to the effect of any bet on your existing or overall positions with Delta Index. Delta Index need have no regard to the Client's comments that any bet he places is a bet to close all or part of an open position. Delta Index will treat all bets as a buy or a sell regardless of whether the bet has the effect of opening a new position or closing an existing one.
  • Delta Index need have no regard to the fact that a Client may trade with any entity other than Delta Index (for example if the Client places an "Up Bet" with Delta Index and a "Down Bet" with any other entity).

Cantor Index Terms and Conditions:

All bets still open at the end of the contract period, expiry date or event will be automatically closed at the actual official closing index level or settlement price at that time/date except for single share trading which will be settled at the closing price as reported in the Financial Times (subject to manifest reporting errors) to which a change will be added of half the Company's quoted spread for the relevant share. If the last day of the contract period is not a business day of the relevant underlying exchange, then the immediate prior business day of the underlying exchange will be considered as the expiry date.

6.4 Share Closing Price

  • Due to share price volatility at or about the close of official markets the Company reserve the right with respect to a single share future bet or share option bet to set the close on expiry date at any time within one hour of the official market close on which market the relevant share is listed and to set the closing price as the fair and reasonable market price at the time the bet is closed; and
  • Due to illiquidity in non FTSE 100 stocks the Company reserves the right with respect to such stocks to extend the expiry date and the termination of closing price of any single share future or share option bet until normal market size transactions are executed in the relevant share on the relevant official market.


If you believe to have been treated unfairly by a spread betting firm - your best course of action would be to complain to the FCA. The more facts that you can send to the FCA the better. The people at the FCA are only human after all. They can't be expected to make up rules and regulations to protect customers if they have no idea how they are being abused.

I've recently been reviewing some of the different Terms and Conditions that some of the different companies have. Despite the fact that most companies openly advertise things along the lines of 'fast, live, streaming prices' , 'super fast conformation' and 'the price you see on the screen is the price you get', most companies later seek, in their small print (T&C) to shield themselves from any obligation relating to prices quoted within their own websites. Some even go as far as to say in their T&C "We are at liberty to reject any instruction at anytime for any reason" (or words to that effect). This, in my opinion raises some very serious issues for a number of reasons.

Firstly, it can be argued that in order to get a customer to open and maintain an account a company has made claims in its advertising to indicate to that customer would, in some way, benefit from trading with that company. In simple terms, when advertising a product or service a particular company prints 'claims' about its product / service which purposefully make the potential customer assume that that particular companies product / service is in someway superior. Because of this it can clearly been seen that the particular company is purposefully seeking to obtain a contract and/or working relationship with that customer by making such claims, Therefore these claims are clearly part of the contract between the two parties. In my opinion many of the spreadbet companies appear to disregard these points.

In order to defend themselves against customers' claims of having hit a price on screen but not being filled at that price, most spreadbet companies will simply suggest that you read the T&C. In my experience most of the T&C are not quite as the spreadbet personnel suggest they are. It is well worth reading them through several times in order that you fully understand how both parties are protected. Of course even when you present your case to a Compliance Department it is quite likely that will reject it on the grounds that they don't agree with your particular interpretation. In my recent case with IG they claim that there are other terms not actually listed in the T&C which allow them not to fulfil the contractual obligation which the T&C suggests they have. This type of response can't of course be argued with the spreadbet company and they know this. The only course of action is one of third party involvement which of course means extra cost, extra time and extra stress (and that presumes that you can find a third party who is familiar with the finite details and problems which occur in the world of spreadbetting and can hence adjudicate). The companies involved realise that in order for a customer to successfully challenge them that customer is going to have to take on a considerable amount. This is the reason they stone wall you, to gauge your reaction or non reaction.

It would appear that certain spreadbet companies realise that most people who deal with them aren't actually aware of regulations and laws which protect consumers against, not only underhand practices, but also unfair contracts and T&C which the spreadbet companies weald over us. For example, we know of companies which allow us to submit orders and then decide to hold us for an unspecified period of time before deciding weather to except the deal or not. Of course, if the market moves in that time they can factor such movement into the final decision on weather to except of reject the instruction. If you telephoned the dealing desk of any spreadbet house and suggested that you could wait up to a minute before deciding weather to trade on quotes made via telephone they would laugh at you. With this in mind why should be allow spreadbet companies to do the flipside of that. Of course the spreadbet companies will again claim that the T&C allow them to do this but in my opinion such a claim would almost certainly be in breach of the Unfair Terms in Consumer Contracts Regulations 1999 where Regulation 5 stipulates that:

"a contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance of the parties' rights and obligations arising under the contract to the detriment of the consumer."

Of course in our case we are expected to sign pre written Customer Agreements and therefore the terms have not been individually negotiated and therefore this Regulation would appear to be directly applicable to our situation. If we then take into account what I have previously written about spreadbet companies not allowing us one minute plus to consider quotes then is would be perfectly fair to say that there is a 'significant imbalance of the parties rights' which are, of course to the 'detriment of the consumer'.

Do the spreadbet companies take any notice of these rules and regulations that are in force in this country ? Answer NO* !

In my opinion they will soon have to. After my research I am convinced that the regulatory bodies which oversee spreadbetting are going to be forced to act as more and more stories arise - in fact this is already happening with the recent fines imposed by the FCA on a number of spread betting firms including City Index and Cantor for their aggressive advertising.

Answer NO* - update January 2009: things have drastically improved especially although there is still room for improvement. Many countries in Europe are now starting to look at spread betting as financial instruments, thus, directives and regulation will be on the agenda in controlling the deal with derivatives trading. The EU MiFID financial directives are a beginning, and spell out very clearly what is in store for the spread betting industry. Many of the spread betting companies have asserted that they are following the MiFID 'Best execution' directive. My feeling is that they are not adhering to the spirit of the directive as it is meant to be implemented. The spread betting company that differentiates clients, refers some clients to a dealer, does not give all clients the same odds, is definitely not following the spirit of the 'Best execution' directive. It is as if they are putting an extra zero on the roulette table for some of the profitable gamblers. The spread betting company has the right to close your account, it has the right to give you a re-quote on 'old' prices, but it does not have the right to flag you, to put you in a special category, in order to limit your trading success. What would happen if a casino rigged their gambling tables for some of their clients? They would lose their gambling license at once. As the spread betting industry is targeting customers in the mainstream, the need to regulate the industry is growing, and I have no doubt that more public scrutiny is just around the corner. However, having said that to blame a spread betting company indefinitely for personal trading failures will not lead anywhere, it is simply not the right way to becoming a successful trader. I trade with various spread betting companies and believe that the benefit of trading with them vastly overrides the shortcomings, that are evident in the industry as of today.

Comment by Jim - update August 2016: You are right regarding the terms and conditions. The other problem with them is that they are written in such an arse covering way and are completely non-negotiable, such that us mere mortals just have to suck up whatever terms the companies deign to give us. It's not just financial companies either; the problem is with any large corporation. There is no meaningful choice in the matter, so you either ignore the T&Cs, and hope for the best, or go without. The latter is often not a viable option. e.g. buying insurance, taking out a mortgage, signing up for Facebook. Reading the small print is pretty well a waste of time because it doesn't achieve anything. You need the product, so will sign up whatever you read, or don't read, in the terms and conditions. The only thing one can do is hope that consumer watchdogs/regulators/courts will strike down any particularly egregious terms if the brown stuff hits the fan.

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