Spreadbetting 'error' on Financial Markets

stebiz

Last night, as I often do, I decided to trade in the Financial Markets. With the European Financial Ministers meeting it seemed a great opportunity to put my money in how I thought the result would go.

At approx 1am, shortly before the decision was due the FTSE daily plunged by about 60 points (not a huge amount in terms of how the markets are at the moment) and I decided to take a small profit, and after a further couple of hours retired to bed.

Upon waking up this morning I was surprised to see my account was down a few hundred pounds, and upon checking my mails, I had an email saying that the price quoted was incorrect, and that they had reopened my bet. Within minutes the FTSE had powered upwards, and hence the loss.

Now I understand that mistakes happen. I also understand that when you are directly involved, it is difficult to see the dealers situation. So I am asking on here for others views. What would a reasonable outcome be?

They have the normal T&C's (errors etc) which I believe cannot be enforced. The correction took place nearly 7 hours later. I was not emailed. Phoned.

Your views would be appreciated. So far no answer from the dealing company.

Thanks
Steve

Reaper

You are asking for a legal opinion (ie whether their T&C would stand up in court) which I doubt you will get an answer to here. All I can offer is the opinion that you ought to be given your original stake back after a pricing error with no profit and no loss. You may find the company may well settle on those terms to avoid going to court even if they think they have a good chance of winning because court cases are costly in terms of both time and money.

stebiz

Thanks Reaper. To be honest I wasn't asking for a legal opinion (sorry if it came across that way), just a sensible result. I think that if they voided the bet, and my small profit was cancelled out, that would be a fair outcome.

turbobob

This is why I am suspicious of these firms as you are betting against the house. What they have done seems unfair, and voiding the bet seems a reasonable thing to request. Presumably they are able to tell you what the price "should" have been at the time (how they realistically price the FTSE100 at 1 in the morning I don't know..). If the pricing error had not occured, would you really have left the position open without a stop and gone to bed, given the markets unpredictability at the moment?

You have the same rights to complain to these firms as any other financial company, and also escalate to the Ombudsman (assuming it's UK based).

stebiz

turbobob wrote: »

This is why I am suspicious of these firms as you are betting against the house. What they have done seems unfair, and voiding the bet seems a reasonable thing to request. Presumably they are able to tell you what the price "should" have been at the time (how they realistically price the FTSE100 at 1 in the morning I don't know..). If the pricing error had not occured, would you really have left the position open without a stop and gone to bed, given the markets unpredictability at the moment?

You have the same rights to complain to these firms as any other financial company, and also escalate to the Ombudsman (assuming it's UK based).

Thanks Bob. The answer to your second part is a big NO, as for going to bed. When I am trading, I literally live, sleep, and everything else on my pc. That is what so annoyed me. I mean fancy reopening the trade 15 minutes before the markets open - they may as well said Heads or Tails.

tradetime

From what you have written it sounds like the SB is in the wrong although as they always say "the devil's in the detail" Their opportunity to correct errors should live and die in the re-quote, where you have the right to accept or decline the new price, otherwise they are setting themselves up to simply re-write a bet based on how the market turns out. Bit like your bookie quoting you 100-1 on an outsider in the Grand National, and then when it wins, saying; "I'm sorry we gave the wrong odds, that horse should have been 5-4."

I'd be inclined to call up and query, but treating in a non combative manner, st least initially, you may find they will agree any reasonable solution., my personal feeling from what you have described is that the original bets should be honored.

tradetime

This is why I am suspicious of these firms as you are betting against the house.

Technically that is true, in so far as a SB market is a synthetic market created by the company you are betting with, and I have read many scathing stories about "how such and such a SB firm did this, or that to rob a client." Since I have not used them a lot, I cannot bring my own observation to bear, and would not suggest you are wrong to be suspicious, truth be known, my own suspicions are primarily why I have had little experience with them.. However applying a little logic tends to cast skepticism on most of the stories I hear.

The simple fact is that about 80% of people trying to make money on short term market moves, lose money, given they are a regulated industry it would be bad risk management to deliberately "cheat" clients when most of them will lose anyway. For consistent winners in the SB arena, the firms are very quick to identify them and the increased spread on the products easily allows the risk to be hedged and a profit still made. Winning clients are also a benefit in attracting fresh meat, especially when hedged, the "house" has shifted the risk to the markets.

turbobob

Mainly I'm wary of things where the price cannot be verified, for example the 24hr FTSE100 rolling bets. How do they price these at 2am for example?

tradetime

turbobob wrote: »

Mainly I'm wary of things where the price cannot be verified, for example the 24hr FTSE100 rolling bets. How do they price these at 2am for example?

I really have no idea, not something I have had cause to consider. I would assume they run some sort of pricing model that takes into account the Globex overnight session on US futures, and the Asian markets, but as said, I really have no idea.

kennyboy66_2

stebiz wrote: »

Last night, as I often do, I decided to trade in the Financial Markets. With the European Financial Ministers meeting it seemed a great opportunity to put my money in how I thought the result would go.

At approx 1am, shortly before the decision was due the FTSE daily plunged by about 60 points (not a huge amount in terms of how the markets are at the moment) and I decided to take a small profit, and after a further couple of hours retired to bed.

Upon waking up this morning I was surprised to see my account was down a few hundred pounds, and upon checking my mails, I had an email saying that the price quoted was incorrect, and that they had reopened my bet. Within minutes the FTSE had powered upwards, and hence the loss.

Now I understand that mistakes happen. I also understand that when you are directly involved, it is difficult to see the dealers situation. So I am asking on here for others views. What would a reasonable outcome be?

They have the normal T&C's (errors etc) which I believe cannot be enforced. The correction took place nearly 7 hours later. I was not emailed. Phoned.

Your views would be appreciated. So far no answer from the dealing company.

Thanks
Steve

All spread betting is governed by the Financial Services Act (1986), ultimately you can complain to the Financial Ombudsman.

I think they are taking the p***.

A reasonable outcome would be to have the whole bet voided.

stebiz

kennyboy66 wrote: »

All spread betting is governed by the Financial Services Act (1986), ultimately you can complain to the Financial Ombudsman.

I think they are taking the p***.

A reasonable outcome would be to have the whole bet voided.

Thanks for the input. The dealer has sent me the following

Thank you for your email.

Please accept our apologies for the delay in responding to your email(s).

As previously highlighted we did experience a technical error with our pricing feed, which caused a drop of 70 points on our FTSE Rolling Daily price. We can see that you closed this position at 5091.0 this morning on an incorrect price of 5091.0, therefore your profit was revised. The market low at 1.00am was approximately 5150, more than 50 points offside.

As stated within our first email to you this position was reinstated, before this was automatically stopped out today at the price of 5268.8; by your automated stop level.

At 07.41am our bid reached 5270.0, therefore inclusive of the spread this was significantly past your automated level. If you are still not happy with this account decision you may make an official complaint. Please see the following link for our complaints procedure.


I am really quite disgusted with this. In this case it was only a few hundred pounds, but I have traded thousands before.

This has now been raised to a high level complaint, which I am advised I will have to wait upto 8 weeks to be resolved.

I have now withdrawn the rest of my cash, and will trade with somebody else.

Caveat Emptor as far as these trades are concerned.