No, its not - but in their defence they do openly state that they offer a CFD on an index future, which they then chop up and sell in smaller products, called micro indexes. It is quite novel, in the sense that they can then offer a 24*7 trading platform. All in all, costs the same as an ALMI. What is interesting, is that they create their own 'overnight futures' market, by extrapolating on the movements of the overseas markets, and offering a bid ask on the JSE. How they do this, I don't know - because I have no idea how they would hedge themselves. I mean, if they are quoting the ALSI to open at say 29800, and they then hypothetically sit with a large short position(s) being taken, and the market gaps against them - how do they absorb the loss - if they are unable to take out an actual position?
During market hours the index mirrors the futures and after-hours IG Index, or any spread betting firm make a price based on other futures movements the spread betting firms cover themselves by widening the spread out of hours. So if you think the market will initially drop 1% but IG Index are already discounting this by quoting it down 1% Their spread reflects what they think the future price of the index will be and visa versaA¢A_A¦ just remember the house always wins
Sorry boet, but that doesnt quite make sense. The spread covers their profit, but it doesn't cover their exposure overnight - they must be covering that out of their cash - or else they are using overseas indexes to hedge against JSE exposure, which is probably what htey are doing, since they set the spread in any case.
no choppie, you are missing the point, look at what the bid offer spread is now, after 5.30 have a look at the spread again, they dont need to hedge overnight, they make money of the spread.dow FTSE the can hedge, future trades 24h,so based on the expected move they will set the spread accordingly.If you find this hard to understand phone IG index..
I don't think you can hedge a position with a spread? They widen it, sure - but if I take out 100 contracts short at 30,000 and the market moves 200pts in my direction, there is nothing they can do with a spread to fix that - except keep it at 200pts until they get enough counter trades maybe.
a snippet from the following: http://onlinefinancialtrading.com/blog/spread-bet-companies-how-they-work-and-a-secret-you-can-learn... "In theory, if not always in practice, the company places a similar bet in the actual market, opening and closing it at the same times and price levels as you. This is known as A¢A_AohedgingA¢A_A_, so any winnings you make from the company are made up by the companyA¢A_ATs winnings on the market. But even those companies who hedge their bets frequently canA¢A_ATt do so with every bet A¢A_A" the cost and administration would be too much. Instead, they largely offset long trades against short trades and from time to time hedge the balance"
Are you being observant of all this high class IG poaching? Regardless of this, there are repeated indicators of a collusive here. Forensic retracements, a fair amount open to all, serve to identify them. So beware of the multiple IG broker agents afoot. However, they need to keep repeating for exposure here, on their main SA strawberry patch.