Broker of the month: City Index, read our expert and client reviews here
Based just outside London in St Albans, offering one of the largest market coverages for financial trading and still with a trackside presents for traders looking for a punt on the weekends. We wanted to find out exactly how Spreadex wins business from the larger City based brokers so spoke to founder and MD Jonathan Hufford (note no grandiose CEO titles here) to find out…
First and foremost, why should a client trade with Spreadex as opposed to any other broker?
Spreadex positions itself as “a one stop shop” for various gaming products. We are the only company to offer sports and financial spread betting from one account. You can also bet on sporting fixed odds markets along with a casino – these can all be done from the same wallet. Read our Spreadex Review…
Credit facilities are provided and we are constantly striving to update our web site and introduce more markets and functionality. Auto cash out and variable FX spreads are examples of technology released recently.
How much of a focus do you put on customer service versus pricing?
Everything we do and every decision we make is based around anticipating what the client wants. We are totally customer focussed – an ethos that has been developed across various business owned by the shareholders of Spreadex. If we can get the customer service right, we know it will generate revenue.
The in-depth industry report by Investment Trends has repeatedly shown that Spreadex offers the best customer service in the industry out of a myriad of firms, for several years now.
What do you think is the most important element in winning and retaining new business?
Winning clients in this niche industry is notoriously hard. We have noticed recently the cost to acquire financial clients has been steadily increasing. There are some powerful brands out there and to “shout louder” takes a huge marketing spend!
However, once clients have signed up I believe they are pleasantly surprised by the range of our offering and also the levels of personal interaction with our team.
The client experience will start with a welcome call to ensure new clients know that they understand how spread betting works. We do not want clients to over leverage and so on. It is in our interests to keep the client happy to drive a long term relationship. I think the welcome call creates a great first impression.
Spreadex is one of the few brokers that allows trading on credit. How do you customers use this facility?
Yes we do offer credit subject to the client requesting it and having the appropriate status. In spread betting (particularly financials) collateral has to be lodged with the company before a trade can be accepted. A credit limit minimises the amount required which we obviously hope generates business as it is more convenient for the client.
What’s your average customer like? Would you say they are more experienced or beginner traders?
I am always reluctant to use the word average! They are all different but generally we try and recruit more experienced clients who have traded or are trading elsewhere and are familiar with the concept of leverage. In particular we like investors who trade on AIM – where we offer one of the few companies to offer spread bets and leverage on AIM stocks and offer one of the most comprehensive services in the industry.
How popular are your AIM markets?
AIM is very popular as we have a reputation for offering these stocks whereas many of our peers do not offer AIM. We can offer stocks down to £5m market capitalisation. We can also offer competitive levels of leverage on these stocks – whilst the rules still allow!
There are some clients who want all of their investments to be within the taxed regime. This is because if they make a loss – the loss is allowable for capital gains tax purposes. It is widely offered by our peers and we thought it appropriate to offer the full suite of leveraged services.
It’s well reported that many new clients find it hard to make a profit short-term trading in the long-term. What would be your best bit of advice to new traders getting started in the leveraged markets?
Knowing when to take losses is a cliché but is also key to any investment success. It is hard to analyse a stock or even be tipped one and see it fall in value. The market is telling you that you are wrong!
However, stop losses or at least a price where you cut is fundamental to success.
Are there any new products, update or acquisitions on the horizon for Spreadex?
We have recently launched variable spreads on our FX spreads that allow much tighter pricing when volumes and market depth allow. EUR/USD is now available from 0.6 points and GBP/USD from 0.9 points.
We have also upgraded all our charting facilities. Our new charts feature many more features for technical analysts and includes advanced features such as Pro Trend Lines and pattern recognition.
Several years ago we were one of the first firms to offer Bitcoin. We are now looking at offering Bitcoin again when are comfortable with the hedging arrangements.
Most stick to one or the other but there is a group who play both. We also offer sports fixed odds markets from the same account and that can be popular with our financial clients at times like the Cheltenham festival or the Six nations rugby . It is convenient to have all your speculative instruments at one home
What would you say to punters looking to try sports spread betting for the first time?
Please visit our web site and particularly the Get Started pages which include a 2 minute video. It is the same concept as for financials, buy if you think the result will be higher than our price and sell if you think it will be lower.
The important part for new punters is to manage your staking and appreciate market risk. For example runs in a cricket match is far more volatile than goals in a football match. It is vital to adjust your staking accordingly….
How do you see the industry developing under MIFD 2 would you say there is going to be more consolidation or expansion, especially overseas?
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MIFID 2 will have a big impact on the financial services industry generally – particularly those who advise or introduce business to third parties. The IT implications of complying are immense and it is hard to see how small companies will be able to cope.
I have been saying our industry has to consolidate for 10 years plus now, so I am rather reluctant to make further predictions….in fact the market is bigger and more fragmented than it has ever been.
I do think it is apparent that the Europeans do not like the concept of leverage being available to private retail clients and I would anticipate some push back from them once they receive the powers of product intervention under MIFID 2.
Any plans to go public?
No! We enjoy the flexibility that being a private company brings.
And finally what are your top three resources to help traders. For example, books, websites, apps, services or strategies?
Of course, the first port of call should be our website! It offers a lot of information and tools for traders. We have everything from worked examples, video explanations, market commentary, share analysis and an economic diary. Our platform now features new charting tools with pattern recognition and Pro Trend lines, a must for any technical analyst.
For other sources of information, Robbie Burns has penned really informative books about spread betting and trading psychology. His books include “The Naked Trader” and “Trade Like a Shark”. I would thoroughly recommend reading these to avoid common mistakes.
Finally, for those new to spread betting the best way to trade is to do it on paper. Forget demo platforms with flashing prices. It might be seen as old hat but writing down what you are doing is the best way to learn!
For more information, read our Spreadex review here
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Richard started the Good Broker Guide in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously acting as multi asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2000.