I suspect stockbrokers and CFD providers want to merge the two...

First 2 Last

Share
Profile

Follow
LeeKing

5,865 Posts.

224

21/01/17

11:47

Post #: 22047446
Share

Originally posted by cyber_y ↑

I just switched to IG and am very disappointed with them today.
IG's CFD system has a defect which double counts the collateral usage.

I have both CFD and share account with them, and the used collateral has been counted twice -- once in CFD account, once in share account.
If you have $500 CFD position, margin requirement is 20%, it shows you have $100 cash as used collateral in CFD account as a margin, AND also have $100 worth share as used collateral.

I plan to transfer cash from CFD to share, purchase share, use it as collateral and open CFD.
But when I tried to transfer cash from CFD to share, system told me I don't have sufficient fund in CFD account.

The system double counted the collateral so I didn't dare to buy any more. The share price dropped to a bottom and bounce back as expected . This defect costs me about $1000 in a day..

Have called their helpdesk, they sent a request to IT support and need to wait for the feedback, and the only thing they can do is to hoping IT team can fix it..
They told me if I received a margin call, but I believe that's incorrect, I can call them to investigate it.
But I still think it's dangerous and asked will the system force close my position due to the double counting collateral usage? They didn't answer this question,but said someone should review it before force close ...

Anyway.. need to monitor collateral calculation, that may go wrong.

Expand

I suspect stockbrokers and CFD providers want to merge the two in order to make more money off clients, so I keep it all separate. Imagine some of the scenarios. One of them would be a client, in the heat of the moment, moves all their stockbroking money over to CFDs, then loses it all. So instead of making $100 brokerage, the CFD provider makes $100,000. Or the client accidentally bets on a $50 per pip transaction, when they intended to do a $1 per pip transaction. Or the client forgets to put a guaranteed stop loss on, and a government decision causes a currency to gaps down 20% as happened with CHF last year, I think. There are lots of ways for things to go wrong. So I reckon it's best to keep stockbroking and CFDs with separate companies and to keep a small amount in your CFD account.
5 Upvote

Reply