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250k cap on crypto accounts

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Dear IG,

I find it quite disappointing that any trader who trades in cryptocurrenices has a notional limit of 250k on the account if the value of the account crypto surpassed that figure. If we end up with a potential bull market in crypto this could be easily surpassed. Does that mean to will credit anything over that value back into the clients account to keep it under 250k ?.

If so, it’s disappointing as an established spread betting company your penalising traders who end up with profitable bets that exceed 250k. 

Do you have any plans to take off the cap ?

Kind regards 

 

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@ROUGEONE,

The risk would be that the positions would be reduced accordingly to bring down below £250k. I should just add this is for both CFD and Spread Betting. 

Also the use of leverage will bring many traders either short/long Cryptos on a strong and bullish trend either upward/downward close to such levels if not exceeding them.

This is where alternative brokers would need to be used. 

 

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hey @ROUGEONE - the crypto space is changing very rapidly, and new institutional grade storage, execution venues, and security / insurance options are being developed. As a company as well we would have had a longer time in the space, and therefore be able to review these notional limits. Currently these levels are being imposed, but if we see another bull rally then as with all things, we will be able to periodically review the offering. I appreciate this is a bit wishy-washy and speculative, however I hope it gives insight into the reasons behind the level.

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@JamesIG,

Your post is fundamentally flawed. Let me explain why. Markets go either up, down or sideways. Now many traders will either profit when markets are trending upwards or downwards. Your post has an upward trending bias. Markets move downwards and one of the main points of Spread Betting and CFD is allowing the client to take short positions and profiting using leverage.

We have just seen a humungous bull market on the downside for Cryptocurrencies over the past 12 months. That is for some, 12 months of shorting Cryptocurrencies and profiting. 

Yes your answer is wishy washy and speculative, that bit I do agree with. However, no it does not give me an insight into the reasons behind the level. If you had stated that IG had to manage their risk and had to ensure they did not lose out if traders executed the correct trades on Cryptocurrencies and went long during uptrend and short during downtrend so it would limit the potential losses for IG then I would have understood.

I wish you a very happy new year and a very healthy and prosperous 2019. 

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My reply has an 'upward trending bias' because that was the most appropriate way to answer the question - a question which specifically referenced a bullish move in the crypto space. Also, if the OP had maxed out their 250k limit and then the markets moved down, the notional value would obviously decrease and there wouldn't be anything to worry about and no answer necessary...

In regards to the level let me try and be clearer: over the latest bull run we had thousands and thousands of clients trading on a very new asset type which didn't have an appropriate amount of liquidity, infrastructure, institutional level execution, security, insurance, or storage capabilities in the underlying market. We're not talking about a couple of bitcoin here, we're talking about significant size, holding 20% of the global OI in the futures market, and getting exceptional deal execution sorted for our 195,000 client base (who dealt crypto).

There are still such barriers to institutional entry, friction with the movement of assets on/off exchange, and thin liquidity, however these things are getting better. We periodically review and monitor everything (from margin requirements, to stop levels, and one off specifics such as crypto max size) so if we see this area improve and decrease the risks for dealing in such significant size for our client base, we may be able to review the max each client can hold. 

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@JamesIG

Thank you for a much better explanation. That makes more sense to me. 

I sense things are improving albeit slowly and this will take time. Based on what I am reading (if it can be believed and is credible) then things are moving in the right direction and positively in relation to Cryptocurrencies so hopefully 2019 should see a lot of improvements in the things you mention. 

 

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