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JamesIG

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Everything posted by JamesIG

  1. Great to hear from you - such a good in-depth introduction, and of course welcome to the community! You've joined at a great time - we shall be looking at making a number of important changes over the next few months so you get to view the 'old' and 'new' layout and offering. The first small change we have is to change the 'Morning Call' to a 'Daily Discussion'. Hopefully a completely new feel with some more engaging content. From your intro-post I think you'd be interested in the Macro Wrap section at the top? We'd love to hear your feedback as a comment on the above post, and I know both myself and the rest of the community are looking forward so some equally engaging and insightful posts as you've made above. See you around :manhappy:
  2. Hi and I just wanted to quickly reply to your comments regarding the variability in spreads on FX, specifically during periods of increased volatility. This relates to how FX is priced and dealt in the underlying market, and how this spread is variable basis the wider global financial system. There is also a very interesting video which I have included below. I would recommend watching it all, however the FX section specifically starts at about 2 minutes. FX isn't priced by a central exchange like shares, but is instead quoted by bank and other institutions. This means the FX quote comes from a number of multinational banks who will give a price which they are happy to buy and sell currencies for. We take 10 - 15 of these largest banks and liquidity providers and then use an algorithm to display the best bid/offer in the market at that time. This gives IG's clients the tightest possible spread at that time and accurately reflects the underlying market. During periods of high volatility these banks will either increase their spreads, or pull their quotes briefly. In turn, the FX market bid/offer spread widens, and the IG spread reacts accordingly. During the regular trading day, like you stated, these max spreads will be capped, however we do sometimes increase these during known periods of volatility (Brexit / Elections etc). Once again this accurately reflects the underlying market. https://www.ig.com/uk/about-ig-videos?bctid=4542917668001&bclid=3671160857001 I hope this clears up a few points and clarifies the FX variable spread.
  3. Hi Mickey, let me answer these questions for you. 1) In the underlying market Bitcoin is traded on centralized and de-centralized exchanges, however there isn't a single best bid and offer. We therefore take the feed from a number of different exchanges, and take the best bid/offer quotes to provide the tightest spread. We then wrap an IG spread around these quotes. The spread can be wide for a number of reasons, however the most important to take note of is that you are dealing on a leveraged position. 1 Contract in BTC will be 100 coins, which is highly unlikely to be able to execute at the touch price. The price feed comes into the IG systems and is projected to all clients. The majority of times a client deals, they'll be matched instantly without human interaction. If a deal is particularly large, or it goes outside our pre-determined levels of exposure, then we may need to manually deal to get the best fill. 2) The High/Low will update at 10pm, in the same way as FX. The actual 'tick' in the market will be printed basis the changing feed. 3) We take a number of the largest and most liquid exchanges to offer pricing and execution, however in the same way as our FX offering, we do not provide these liquidity providers. I hope this provides some clarity. Thanks James
  4. Hi, thanks for the reply. Let me try and clarify things, and give you more insight into the variable spreads which are applied to our options pricing. Options pricing will be variable basis the time of day, as well as the current premium applied. The desk view 'in hours' to be between 08.04am and 16.30pm London time, with the spreads changing at these times for 99% of the time. Dec DAX options for example will have an 'in hours' spread of between 5-6 points, where the spread will be 5 for premiums of 50 or less, and 6 for premiums of 60 plus. Anything between this will be variable on a sliding scale. Out of hours this will change to between 6 and 8 points, where it's 6 for premiums of less than 60, and 8 for premiums more than 80, with a sliding scale between. Therefore the spread is variable basis of how close to the money the strike is. I appreciate what you are saying about the increase in spreads over periods of high volatility, and I will pass this on to the heads of each desk respectively. Like you said, it is worth noting that these spreads are variable, however it isn't an arbitrary decision. For example, on Friday we saw a massive devaluation of Sterling by 6% in the space of seconds, which cased this increase in spreads. This means that we were unable to inform clients of this change. If we were ever to change spreads on a known date and time then we would of course do our best to proactively reach out to inform clients. I hope this clarifies things for you. James
  5. Hopefully I can shed some light on this for you. During the cash market of the FTSE we are able to offer options with tight spreads. This is because there is an underlying market to hedge in, and an efficient representation of the current market. When the cash market shuts, i.e. after 16.30pm, we are providing the market, and subsequently the pricing for these options. Due to a lack of an underlying market to hedge in, as well as reduced liquidity in the Futures, then spreads will increase in the same way as they do on other traded instruments. In response to the GBPUSD Flash Crash early Friday morning, we did briefly increase our spreads higher than normal. These have now been brought back in line with normal spreads, so you shouldn't see the 16 points on the March options, and there shouldn't be anything higher than 8. This has been brought in line recently. I hope this clarifies things. James
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