Friday, May 16, 2008

Finspreads - Business Model

Finspreads was launched 19th April 1999. In Feb 2001 launched the FIRST fully interactive online spread betting platform. In may 2002 IFX group PLC purchased Finspreads, IFX is fully listed on the LSE and is authorized and regulated by the FSA. In November 2003 launched new look online platform. In November 2004 an advanced order system was launched.

Finspreads philosophy is to become a client driven retail spread betting platform, with a fully interactive website and an emphasis on client training and support to "bring out the professional trader in you".

Finspreads has recently added binary bets to its online spread betting platform. These are win-lose propositions that allow traders to take a view as to whether a market will finish a session up or down. Clients can bet whether the FTSE or the Dow will end a given day or even a specific hour higher or lower.

A binary market is made between 0 (the event not happening) and 100 (the event happening). For example, we have a binary bet on whether ABC plc share price (400p) will close up or down on the day. If it closes up the Binary mkt will close at 100 and down at 0. The market is titled "ABC PLC up on the day" At the opening of the day the market will trade at 48 - 52 (which means it's 50/50 as to the outcome) you'd buy @ 52 if you agree that it will end up on the day or sell at 48 you disagree. The day progresses and ABC announce some good news which rallies the share price upwards and therefore the market settles at 100. If you bought at 52 your bet will close out at 100 which will give you a return of (100-52) = 48 x your stake. If you had sold at 48, disagreeing with the market then you'd have lost (100-48) = 52 x your stake.

Currently only 4 binary markets are offered: FTSE and Wall Street up and down on the day and hourly markets.

The fundamental principal of pricing model used is Black and Scholes, but there are many more parameters used.

Proprietory trading platform is used. But the firm affirms, we guarantee our dealing prices, so do not knock people back once they've clicked on buy or sell. You can also add place limit orders as well.

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