iDealing CFDs dealing service

iDealing launched launched a contract for difference (CFD) dealing service in September 2002. They claim that their CFDs service offers cheaper dealing charges than are available elsewhere.

iDealing launched launched a contract for difference (CFD) dealing service in September 2002. They claim that their CFDs service offers cheaper dealing charges than are available elsewhere.

Foster Bowman of iDealing explains that the company hedges CFDs by taking out positions in the underlying stocks directly, rather than taking out CFD positions with institutional brokers, such as Dresdner Kleinwort Benson, a method which increases the cost to the investor through wider bid-offer spreads and higher charges.

Where a CFD is paid for by commission, Mr Bowman promises:"We provide touch prices which are equal to or better than London Stock Exchange (LSE) prices." Moreover, iDealing's commission rate of 0.01 per cent of trade value is significantly lower than the commissions charged by rival CFD firms, which range from 0.02 per cent to 0.05 per cent.

iDealing also offers commission-free CFD trading, like deal4free, where the broker's charge is reflected in a slightly wider spread. Mr Bowman says iDealing's spreads should be lower than its rivals' because of the efficiency of hedging through the underlying stock. iDealing's service is also online.

iDealing offers two types of margin accounts - the 'commission-free account' (with house prices) and the 'touch account' (with touch prices). The 'House Account' is commission-free and orders are dealt against iDealing's house prices but is not appropriate if you plan to deal in less than GBP5000 worth of stock. 'Touch Accounts' are dealt on the prices reflecting the spreads of the underlying securities of the CFDs in question and carry a commission charge.

Limit prices (for CFDs) are available but after hours trading isn't possible. Stops are available but guaranteed stops aren't. Also, they maintain 'Forced Stops' on all Margined positions. Phone dealing (for larger positions) is also offered. Also, there's no inactivity fees if you let your iDealing account inactive for a period of time

iDealing can offer EU citizens an account providing that you have a UK bank account. For funding you can either send iDealing a cheque or make use of their electronic payment mechanism (i.e. BACS/CHAPS). iDealing cannot accept credit cards or cash payments under any circumstances. All funds must originate from a personal UK bank account held in your name. And again they classify clients as intermediate meaning that certain protections that are afforded to private customers under the rules and guidance of the FSA may not apply to you:

iDealing states:

'As a consequence of classification as an intermediate customer certain protections that are afforded to private customers under the rules and guidance of the FSA will not apply to you. These include rules relating to the issuing of direct offer financial promotions, ensuring that clients understand the nature of the risks involved, obligation to disclose charges, remuneration and commission in writing; restrictions on the ability to lend money or grant credit to private customers; notification of the circumstances in which a customer may be required to provide any margin requirements and ensuring that customers are able to obtain a reasonable price for non-exchange traded securities'

It is also worth nothing that money deposited at iDealing is not held under the FSA's client money rules. This means that your money may be at risk in the event of iDealing's default or insolvency. Also, you do not have right of access to the Financial Ombudsman Scheme.

To withdraw funds you have to send them a signed written request but this is is good - e-mail or phone orders are too insecure anyway.

For Freepost:

iDealing.com Limited
Freepost LON13628
London E1 7BR

Physical address, registered post:

iDealing.com Limited
114 Middlesex Street
London E1 7HY

iDealing Contracts for Difference Highlights:
Telephone number: 020 7422 1741
Margin: 20% (16% for same-day cfd trades)
Commission: Free/0.10% (min 12.50)
Minimum initial account size: 2,000
Interest charged on long positions: 6.50% (hmm this is the hidden cost!!)
Interest paid on short positions: 0.50%
CFDs available: Most FTSE 250 stocks
Other Derivatives offered: Spread betting
Automatic trading facilities: Limit orders, stop losses, stop limits, good-'til-cancelled, OCOs
Online/telephone trading: Yes
Advisory service: No
Prices: Real-time prices; best execution
Research available: No
Trading platform features: 'Touch guarantee': equal or better than underlying stock
Trading on credit: Not available
After-hours trading Not available