Interview with Mr James Bateman of www.odlsecurities.com

Andy, Contracts-for-difference: Ok to start, so when did ODL Securities opened for business? When did you introduce CFD trading?

James, ODLS: ODL Securities has been trading since 1994, originally as Options Direct (Europe) Ltd.

Andy, Contracts-for-difference: Tell us a little about ODL Securities. How big is ODL Securities?

James, ODLS: We currently employ 85, up from 28 eighteen months ago. The Company has recently undergone a period of rapid expansion following a significant injection of new capital by its current owners. As part of this expansion the Company acquired the business of Cannon Bridge Corporation, a futures, options and CFD service provider for retail customers, in September 2004.

The number of active clients gained throughout 2004 increased by 27% with a further 3,000 clients gained so far this year. Currently ODLS has over 8,800 active clients and more than £420million in client cash and assets.

Andy, Contracts-for-difference: ODL Securities is also known as Options Direct and MyBroker. Please comment. Has the company changed names in the past?

James, ODLS: Our original name was Options Direct but we launched an online equities and derivatives trading platform called myBroker in October 1999. The myBroker platform obviously still exists and myBroker remains a brand name.

As our product range expanded it was clear we had to change the company name to reflect this - hence ODL Securities. This occurred in 2002.

Andy, Contracts-for-difference: Tell us about the owners and principals of ODL Securities.

James, ODLS: The major shareholders are Graham Wellesley, Lorenzo Naldini and John Paul Thwaytes, all executive directors of the firm.

John Paul is the founder of ODL Securities while Graham and Lorenzo were previous directors at IFX.

Andy, Contracts-for-difference: Could you walk us through ODLS' products? Which markets do you cover? (do you offer CFDs on individual FTSE 250 stocks?, is there a minimum valuation cap?)

James, ODLS:

  • Spot foreign exchange, gold and silver.
  • Foreign exchange corporate delivery deals
  • LIFFE index and equity traded options and financial futures.
  • US derivatives traded on all major US exchanges
  • CFD's on FTSE 350 stocks, S&P 500, Nasdaq 100, all NYSE and AMEX stocks, CAC40, DAX 30 and MIB30, FTSE 100 index and all major US and European indices.
  • All US equities traded on the NYSE, Nasdaq, AMEX and the OTC Bulletin Board.
  • UK equities, investment trusts, convertibles, warrants and covered warrants traded on the LSE, AIM and OFEX.
  • Fixed Income
  • European equities and derivatives
  • Corporate Finance
  • Regular educational programs and training

Andy, Contracts-for-difference: What dealing platform do you use? Is it proprietary? What would you say really stands out about it?

James, ODLS: Our platform is proprietary, it offers direct market access allowing clients to be price makers rather than price takers and can therefore trade within the spread.

We offer limits and stops - good for the day and good till cancelled. We also offer auction orders allowing clients to participate in the pre and post-market auctions on SETS.

Andy, Contracts-for-difference: Is phone dealing available? Are there any additional fees or restrictions for phone dealings?

James, ODLS: Phone dealing is available at no additional cost.

Andy, Contracts-for-difference: Do you accept International clients? In which base currencies can clients trade?

James, ODLS: We do accept international clients and they can choose their base currency as £, US$ or €.

Andy, Contracts-for-difference: Do you offer after-hours trading? Please tell us about your financing charges and commission charges on equity CFDs.

James, ODLS: We offer after hours trading on the FTSE 100 Index CFD between 4.30pm and 5.30pm. We do all UK stocks over £100m market cap. Clients can trade US stocks before and after normal US market hours (2.30-9.00)

Financing -
UK - CFDs are -2% / +2% around the £ overnight Libor rate
Euro - CFDs are -2% / +2% around the Euro overnight Libor rate.
USA - CFDs are -2% / +2% around the $ overnight Libor rate.

Commissions - equity CFDs @ 0.2% and index CFD's are FREE.

Andy, Contracts-for-difference: Please comment on your spreads and commissions for Index CFD trading.

James, ODLS: The UK 100 Index CFD is 2 points between 8.00 and 16.30 and 3 points between 16.30 and 17.30. This spread can change if in ODLS' opinion market conditions warrant.

Andy, Contracts-for-difference: Are there any inactivity fees? Any other fees/commissions that our readers should be aware of?

James, ODLS: No inactivity fees. Also, there are no fees to make debit card payments but for credit cards there is a charge of 1.45% of the value of British Pound transactions and 3.00% of the value of US Dollar/Euro transactions.

Andy, Contracts-for-difference: Do you offer guaranteed stops? Are there any additional fees for using this service?

James, ODLS: Yes we do. If your stop is triggered than the rate that you deal at is guaranteed by ODLS. The limited liability stop is only available when opening the trade. The limited risk premium of 0.75% of the share price is payable on the opening trade. This service is only available on leading stocks and has to be at least 5% away from the current market price. All limited liability stops are based on ODLS' price and deemed Good Till Cancelled. All limited liability stops are automatically cancelled when you close the position the order is placed on.

Limited liability orders may be changed, during market hours, but have to be a minimum of 5% away from the current share price. There is an additional charge of 0.25% of the share price for this service. This will be added to the closing trade for this position.

Andy, Contracts-for-difference: Do you allow clients to deal at the market (i.e. allow market orders) or can clients only place limit orders?

James, ODLS: We accept market and limit orders.

Andy, Contracts-for-difference: What is the minimum deposit and minimum/maximum opening trade size (if there is any)?

James, ODLS: No minimum deposit but enough to fund margin requirements. Minimum trade size in equities is 1 share and the maximum depends on free equity in the client's account and market liquidity.

Minimum trade size on the FTSE is £1 per point and the maximum is £200 per point during normal trading hours and £100 per point between 4.30pm and 5.30pm.

Andy, Contracts-for-difference: What margin is required for trading contracts for difference at ODL Securities?

James, ODLS: 10% on equities and 4% on indices.

Andy, Contracts-for-difference: Rumour has it that you do not have any slippage on stops and that you provide a free price feed with no minimum trade size. Please comment.

James, ODLS: We do have slippage on stops - we fill at the best available price if a stop is triggered. Minimum trade size is 1 share.

Andy, Contracts-for-difference: Do you provide an advisory service? Any other services you provide?

James, ODLS: No - execution-only. Regular updates and real time margining.

Andy, Contracts-for-difference: Do you accept deposits by BACS? Which other payment methods do you accept? Do clients need to fill up a fax form to request a withdrawal?

James, ODLS: We accept BACS, CHAPS and cheque payments. To withdraw funds we just require an email from the client quoting his account code.

Andy, Contracts-for-difference: Do you offer credit facilities? Can accounts be overdrawn?

James, ODLS: No we don't and accounts are not allowed to be overdrawn.

Andy, Contracts-for-difference: Is interest paid on the balance of the accounts?

James, ODLS: Yes. 1.75% below base.

Andy, Contracts-for-difference: How do you see yourselves conquering the contracts for difference market? What else are you offering as products and services that puts you a bit ahead of your competition?

James, ODLS: ODL is one of the few trading houses offering on-exchange and off-exchange products to customers in addition to tax-efficient wrappers. From single or multiple accounts customers can trade equities, futures & options, fixed income, CFD's, forex, gold & silver.

Over time customers look to trade new products once they have tried and tested one specific product. We cross sell our range of products to a lot of existing customers.

Andy, Contracts-for-difference: Are there any general safeguards for clients - protected accounts for clients' money or segregated accounts...etc? How are you regulated?

James, ODLS: ODL Securities is authorised and regulated by the Financial Services Authority and is a Member of the London Stock Exchange.

Andy, Contracts-for-difference: What books and resources would you recommend to fellow cfd traders?

James, ODLS: Any on derivatives, trading discipline and risk assessment.

Andy, Contracts-for-difference: Who is predominantly making up your customer base at this time?

James, ODLS: Retail customers.

Andy, Contracts-for-difference: What do you think are the most important characteristics of the professional contracts for difference trader?

James, ODLS: Good understanding of equities and equity derivatives. Good overall knowledge of European and US markets.

Andy, Contracts-for-difference: As of now, what trends do you see in the markets people choose to trade? Are there certain markets that clients seem to prefer? Do you think this will change over time?

James, ODLS:

  • Clients trade established markets and big cap stocks - FTSE, DAX, CAC, & MIB are the favourites in Europe.
  • NYSE and NASDAQ remain very popular with clients domiciled in the Middle East.
  • We are seeing more demand for peripheral markets in Europe - Greek and Eastern Europe CFDs.
  • Other trends at the moment are bid targets (3 in the FTSE 100 this week alone - BPB, Compass, Exel) and mid term valuation plays on good company earnings growth.
  • Clients prefer liquid stocks they can get in and out of (Google).
  • We will start to see more business in Eastern Europe and Asia as clients become more aware.

Andy, Contracts-for-difference: Do you organize any training seminars or meetings which our readers could attend?

James, ODLS: We offer all day seminars on the final Friday of the month covering equities and derivatives trading (including CFD's) in addition to technical analysis. These are available to clients and non-clients and cost £200 plus VAT.

Andy, Contracts-for-difference: Is ODL Securities profitable? How many clients do you have?

James, ODLS: Most definitely. We have over 8,800 clients - obviously some are more active than others depending on what products they trade.

Andy, Contracts-for-difference: What challenges do you see ahead?

James, ODLS: Regulations on shorting still a problem that needs to be overcome in Southern Europe. Creating a platform enabling trading in all our products - both on-exchange and off-exchange (OTC)