Welcome to Spread Co. Trading the markets with Spread Co 1 1
Welcome to Spread Co I founded Spread Co in 2006 with the vision to bring a custom built, professional trading platform to financial traders with tight spreads and low dealing costs. Today, we count ourselves as one of the leading providers of CFDs and spread betting in the UK, with partnerships in a number of locations worldwide, including Europe, Canada, UAE, Peru and India amongst others. We are a privately held company based in north London and are authorised and regulated by the Financial Services Authority in the UK. I hope you will have a long and profitable relationship with us at Spread Co. Ajay Pabari Managing Director Spread Co We continue to innovate. For example, in India we have developed a unique new product called Premium Securities, which offers Indian clients access to markets previously unavailable within a regulated environment. The Spread Co trading platform is powerful, intuitive, rich in functionality and skilfully designed. Our clients have access to tight spreads on real-time prices and are able to participate freely in the exciting and rapidly evolving trading environment of the world s financial markets. 2 1
Contents 4 What is spread trading? 5 How do CFDs compare to spread betting? 6 Benefits of spread trading 7 Why Spread Co? 8 What is the spread and what are the charges? 9 Some examples 10 Our international partnerships 11 Quick FAQs Contracts for Difference and Spread Betting carry a high degree of risk to your capital and it is possible to lose more than your initial investment. Please ensure you fully understand the risks involved. Spread Co Limited is authorised and regulated by the Financial Services Authority. Register No. 446677. 1 3
What is spread trading? Spread trading is an exciting, tax-free* and cost-effective alternative to traditional ways of trading financial markets. It offers you a way of trading a huge variety of global markets without physically owning the asset, such as a share or commodity. Because you trade with an element of leverage, you can trade with a small amount of capital and profit from a rising or falling market.** You are essentially betting on the movement in the price of the underlying asset. The more the market moves in your favour, the more you profit, with unlimited potential. Conversely, the more the market moves against you, the more you could lose and you may lose more than your initial deposit, so ensure you are aware of the risks. Spread Co offers two ways to spread trade you can choose a spread betting and/or a Contracts For Difference account and can trade both from the same platform. *Tax laws can change or may differ in a jurisdiction other than the UK. **Leverage may result in losses as well as larger profits 4 1
Spread betting and CFDs similarities and differences The key differences: Spread betting is exempt from Capital Gains Tax, CFD trading is not.* Losses on CFDs can be offset against capital gains, this is not allowed with spread bets. The key similarities: No stamp duty is paid on transactions. Margin trading is used to leverage up your capital. When trading CFDs, you trade in a similar manner to purchasing shares i.e. you buy 10,000 shares of BP. With spread betting you trade in GBP (or $/ ) per point so for 10,000 shares in BP you would instead stake 100 per point movement in the share price. If BP goes up by 10p, your 10,000 shares makes 1,000, as does your spread bet. You can trade thousands of markets and go long or short with both. You do not own the shares or underlying security and have no voting rights. *Tax laws are subject to change though and tax treatment may depend on the individual. 1 5
More spread betting benefits 6 Spread betting offers many advantages over traditional methods of investing: Profits free from Capital Gains Tax and Stamp Duty The profits you make are currently exempt from Capital Gains Tax and Stamp Duty in the UK, but tax laws are subject to change and can depend on personal circumstances or location. Go long or short on a wide range of global financial markets Not only can you go long (buy) any share, index, currency or commodity on our platform, but you can also sell them short, allowing you to profit from falling as well as rising markets. No commissions or hidden charges All our dealing charges are included in the spread there are no hidden extra costs or dealing commissions. We do not charge you to roll an equity or index short position overnight. Tight spreads Our spreads are some of the tightest in the industry, both in and out of normal trading hours, starting at just 0.8pts on EURUSD, UK100 and US30 indices. Tighter spreads mean better value to you. Low margins When you spread bet you are trading on margin you only have to put up a small percentage of the value of your trade. This allows you to utilise less capital compared to traditional methods of trading. 1
Why Spread Co? There are many reasons why you should choose to make Spread Co your trading firm of choice, whether you are a new or experienced trader. These include: Tight spreads At Spread Co we offer some of the tightest spreads in the market. From 0.8pts on the UK100, US30 and EURUSD through to 4pts for Gold and US Crude.* Low margins The lower the margin required, the lower the amount of capital required to hold a position. Spread Co offers extremely low margins, such as 30pts on the UK 100. Lowest financing charges Not only do we offer some of the tightest spreads, but our financing costs are the lowest you will find anywhere. A sophisticated, powerful, yet simple-to-use customisable trading platform offering advanced charting and instant execution via a web-based or downloadable version. Trade CFDs and spread betting from the one account more choice for you. 24 hour customer support and educational videos and guides. Trade from 1 per point and with as little as 100 in an account. 0.8pt spreads are available to all spread betting clients trading without guaranteed stops during normal trading hours and are subject to our general rules on trade acceptance. See site for more details. 1 7
What is the spread and what are the charges? The spread, also known as the buy / sell spread, is the difference between the prices at which you can buy and sell financial instruments such as indices, equities, commodities or FX pairs. For example: The spread is how market makers such as Spread Co are compensated for creating a market for you to trade. A wide spread is more expensive to you, a tight spread is cheaper to you. Spread Co offers some of the tightest spreads in the market, meaning you can make your money go further with us. If Spread Co is quoting the UK100 (FTSE100) at 5001-5001.8, the lower figure (5001)is the sell price and the higher figure (5001.8) is the buy price. So you can sell the UK100 at 5001 and buy at 5001.8. The spread in this example is 0.8, which is one of the tightest spreads around on the UK100. There are no additional dealing commissions or charges other than an overnight financing rate, if you choose to hold a position overnight. But here too Spread Co stands out from the crowd, with some of the lowest charges in the industry. 8 1
Some examples A: Spread betting on the UK100 (our market on the FTSE100 index) You think that at 6,000 the UK100 index has reached a top and decide to sell it short. You may have holdings in shares, PIPs or investment trusts you would like to hedge against should the market fall. Spread Co offers a spread on the UK100 of 5998.2 5999. You sell at 5998.2 for 10 a point putting a stop loss at 6100. Two weeks later the UK100 has fallen to 5850 and you decide to close your position. You therefore made the following profit on the trade: 5998.2 5850 = 148.2pts. This is multiplied by your stake of 10 to give a total profit of 1,482* If on the other hand the UK100 kept going up and hit your stop loss of 6100, you would lose 101.8pts or 1018. Of course, you can close the trade at any point along the way to take a profit or cut the loss short. B: Trading a CFD on BP Shares. BP shares are recovering from their lows after the oil spill and you think they are worth buying at 380p. The Spread Co CFD spread is 379.6 380.4. You buy 10,000 BP CFDs at 380.4. The market value of this trade is 38,040 but as only 5% margin is required you only need to put down 1,902 to hold the equivalent position. You place a stop loss at 365p. You hold the shares for four months and they hit 500p - you decide to sell. Your 10,000 CFDs are now worth 50,000 so the profit on your position, before financing charges comes to 11,960. These charges come to about 350 to hold this position for four months, resulting in a net profit to you of approximately 11,610 on an investment of just 1902, or a ROI of 610%. If BP shares had fallen though to 365p and you closed the position you would have lost 1,540. *Excluding overnight financing charges, see site or speak to our client services team for more details. 1 9
Our international partnerships Spread Co has partnerships worldwide, with clients trading through white label partners and Introducing Brokers in Canada, UAE, Europe, South America and India amongst others. Spread Co offers a number of different partnership structures, from affiliate partnerships to full white label solutions and we are always happy to talk to potential partners whatever their requirements or wherever they are based. In India for example, we worked closely with leading national brokers to develop a unique product specifically for the Indian market, called Premium Securities. Premium Securities offer many of the features of leveraged trading but adheres to local regulatory restrictions on how clients can trade leveraged products. Similar to how a CFD works, A Premium Security is an agreement between two parties to settle, in cash, the difference between the BUY and SELL price of a particular instrument. Premium Securities enable clients to get exposure to a variety of global instruments using a single platform. With a Premium Security trade, an investor makes a fixed investment to gain a leveraged exposure to an underlying financial instrument. The embedded leverage in the Premium Security contract means the investor has the potential of making higher returns, or losses, when compared to trading the cash value of the underlying instrument. However, similar to option trading, losses are limited to the amount invested. Unlike option trading the Premium Security has no expiry and the investor is free to choose when he wants to close the position. If you would like to discuss any of the partner options above we would love to talk to you call us on +44 (0) 1923 832 641 or email us via sales@spreadco.com. We look forward to hearing from you. 10 1
Quick FAQs How do I open an account? You can apply online at www.spreadco.com. Our online application is easy to complete and should only take you a few minutes. We will process your application and get back to you as soon as possible. Once your application is accepted you can then log on with your username and password. What is the minimum initial deposit? The minimum initial deposit for spread trading is GBP100, EUR125 or USD 160 and you can deposit via credit cards, debit cards, bank transfer or cheque. See our site FAQs for full details. Is Spread Co regulated and is my money safe? Yes, Spread Co is regulated by the UK Financial Services Authority under register number 446677. All retail client funds are segregated from Spread Co s funds and clients are protected by the FSCS up to 50,000. Where can I download Saturn TRADER? We recommend clients use our downloadable trading platform for its superior performance. You can download it from our site - go to www.spreadco.com/support. What is a margin call? What is the minimum stake size? The minimum stake size depends on the instrument, and is typically from 1. See our market Info for further details A margin call occurs when there is insufficient funding in your account to cover your open trades with the necessary margin. This happens if your account valuation falls below the margin requirement. Limited Risk Account holders will not receive margin calls. 1 11
www.spreadco.com Spread Co Ltd, Argyle House, Joel St, HA6 1NW. Client Services: 01923 832 682 cs@spreadco.com Dealers: 01923 832 609 dealers@spreadco.com