FCA Action

FCA proposes stricter rules for CFD products

This news may affect you if use leveraged trading products. The proposals include new disclosures, risk warnings and leverage reductions for retail clients, depending on their trading experience.

Shares in related companies are all currently down by more than 25%: IG Group (LON:IGG), CMC Markets (LON:CMCX), Plus500 (LON:PLUS).

One thing I'd note is that IG has some international diversification, earning 45% of operating profit from offices outside the UK last year. But I suppose there are no guarantees that other regulators won't decide to take similar actions in the future!

The FCA remarks that 82% of client accounts, in a representative sample, lost money on these products. While I'm certain that the vast majority of those clients did not intend to lose money, it would be really interesting to know how many of them are using CFDs for legitimate risk management purposes: to hedge the risk of their physical stock portfolio, or a large foreign exchange transaction they are about to make.

My simple point is that there are ways to judge client satisfaction, other than by how many of us are profitable!

Gateley Holdings (LON:GTLY)

Share price: 118p (+5.8%)
No. shares: 106.8m
Market cap: £126m

Half Year Results for the six months ended 31 October 2016

This is a commercial law firm, making it one of those few businesses on the stock market which would normally use the partnership model (instead of having external shareholders).

While all businesses are reliant to a greater or lesser extent on their employees, businesses like this are completely reliant on their staff. That makes them somewhat risky territory for external shareholders!

To lessen the risks, I look for the following two key elements:

  • A respected company name which has been around for a long time (Gateley has this).
  • A track record of treating external shareholders well.

Gateley has only been listed for about 18 months, but it has at least paid two dividends during that time. Today, with strong results, it announces a substantial dividend increase:


Trading is described as "robust", with the company "on track to deliver against expectations…

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