CMC Markets - Be careful

Discussion in 'Stocks & Derivatives' started by jparrie, Feb 12, 2013.

  1. jparrie

    jparrie New Member

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    Had an interesting experience today using CMC Markets stockbroking.

    I placed an At Market order and assumed that my order would be filled "at market'. Wrong - a small parcel went through at the prevailing bid, then the rest was placed in the queue as a Limit order.

    I wasn't a happy camper by this stage and when I talked to a broker at CMC I was told I would have to amend my order if I wanted an immediate fill.

    Their own documentation says this - "Market orders are used to open or close a transaction at the current market price. It doesn't matter whether you are buying or selling, a market order will always get filled."

    Clearly this isn't the case, so if you use CMC, take care and never assume your at market orders are actually carried out at market.
     
  2. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    I don't use CMC, however, if this cost you, I would take issue with them.
    Any decent brokerage will compensate for their balls-up.
     
  3. Roswell Crash Survivor

    Roswell Crash Survivor Well-Known Member Silver Stacker

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    I could be mistaken, but isn't CMC one of those firms who actually hold the title to your securities 'in trust' rather than merely transact on your behalf?

    As in, you have counter-party risk exposure if they were to become insolvent and undergo liquidation?
     
  4. CMCMarkets

    CMCMarkets New Member

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    CMC Markets operates two separate businesses in Australia - a CFD business and a stockbroking business (CMC Markets Stockbroking).

    In your post you refer to our broking business which is a full ASX participant, with normal CHESS sponsorship, where the user owns title to the shares, as with other major online brokers. However, your description of market orders, which says they will always be filled, relates to CFD orders placed on CMC Markets' CFD platform.

    On the CMC Markets Stockbroking trading platform, orders placed "at market" are submitted to the ASX as limit orders, three price steps above/below the last sale price. If there is insufficient volume available at that price, the remainder of the order will sit in the market on the buy side at that price.

    This is described on the order ticket when "at market" is selected.

    You can also read more about market orders in our Online Trading FAQs http://www.cmcmarkets.com.au/stockbroking/faqs-stockbroking
     
  5. Ag47

    Ag47 New Member

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    Hello and welcome :)
     
  6. jparrie

    jparrie New Member

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    This is what the website says:

    "We can accept at market orders online, which will be placed at three price steps above (for buys) or below (for sells) the last sale price. "

    That statement does not state that At Market orders will be placed as Limit orders. Because what you have just described is the placement of a limit order at a maximum '3 price steps' below the last sale. That statement is very misleading, at best.

    No it is not. This is what it states: "Market orders are placed 3 steps below the last trade" - That does not say that an At Market order will be changed to a Limit order and that I should be aware that this potentially dangerous situation could occur.

    Never, ever have I heard of an at market order being changed to a limit order. That is ridiculous and very, very dangerous.

    What your system is forcing people to do is place only limit orders well above/below the current price in order to get fully filled.

    Question: Why can't an At Market order be just that - at market?

    ....................................

    Edit: CMC, I'll prompt you for the correct answer, I'm just wondering if you actually know yourselves? Market to Limit (MTL) If I'm right, then you need to change your documentation and your platform to notify this recent change.

    For those that don't know what the ASX has done, you'll be stunned when you find out. I'll post after CMC answer, if they do, but one thing CMC must now tell us is; What is the maximum deviation from the last price that a Limit order can be placed at?
     
  7. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    +1.
    I'm with jparrie.
    This is potentially catastrophic in a fast moving market.
    In all my years of trading, I have not heard of a market being changed to a limit. Infact, calling that type of order a "market" order is misleading.
     
  8. CMCMarkets

    CMCMarkets New Member

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    Thanks for your feedback, you raise an interesting point. We'll review our wording on market orders and limit orders. In the meantime, if you have any questions or would like to discuss further please just give us a call on 1300 360 071
     
  9. SilverSanchez

    SilverSanchez Active Member

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    As far as im concerned (not being a CMC client) 'at market' and 'limit' have commonly accepted definitions across the investing community and it sounds like your definition of 'at market' is infact a 'limit' order.

    I would assume an online trading platform such as CMC would be far more aware of that than most.

    Not meaning to be hostile, just direct.
     
  10. jparrie

    jparrie New Member

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    Well, a rather disappointing response from CMC. Having done a little bit of research on the subject I think you will all be quite surprised at what I found out.

    The ASX changed the orders it will accept and the way they are executed some months ago, not sure when exactly but if CMC or someone knows please enlighten us.

    So to the point - There is now no such thing as an "At Market" order on the ASX.

    The commonly accepted order At Market, has been changed to something called "Market to Limit"

    You can read about it here (pdf): https://www.asxonline.com/intradoc-cgi/groups/participant_services/documents/manuals/asx_016422.pdf

    Basically the end result is that if you need to dump stock one day and there is a fairly hectic market, unless you have a fairly liquid stock you will end up with a portion of your stock sitting at the ask. Meanwhile with other people jumping on bids you get left further and further down the queue, and what you think is your "at market" order unfilled.

    So no matter what broker you use in Australia for buying or selling shares, none of them offer At Market orders as we all know them. They don't exist.

    This little change has been kept very quiet by the ASX. Have you been notified of this by your broker? I don't recall having this pointed out to me by CMC, but I stand to be corrected. As for online "At Market" orders, I would have thought it reasonable that they are no longer called that by ANY broker.

    CMC's best execution policy states this: "CMC stockbroking is obliged to take reasonable steps to obtain the best outcome for you when executing orders on your behalf on the ASX".

    So where does the "3 steps below/above" come from? Why 3? Why not 5? Or 6? And what exactly is a "price step"? I also noted somewhere a statement that if a Limit price is considered too far from the current price level then it will be cancelled. Please explain.

    Even for stocks like CSL, there is quite often a big difference between bid and ask prices, far more than "3 price steps".

    So how about explaining all this to us here? Let's get it out in the open. Having looked at it I don't think CMC is at fault with their execution methodology, but some explanation of how this is all supposed to really work would be appreciated.
     
  11. SilverSanchez

    SilverSanchez Active Member

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    Wow,

    So in a cascading drop in share price - your at market order (indended so you sell all as fast as you can for as much as you can get) is effectively over. You sell 100,000 shares at market on a cascading drop and end up selling only those which have buyers 3 steps below your sell order!!!

    You could effectively sell basically 0% of your holdings if the time between the click of the mouse and the execution of the order its already dropped the 3 steps!
     
  12. renovator

    renovator Well-Known Member

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    Nice work jparrie . .
     
  13. Finesg

    Finesg New Member

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    To top it all off, CMC's customer service is horrid. They never reply to email.

    Their new platform (launched in July 2013) has also taken away the 'custom leverage' feature. I'm starting to feel that what people say about CMC being a bucket shop isn't far off the truth.
     
  14. Finesg

    Finesg New Member

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    To add to my prior post, their recent platform upgrade has also introduced a variable margin requirement. The margin requirement is no longer fixed after a position is opened. It goes up and down depending on the price of the underlying.

    I shifted my funds to another broker. There seems to be many more out there who seem safer and offer better customer service. Many reviews seem to say CMC will do everything to clean you out very quickly.
     
  15. trew

    trew Active Member Silver Stacker

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    Thanks very much for digging that up jparrie

    I never place at market orders anyway, but looks like if you want 'at market' in the future you will need to place a limit order with your own limit way outside the current trading range to make sure the order gets completed.
    Assuming your broker online system accepts the limit - I've had cases of orders being rejected because my low ball limit was considered too far out.
     
  16. Greenman

    Greenman Member Silver Stacker

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    Yep.
     

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