A Professional's View
We are delighted that market professional Dominic Connolly has had an opportunity to trade on and review the revolutionary L2 platform.
Dominic Connolly has been involved with equity CFDs since their inception in the UK market. During that time he has worked for a number of major City firms and has been instrumental in the evolution of the product into the retail market.
The author of The UK Trader's Bible he is a professional equity trader and commentator, and has written many articles on derivative products for most major publications.
Direct Market Access
For the professional stock trader and active investor, direct market access (DMA) is now the benchmark by which all new trading platforms are judged. The ability to trade and interact directly with London's electronic order-driven market as well as to be able to participate in the full trading day including pre- and post-market auctions, where the day's best prices are often available, has rapidly become a pre-requisite for all serious traders. Trading on other people's prices on a take it or leave it basis no longer necessarily meets the expectations of the modern day professional trader.
L2 Dealer represents the next generation of 'must have' dealing platforms, offering more than just two-way prices. Synthetic direct access via CFDs offers the trader all the cost-effective benefits of CFDs combined with the advantages of an electronic market place allowing the individual full control over his dealing price. Full market depth visibility for every stock and market interaction allows him to become a price maker rather than price taker and to not just see but be seen. Effectively he can now buy at the low of the day and sell at the high of the day, a privilege before enjoyed only by the few. My style of trading, as well as many of my trading colleagues, requires instantaneous dealing without the delays associated with complications such as 're-quotes' or dealer referred tickets.
Traders who have up until now been reluctant to trade stocks on the quote-driven SEAQ system and restricted themselves to SETS stocks, will be attracted by the Retail Service Provider (RSP) facility embedded in the platform which allows them to request improved prices inside the displayed market spread for market maker (SEAQ) stocks. I found it particularly attractive to be able to get quotes at any time in SEAQ stocks and be able to simultaneously compare the price offered between all three providers. Investors utilising RSPs through execution only brokers will be familiar with how effective this mechanism can be but up until now it has been only available for traditional stocks. This is the first time that I have seen the advantages of an RSP facility combined with a CFD platform allowing 'shorting' or selling to open trades with the CFD provider automatically taking care of the short sale and associated stock borrowing and settling issues. The embedded RSP facility is also available for SETS stocks when there is insufficient liquidity on the order book as an alternative means of trading in appropriate circumstances.
Comprehensive time and sales data is available instantly in a separate window for any stock detailing full historical trade information. The full market depth (Level 2) can be viewed for several stocks simultaneously and is helpfully colour coded for easy interpretation of daily moves as well as detailed information on the last five trades, including the corresponding trade code; essential for keeping an eye on trades being executed 'off book' between market participants.
The limit minder feature can be set up to allow the trader to keep track of several key levels for individual stocks simultaneously while the order book window details the status of current orders, both fully and partially filled by account.
Other useful features include a live ticker that can be positioned anywhere on the screen to monitor stock prices with the option of being able to filter the selection of stocks covered, live currency spot rates and live prices for over thirty UK sector indices, including daily hi-lo.
Real time monitoring of profit and loss and available margin is easily viewed via an automatically generated statement online from a tab at the top of the screen.
For larger orders in SETS stocks, there is a tranche facility that I have not seen before on a CFD platform allowing the individual to benefit from the iceberg facility on SETS. This allows the full size of the order to be hidden on the book, only displaying a part of it at any one time, but allowing full execution if a counter party attempts to trade through the price. For instance if you wanted to buy 100,000 CFDs in Northern Foods but are reluctant to display the full order for fear of influencing the price on the book, the order can be broken up into 4 clips of 25,000, where 25,000 is displayed at one time only. However you do not risk missing a trade, as the full amount will automatically execute if a seller comes in for the full size.
Comprehensive coverage of UK stocks is offered as well as the major US and European blue chip stocks. Trigger pages are fully colour coded automatically as soon as selected, allowing the viewer an instant barometer of the current state of the market.
Up to ten portfolios or watch lists can be created and saved and it is easy to view several bespoke screen arrangements by saving them under different titles and recalling them at will.
Dominic Connolly