Having heard good things about Berkeley Futures Advisory Service and keen to find out more about trading futures and options, I met up with Andrew Moreno, Ian Thurgood and Andy Bibby who collectively form the Berkeley Futures Advisory team at their Saville Row office in London
Here’s what they had to say about Berkeley Futures, their products and services:
First of all, what are the advantages of trading futures over CFDs?
Andrew Moreno: Futures are an on-exchange product, so to start with you are trading with the market directly, not a desk. Because of this, pricing is transparent and orders are routed directly to the exchange, where as CFDs are quoted by the CFD broker – and of course when you send an order to them they will run the trade with their own spread.
CFDs are priced off of the futures price so they generally have a higher spread. Even if the CFD broker doesn’t charge a commission he will include it in his spread as they have to make money. Futures are the most liquid way to trade commodities and have been trading on commodity exchanges for well over 100 years – CFDs are a relatively new product.
What sort of minimum account size and experience level will you accept?
Andrew Moreno: It depends on the style of trading. Berkeley Futures will only accept accounts with a minimum starting balance of £10,000. Futures and options require margin, so you will need enough funds in the account to trade them. With advisory accounts, we feel that the investment needs to be about £25k upwards, but that is not to say you cannot start with less.
In terms of experience, we do look for some prior trading experience as futures and options are classed as professional products. But that does not mean that people with less or no experience will be turned away, it comes down to suitability and affordability for the client which we take seriously, as we look for capital growth not financial gambling.
With options, we recommend looking at educational option websites to get yourself ready for trading. We would use this along with the advisory service to get customers well on their way to achieving capital growth.
I understand there has been significant growth in the number of futures and options exchanges available. Do you think this offers retail investors more opportunities?
Ian Thurgood: Not necessarily. We find that most clients stick to the main exchanges (ie LSE, CME, NYSE etc) as the liquidity lies there – but we do offer other exchanges as sometimes portfolios do need more scope. However, it is best to stick where the liquidity is in most cases.
You currently offer Direct Market Access to more than 25 futures and options exchanges, which gives your clients plenty of choice. What criteria do your clients use to choose between exchanges?
Ian Thurgood: Liquidity, as I’ve just mentioned, is the key and this is why we choose to mainly stick with the UK and US markets. The FTSE 100 is a great market to trade as you can not only trade the futures and options on a basket of FTSE stocks (the Index), but you can also trade options on the majority of the individual equities.
The CME, ICE and Eurex have the vast majority of products covered. Other exchanges offer a similar subset of products which may have some local advantages which include time zone, settlement currency or delivery location for physical contracts. Clients tend to stick to the biggest exchanges as prices and liquidity tend to be much better.
Berkeley’s eSignal platform allows traders to share data between themselves – what can they share, and do you see social trading as a major growth area in the futures market?
Andrew Moreno: Social trading has seen a large amount of growth in the last few years but this is due to the growth of technology. At the end of the day, social trading has been happening for years as brokers speak to each other and investment clubs/forums have always existed.
One area in which we are paying a lot of attention is automated trading. We have recently launched our Strategy Exchange platform. Developers put their algorithm on the exchange which then gets back tested and allows clients to subscribe to their futures strategy for a monthly subscription, allowing them to sit back while the machines trades for them. This is great if you are a developer as you now have a market place to put your strategy on and as a client you can easily sort the best strategies and choose what is right for your portfolio.
You offer trading on the Dubai Gold and Commodities Exchange: what are the attractions of this exchange for traders?
Andy Bibby: The DCGX offers similar products to the CME but has local delivery for physical contracts as well as catering for a Middle East and Asian time zone. Our clients can also take advantage of pricing discrepancies and arbitrage between these exchanges.
You place emphasis on helping clients manage their risks, for example via your agricultural and hedging services. How does this work in practice for traders?
Andy Bibby: We work alongside our clients to discuss and advise them on their exposure to certain commodity price fluctuations, enabling them to take advantage – or not be disadvantaged – by current or future price movements. This can include locking in the current price for producers and consumers or using options to ensure a minimum price for a particular commodity.
What sort of proprietary research services do you offer traders?
Andy Bibby: We do not currently offer research services but do provide a morning note to those who want to subscribe. We feel that, generally, good research can be found online for free. However, we offer an option based educational website for beginners who wish to get started in the world of options.
How easy is it to trade with Berkeley Futures using mobile devices?
Andrew Moreno: This is a very easy process and is an area we find is growing rapidly. We offer iBroker and CQG but TT is coming very soon with its new mobile offering which looks very interesting indeed.
At the moment my favourite mobile platform for futures and options is iBroker – it works very well on both an iPad and Android devices. You can receive push notifications when you have market alerts or just want to know when you have traded. The iOS version even allows these notifications to be delivered to the Apple Watch….very cool.
Are you seeing demand for futures and options within investors’ private pension arrangements, and how do you deal with these requests?
Ian Thurgood: We see a lot of demand for SIPPs in all asset classes and work with a few pension providers in particular who are happy with futures and option investing.
Self Invested Personal Pensions are common place now and we find that clients with large equity portfolios are looking to obtain growth with more than just collecting dividends. Options are a tool to do just that and we are here to guide clients down the correct path.
In the last few budgets, the government have made it more attractive and simpler to invest in a SIPP as pension holders now have more control and clarity on the benefits and when they are able to draw from it.
As a desk, we monitor individual risk closely. Pensions are treated differently to normal retail client accounts as there is a definitive sum of money within the pension plan.
Find out more about the Berkeley Futures Advisory Service
You can check out our Berkeley Futures review to find out more about the broker. If you would like to speak with Andrew, Ian or Andy to find out more about their Futures and Options services, simply hit the button below and complete our request a call back form.