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City Index

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City Index
Company typeSubsidiary
IndustryFinancial services
FoundedSeptember 1983; 41 years ago (1983-09)
FoundersChris Hales
Jonathan Sparke
Headquarters
London
Area served
worldwide
Key people
Sean M. O'Connor (CEO, StoneX)
Services
ParentStoneX Group
Websitewww.cityindex.com

City Index is a global provider of spread betting, contracts for difference (CFD) and foreign exchange (FX) trading services. Founded in the United Kingdom in 1983, it currently operates as part of the Nasdaq-listed financial services group StoneX. City Index serves retail clients globally, holding regulatory licenses from the Financial Conduct Authority (FCA) in the UK, the Australian Securities and Investments Commission (ASIC) in Australia, the Monetary Authority of Singapore (MAS), and the Central Bank of the UAE.

Initially focusing on spread betting, City Index expanded its services from the early 2000s, acquiring several other brokerage businesses and establishing international offices in Asia and Australia. The company experienced substantial financial difficulties during the 2008 financial crisis, leading to restructuring and eventual acquisition by GAIN Capital in 2014. GAIN Capital itself was later acquired by StoneX Group in 2020, making City Index part of StoneX's retail brokerage division.

History

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City Index was founded by Chris Hales and Jonathan Sparke in September 1983, initially backed by a $4 million investment from a US shareholder. The company began operations in March 1984, pioneering spread betting for retail clients.[1][2] In 1994, entrepreneur Michael Spencer acquired a £6 million stake in City Index, gaining a controlling interest from the founders in 1997.[3][4]

In 2001, City Index introduced contracts for difference (CFD).[5] In 2005, it acquired IFX Group, owner of FX broker IFX Markets and spread betting provider Finspreads, a London-based company founded in 1999. The Finspreads brand was relaunched in January 2013 but ceased operations on 24 March 2018, when all existing Finspreads accounts were migrated into City Index.[6][7] In 2006, the company opened offices in Sydney, Singapore, and Shanghai to serve clients across the Asia Pacific region.[8][9]

In 2008, City Index acquired US-based FX Solutions, the New Jersey-based FX broker.[10] In October 2009, it launched the City Trading app, the first spread betting and CFD mobile platform for the iPhone, later expanding to Android and Blackberry.[11][12]

During the 2008 financial crisis, Spencer provided a £70 million capital injection to stabilize the company after significant trading losses.[13] Despite this, in March 2009 City Index briefly breached its banking covenants.[14][4]

In November 2014, GAIN Capital, owner of Forex.com, acquired City Index for approximately $118 million. At the time, City Index reported annual revenue of $124.8 million and adjusted earnings of $10.7 million but carried net operating losses of around $65 million.[15][2] The merged company had roughly 235,000 clients in 180 countries with annual trading volumes exceeding $3 trillion.[16]

GAIN Capital had attracted acquisition interest from several bidders since mid-2019.[17] In June 2020, INTL FCStone (later renamed StoneX Group) made an acquisition offer at $6 per share, valuing the deal at approximately $236 million.[18] Due to GAIN Capital's strong recent performance, including Q2 2020 net revenue of $101 million,[19] many shareholders considered the offer undervalued, and some supported an alternative proposal by JB Capital at $6.25 per share.[20][21] Despite this shareholder opposition, the deal with INTL FCStone was eventually finalized.[22][23] The acquisition was also marked by an insider trading scandal involving Joseph Conlan, a former financial services executive at GAIN Capital. Conlan learned confidential details about the pending acquisition from a friend employed at StoneX and purchased GAIN Capital shares ahead of the public announcement. The case concluded with Conlan agreeing to a cease-and-desist order and paying $159,389 to settle regulatory charges.[24]

Following the acquisition by StoneX Group, City Index became part of StoneX's global retail brokerage division. Under the new ownership, City Index UK's legal entity was renamed StoneX Financial Ltd, though the City Index brand continued to operate specifically for retail customers.[25] In 2022, City Index underwent a rebranding and updating its trading platforms to include Advantage Web Trader, TradingView, and MetaTrader 4.[26]

In April 2025, City Index Singapore transitioned to Forex.com, another StoneX subsidiary.[27] Conversely, Forex.com's operations in Australia were rebranded under City Index.[28]

Marketing and sponsorship

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In October 2012, City Index launched the City Index Trading Academy, an online educational competition presented as a web series. The project involved eight amateur traders competing over six weeks, with the winner receiving a cash prize of £100,000. The series aimed to educate participants and viewers on trading strategies and market dynamics. The program was broadcast on City Index's official website and distributed via YouTube. The first season concluded with trainee London black-cab driver John Walsh declared winner after achieving a return on investment of 23.6%.[29][30][31]

In December 2021, City Index announced a three-year partnership with the Sydney Roosters, a professional Australian rugby league club, becoming the team's Platinum Partner. The sponsorship aimed to enhance brand visibility and recognition within the Australian market and the broader Asia-Pacific region.[32]

Controversies

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The "Plumber and Spaniard" Scandal (2002–2006)

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In 2002, City Index became involved in the controversial "Plumber and Spaniard" scandal. British businessman Paul Davidson, nicknamed "the Plumber," placed a £6 million spread bet anticipating the rise of his company Cyprotex's share price upon its flotation on AIM. Nigel Howe ("the Spaniard") was the City Index broker responsible for the deal. Investment bank Dresdner Kleinwort Wasserstein subsequently purchased approximately 80% of Cyprotex's shares, allegedly covering City Index's risk exposure, which artificially inflated the share price. The transaction led to market manipulation accusations and triggered an investigation by the Financial Services Authority (FSA).[33][34][35] Investors accused Davidson and Howe of market manipulation and appealed to the Financial Services Authority to launch an investigation.[36] After a lengthy inquiry, Davidson was initially set to face a £750,000 fine, which he contested.[37][38] In May 2006, Davidson was cleared of all charges; however, by then he had declared bankruptcy with debts of approximately £20 million. City Index faced significant reputational scrutiny but was not formally penalized by the regulator.[39]

Compliance and reporting failures (2007–2011)

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In January 2011, the UK Financial Services Authority fined City Index £490,000 for substantial deficiencies in transaction reporting. Between November 2007 and September 2009, City Index incorrectly reported approximately two million transactions, representing nearly 60% of its total required reports. Additionally, around 55,000 transactions were not reported at all. The FSA criticized City Index for inadequate systems and internal controls, emphasizing the risk posed to market transparency and investor protection.The fine was among the largest penalties imposed by the FSA at the time for reporting breaches.[40]

Platform exploitation incident (2011)

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In 2011, day trader Barnett Alexander exploited a technical loophole in City Index's spread betting platform, generating profits of around £630,000. Although Alexander was subsequently fined £700,000 by the FSA for market abuse, the regulator highlighted that City Index had failed to identify and address the platform's vulnerability, despite clear signs of exploitation.[41]

Regulatory issues in Australia (2012–2023)

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City Index's Australian operations faced repeated regulatory scrutiny by the Australian Securities and Investments Commission (ASIC), primarily concerning client money management and misleading statements.[42] In October 2012, ASIC fined City Index Australia twice for making misleading statements on its website regarding client funds.[43] In April 2013, ASIC imposed an enforceable undertaking on the broker after identifying serious deficiencies in client money handling practices, mandating the appointment of an independent auditor.[44][45]

In November 2023, ASIC required City Index Australia to compensate clients due to multiple weaknesses in change management procedures and errors in leverage ratio limits.[46] This case was part of a broader regulatory initiative, with City Index contributing to an aggregate compensation exceeding AUD $17.4 million, shared among seven CFD issuers, including City Index.[47]

References

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  1. ^ "Christopher Hales obituary". The Times. 19 July 2018. Retrieved 9 April 2025.
  2. ^ a b Agnew, Harriet (31 October 2014). "Spencer sells City Index to GAIN Capital". Financial Times. Retrieved 15 May 2025.
  3. ^ Barber, Bill (7 July 2023). "Spread betting pioneer and City Index co-founder Jonathan Sparke dies aged 76". Racing Post. Retrieved 14 May 2025.
  4. ^ a b Hipwell, Deidre; Parkinson, Gary (1 November 2014). "Tycoon lands $80m payout with spread betting sale". The Times. Retrieved 14 May 2025.
  5. ^ "City Index Market Limited". GOV UK. Retrieved 14 May 2025.
  6. ^ "City Index Group relaunches Finspreads". fxmm. 7 January 2013.
  7. ^ "Finspreads Trading Service Decommission FAQs". www.cityindex.co.uk. Retrieved 11 July 2021.
  8. ^ Segal, Gerald (22 March 2022). "Exclusive: City Index Australia rebrands with new logo/look ahead of global rollout". FX News Group. Retrieved 14 May 2025.
  9. ^ Segal, Gerald (11 April 2022). "Exclusive: City Index expands rebrand to Singapore". FX News Group. Retrieved 14 May 2025.
  10. ^ "City Index seeks a retail FX solution". FX Markets. 17 December 2010. Retrieved 11 February 2008.
  11. ^ "FX news: City Index upgrades its app". Euromoney. 17 December 2010. Retrieved 14 May 2025.
  12. ^ "AM – The future of trading is here, and it's mobile". City AM. 1 November 2009. Retrieved 14 May 2025.
  13. ^ Ho, Geoff (26 April 2009). "Tory treasurer's firm suffers £28.2m loss". Express Co UK. Retrieved 16 May 2025.
  14. ^ Fletcher, Richard (2 March 2009). "Michael Spencer forced to inject £70m as City Index clients default". The Telegraph. Retrieved 15 May 2025.
  15. ^ Haslett, Emma (31 October 2014). "Former Tory treasurer Michael Spencer sells City Index to Gain Capital for £74m". City AM. Retrieved 15 May 2025.
  16. ^ Armstrong, Ashley (31 October 2014). "Michael Spencer sells City Index to US rival for $118m". The Telegraph. Retrieved 19 May 2025.
  17. ^ Golovtchenko, Victor (16 July 2019). "Breaking: GAIN Capital Up 23% on Unconfirmed Acquisition Rumor". Finance Magnates. Retrieved 15 May 2025.
  18. ^ Skinner, Celeste (12 June 2020). "INTL FCStone Closes $350 Million Private Notes Offering". Finance Magnates. Retrieved 14 May 2025.
  19. ^ Shome, Arnab (31 July 2020). "StoneX Completes $236 Million GAIN Capital Acquisition Deal". Finance Magnates. Retrieved 15 May 2025.
  20. ^ Skinner, Celeste (15 May 2020). "More GAIN Capital Directors Vote Against INTL FCStone Acquisition". Finance Magnates. Retrieved 14 May 2025.
  21. ^ Segal, Gerald (1 June 2020). "Another Gain Capital shareholder backs JB proposal, opposes FCStone deal". FX News Group. Retrieved 14 May 2025.
  22. ^ Shome, Arnab (31 July 2020). "StoneX Completes $236 Million GAIN Capital Acquisition Deal". Finance Magnates. Retrieved 15 May 2025.
  23. ^ Skinner, Celeste (27 February 2020). "INTL FCStone to Acquire GAIN Capital in All-Cash Deal". Finance Magnates. Retrieved 15 May 2025.
  24. ^ Chmiel, Damian (31 October 2023). "Gain Capital's $236 Million Deal That Led to an Insider Trading Scandal". Finance Magnates. Retrieved 15 May 2025.
  25. ^ Segal, Gerald (28 March 2022). "Exclusive: City Index Australia rebrands with new logo/look ahead of global rollout". FX News Group. Retrieved 19 May 2025.
  26. ^ "8 Best Forex Brokers in the UK". Finance Magnates. 6 September 2022. Retrieved 14 May 2025.
  27. ^ "City Index is becoming FOREX.com". Forex.com. 13 April 2025. Retrieved 14 May 2025.
  28. ^ "FOREX.com is now City Index". Forex.com. Retrieved 19 May 2025.
  29. ^ "Content marketing case study: City Index and The Trading Academy". UK. 12 August 2011. Retrieved 3 September 2013.
  30. ^ "Trainee cabbie scoops £100,000 in 'X-Factor for traders'". Financial News. UK. 5 December 2012. Retrieved 3 September 2013.
  31. ^ "Black Cabbie trainee wins City Index Trading Academy and £100,000". 12 December 2012.
  32. ^ Segal, Gerald (7 December 2021). "City Index signs as Platinum Partner for Sydney Roosters rugby". FX News Group. Retrieved 14 May 2025.
  33. ^ Hughes, Chris (22 March 2002). "City Index admits spread bet with Plumber 'smelt bad'". The Independent. Retrieved 14 May 2025.
  34. ^ Delgado, Martin (12 April 2012). "£6m flutter pays off for The Plumber". The Standard. Retrieved 14 May 2025.
  35. ^ "Paul Davidson, Ashley Tatham and the Financial Services Authority" (PDF). London Tribunal. 7 March 2006. Retrieved 14 May 2025.
  36. ^ "Spread betting in the dock". The Guardian. 24 March 2002. Retrieved 14 May 2025.
  37. ^ Feddy, Kevin (12 January 2013). "'Plumber' attacks FSA over bet probe". Manchester Evening News. Retrieved 14 May 2025.
  38. ^ Foley, Stephen (13 August 2003). "'Plumber' dumps his stake in Cyprotex". The Independent. Retrieved 14 May 2025.
  39. ^ "'Plumber' cleared after £750,000 FSA fine". The Guardian. 17 May 2006. Retrieved 14 May 2025.
  40. ^ "FSA fines City Index £490,000 for reporting failures". Money Marketing. 20 January 2011. Retrieved 14 May 2025.
  41. ^ Russell, Jonathan (15 June 2011). "Day trader who exploited City Index spread betting 'loophole' fined £700,000". The Telegraph. Retrieved 15 May 2025.
  42. ^ "Fine for false City Index claims". The Australian. Retrieved 14 May 2025.
  43. ^ Millan, Laura (10 April 2013). "ASIC accepts enforceable undertaking from City Index". Financial Standard. Retrieved 14 May 2025.
  44. ^ "ASIC accepts EU from City Index Australia". Money Management AU. 10 April 2013. Retrieved 14 May 2025.
  45. ^ "REPORT 360: ASIC enforcement outcomes: January to June 2013" (PDF). ASIC. Retrieved 14 May 2025.
  46. ^ "ASIC oversees more than $17.4 million in compensation to retail investors by OTC derivative issuers". ASIC. 9 November 2023. Retrieved 14 May 2025.
  47. ^ Nikolova, Maria (9 November 2023). "ASIC oversees more than $17.4M in compensation to retail investors by CFD brokers, crypto firm". FX News Group. Retrieved 14 May 2025.
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