The decision by TD Waterhouse to drop City Index as its derivatives provider after eight years was a 'strategic' one, it claimed.

The execution-only broker today announced it would be using Saxo Bank and London Capital Group in new enhanced services for investors.

Darren Hepworth, trading and customer services director at TD Waterhouse, said the decision had followed the acquisition of new UK client books over the past two years from competitors.

He added, 'These included the UK clients of E*TRADE, whose derivatives services were provided by Saxo Bank and London Capital Group and resulted in our derivatives service being managed by multiple providers.

'It therefore made sense to review our offering to an overall service that best reflected our customer needs.'

Hepworth said TD Waterhouse had had a good relationship with City Index and thanked them for their commitment,

In a market statement this morning, London Capital Group revealed it was to provide a white label financial spread trading platform for TD Waterhouse.

Simon Denham, chief executive of London Capital Group, said, 'We already have partnerships with some of the largest gaming and banking entities such as Saxo Bank and PartyGaming, but a major agreement with a leading stock broker is a significant development in LCG's white label business.'

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