Segregated Client Accounts - Enough for client funds to be safe?

Is it normal practice for dealing firms that are authorised to "hold and control client money" and have "segregated client accounts" to have its customers sign away all rights to any sort of government regulatory compensation scheme, or should I be worried?

No this is not normal (in fact, I've never heard of it).
I would be worried, very worried.
Simple question : what does the client benefit by agreeing to that clause?

A Dashing Blade said:

No this is not normal (in fact, I've never heard of it).
I would be worried, very worried.
Simple question : what does the client benefit by agreeing to that clause?

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It didn't sound right to me either. Thank you very much!

This comes down to your client status. As a private customer you will always bank in a "Segregated Account" but if you are deemed as an intermediate customer you must waive your right to the Financial Ombudsman and Compensation scheme. As an intermediate customer you will have certain advantages over private customers but the above is the trade off.

Regards

Adrian

fxfollower said:

Is it normal practice for dealing firms that are authorised to "hold and control client money" and have "segregated client accounts" to have its customers sign away all rights to any sort of government regulatory compensation scheme, or should I be worried?

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It’s called an “Intermediate Agreement”. In such cases if the firm becomes insolvent you just become a creditor of the company. However, the company can not just make you sign the agreement in the normal way that they make you sign their T&C. They must ensure that you fully understand the implications and that you have relevant knowledge of what you are trading.

Steve.

PS Whose asking you to sign it and how experienced are you?

stevespray said:

It’s called an “Intermediate Agreement”. In such cases if the firm becomes insolvent you just become a creditor of the company. However, the company can not just make you sign the agreement in the normal way that they make you sign their T&C. They must ensure that you fully understand the implications and that you have relevant knowledge of what you are trading.

Steve.

PS Whose asking you to sign it and how experienced are you?

Click to expand...

i had the same. just ignored it. i think most direct access accounts ask for this, maybe to do with trading out of own country. the usa insists on you having knowledge of the markets before trading futures.

It's to do with the products your looking to trade. A private client has certain rights and protectionsas he's deemed to be insufficaintly experienced to understand the risks in trading more sophisticated products. All private client funds have to be held in segregated accounts. By siging the intermediate customer agreement, you're vouching that you have sufficient trading knowledge to understand the risks involved in trading riskier products. Presumably this is to open a CFD trading account. Because intermediate clients understand the risks, the FSA doesn't insist that all their funds are kept segregated - the can be held in a non-segregated account. You do lose some protection, but you can't open a CFD account without opting up. Oddly, you can still spread bet. The ombudsman service is only designed to protect private clients, not expert investors.