CFD trading with CMC

cecja

Member
97 0
Hi,

i have asked the FSA if i trade CFD's with CMC will my funds be secure, and i got this reply from the FSA.

Thank you for your enquiry about the Financial Services Compensation Scheme
(FSCS).

The Financial Services Authority (FSA) Register shows that CMC Plc are
authorised to conduct Contracts for Difference (CFD) business. If a firm is
authorised to conduct investment business by the FSA they will automatically be
covered by the FSCS. The limit for investment business is £48,000 (100% of
£30,000 and 90% of the next £20,000).

However, you should be aware that the FSA authorisation for CMC Plc specifically
excludes spread betting or rolling spot forex contracts. If the business you
plan to undertake with CMC Plc falls into either of those activities it would
not be covered by the FSCS as it is not authorised by the FSA.

But to be honest one think i dont understand, CMC allows you to trade FX & CFD's in one platform so how can my funds be sesure, i'm not able to figure out the answer?

Please any ideas?

Cheers
 

spunkyblonde

Member
84 0
cecja said:
Hi,

i have asked the FSA if i trade CFD's with CMC will my funds be secure, and i got this reply from the FSA.

Thank you for your enquiry about the Financial Services Compensation Scheme
(FSCS).

The Financial Services Authority (FSA) Register shows that CMC Plc are
authorised to conduct Contracts for Difference (CFD) business. If a firm is
authorised to conduct investment business by the FSA they will automatically be
covered by the FSCS. The limit for investment business is £48,000 (100% of
£30,000 and 90% of the next £20,000).

However, you should be aware that the FSA authorisation for CMC Plc specifically
excludes spread betting or rolling spot forex contracts. If the business you
plan to undertake with CMC Plc falls into either of those activities it would
not be covered by the FSCS as it is not authorised by the FSA.

But to be honest one think i dont understand, CMC allows you to trade FX & CFD's in one platform so how can my funds be sesure, i'm not able to figure out the answer?

Please any ideas?

Cheers
hi cecja. i would be worried too much about they security of my funds if i didsnt get a garantee .. from the tradeing house that my funds were secure .. if i traded well and gained money .. may seem a waste of time if my tradeing capital isnt secure in the 1dst place without tradeing rthe market .. cheers :)sally:)
 

cecja

Member
97 0
Sally , cheers for your reply,

I'm not sure why FSA allowes CMC to acept only Intermediate Customer and not private clients,

This is what CMC says:

What is an Intermediate Customer?
An Intermediate Customer has a depth of trading experience and a good understanding of the product he trades. Intermediate Customers have less protection than a Private Customer under FSA (Financial Services Authority) regulations.
 

breadman

Established member
526 25
spunkyblonde said:
hi cecja. i would be worried too much about they security of my funds if i didsnt get a garantee .. from the tradeing house that my funds were secure .. if i traded well and gained money .. may seem a waste of time if my tradeing capital isnt secure in the 1dst place without tradeing rthe market .. cheers :)sally:)
Could it be that the FSA will not cover spread betting of rolling cash forex positions as the government will never get any tax from you if you make money trading with these products,so why bother protecting customer money.

Breadman
 

cecja

Member
97 0
breadman said:
Could it be that the FSA will not cover spread betting of rolling cash forex positions as the government will never get any tax from you if you make money trading with these products,so why bother protecting customer money.

Breadman
Breadman you are right but we are talking about CFD's and CMC can easly seperate the platform (so in other words they can ofer the FX rolling cash seperatly from the CFD.s)(but this is the sekret of the game that CMC plays)

Anyway i'll be happy to hear what the people who have 20-50k acounts with CMC, to see what they beleive about the safety of they funds.

I myself know two thee people who have over 30k account with CMC and they trade CFD's but when i told them about this they had no clue what i mean.
 

breadman

Established member
526 25
cecja said:
Breadman you are right but we are talking about CFD's and CMC can easly seperate the platform (so in other words they can ofer the FX rolling cash seperatly from the CFD.s)(but this is the sekret of the game that CMC plays)

Anyway i'll be happy to hear what the people who have 20-50k acounts with CMC, to see what they beleive about the safety of they funds.

I myself know two thee people who have over 30k account with CMC and they trade CFD's but when i told them about this they had no clue what i mean.
Cecja

It's not the platform that is safe or not safe its the type of account you hold with cmc ie standard customer account is safe, intermediate account more risk if company goes bust or looses money.

Breadman
 

spunkyblonde

Member
84 0
your welcome cecja .. i want to thank you 4 raiseing the subject of the security of tradeing capital ..as to what is the real security of funds kept with them ... :) ..sally ..:)
 

cecja

Member
97 0
breadman said:
Cecja

It's not the platform that is safe or not safe its the type of account you hold with cmc ie standard customer account is safe, intermediate account more risk if company goes bust or looses money.

Breadman
Breadman, i agre with you that the standard customer account is safe but as far as i'm aware CMC ofers only intermediate account? (wish i'm rwong but this is what they told me the other day)

Cheers
Cecja
 

cecja

Member
97 0
breadman said:
Cecja

It's not the platform that is safe or not safe its the type of account you hold with cmc ie standard customer account is safe, intermediate account more risk if company goes bust or looses money.

Breadman
Breadman, please how do you know that we can open standard customer account with CMC , in they website what i can see is only intermediate account forms?

https://www.deal4free.com/cfd/openacc_intro.jsp


Cheers
Cecja
 

breadman

Established member
526 25
cecja said:
Breadman, please how do you know that we can open standard customer account with CMC , in they website what i can see is only intermediate account forms?

https://www.deal4free.com/cfd/openacc_intro.jsp


Cheers
Cecja
Cecja,

I don't know the details of the accounts you can open with CMC but with IG Markets / IG Index they had two classes of account when I opened my account with them. Have you asked CMC what would have to happen for your money to be at risk. At a guess they would have to lose millions & millions of pounds over a very short period of time.

Breadman
 

breadman

Established member
526 25
cecja said:
Breadman, please how do you know that we can open standard customer account with CMC , in they website what i can see is only intermediate account forms?

https://www.deal4free.com/cfd/openacc_intro.jsp


Cheers
Cecja


This notice is provided to you in compliance with requirements laid down by the Financial Services Authority ("FSA") because you are proposing to undertake dealings in contracts for differences in the form of bets with a firm which is carrying on investment business as a financial bookmaker.

Engaging in this type of transaction can carry a high risk. As these transactions differ markedly from normal bets you should not engage in this form of betting unless you understand the nature of the transaction you are entering into and the true extent of your exposure to the risk of loss. The amount that you may win or lose will vary according to the extent of the fluctuations in the price of the index ("the underlying markets") on which the bet is based instead of a sum predeterminable when a normal bet is placed. For many members of the public these transactions are not suitable; you should, therefore, consider carefully whether they are suitable for you in the light of your circumstances and financial recources. In considering whether to engage in this form of betting, you should be aware of the following:

1. The high degree of "gearing" or "leverage" is a particular feature of this type of transaction. This stems from the margining system applicable to such bets which generally involves a comparatively modest deposit or margin in terms of the overall contract value, so that a relatively small movement in the underlying market can have a disproportionately dramatic effect on your bet. If the underlying market movement is in your favour, you may achieve a good profit, but an equally small adverse market movement can not only quickly result in the loss of your entire deposit, but may also expose you to a large additional loss unless you enter into a limited liability contract with the firm.

If you deal on a credit basis, which may amongst other payments cover the initial margin requirements, the extent of your agreed credit facility does not limit your loss or financial liability and you can be subject to margin calls for an amount in excess of your facility. As a consequence, the amount of capital which you are prepared to place at risk should be sufficient to cover your credit limit and the possibility of subsequent margin calls which will only be made once your credit limit has been exceeded.

2. You may be called upon to deposit substantial additional margin, at short notice, to maintain your bet. If you do not provide such additional funds within the time required, your bet may be closed at a loss and you will be liable for any resulting deficit.

3. Such transactions will not be undertaken on a recognised or designated investment exchange and, accordingly, they may expose you to greater risks than exchange transactions. The betting structure and betting rules will be established solely by the bookmaker. For example, if you wish to close the bet earlier than at the time at which it would automatically expire, you will have to close it at your bookmakers quotation which may reflect the premium or discount of the "underlying market". When the market is closed, your bookmaker's quotation can be influenced by the weight of other clients buying or selling with your bookmaker. You will have to close any bet with the same bookmaker with whom it was originally entered into.

4. When entering into such transactions, your bookmaker must do so under a two-way customer agreement pursuant to the FSA rules unless exempted from doing so. You should satisfy yourself that dealing is conducted throughout in strict conformity with that customer agreement and report to the FSA if you have reason to believe it is not.

5. Prior to placing any bets, you should receive from your bookmaker written confirmation of all transactions or other charges for which you will be liable.

6. As a result of section 63 of the Financial Services Act 1986, the bets in this case are enforcable and the bookmaking firm may be sued by you (if you win) and may sue you (if you lose).

7. A limited liability transaction limits the extent of your liability for loss in a transaction to an amount agreed by you prior to entering into such a transaction, but you may sustain such loss in a relatively short time. You should take particular note of this aspect as specified in the terms and conditions of your bookmaker. In particular, you should check whether the limited liability is only guaranteed during normal business hours. You are likely to incur additional costs in this type of transaction and you should obtain from your bookmaker an explanation of these, if they are applicable. Such additional costs may take to form of a specific addition charge, or could be a "hidden cost" because the prices or spread on which these bets are based differ from those applicable to other bets which do not have limited liability.

8. Your bookmaker is prohibited under FSA requirements from providing you with investment advice relating to investments or possible transactions or possible transactions in investments or making investment recommendations of any kind. This prohibition is subject to an exception where advice given amounts to the giving of factual market information or information, in relation to a transaction about which you have enquired, as to transaction procedures, potential risks involved and how those risks may be minimised.

9. Your bookmaker is required to hold your money in segregated trust accounts in accordance with the regulations of the Financial Services Authority, but this may not afford complete protection.

10.If you deposit collateral as security with your bookmaker, you should ascertain from your firm how your collateral will be dealt with.

11. If you have reason to believe that the bookmaker with which you deal is not acting in accordance with representations it has made to you, the terms of your customer agreement or the rules of the FSA, you should report it to the FSA, 25 The North Colonnade, Canary Wharf, London, E14 5HS
Tel: +44 202 7676 1000.

Cecja,

Sections 9, 10 & 11

Breadman