Client money safety!

[moka2]

You are a a trader happy to take market risk but have you though that there is another huge risk called "Broker fraud risk"

Have a look at this article http://www.indextrader.com.au/SIPC_Protection_For_IB_Clients.pdf

The least risk you have ( of loosing money to a broker fraud)
- SIPC covered shares broker who also only offers shares and Options
- SIPC covered shares broker who also only offers shares and Options + Futures

- UK FSA regulated broker with FSIC cover ( but check with FSA fist .. a representative office in UK may not mean 100 % protection

- CFTC regulated futures broker
- Large FSA regulated or CFTC regulated FX ECN broker

Binary Options...! less said the better

 

[NVP]

I surely cant believe it .............brokers not paying us our hard won money back ?

whatever next ?.........

teehee
N

 

[tar]

You are a a trader happy to take market risk but have you though that there is another huge risk called "Broker fraud risk"

Have a look at this article http://www.indextrader.com.au/SIPC_Protection_For_IB_Clients.pdf

The least risk you have ( of loosing money to a broker fraud)
- SIPC covered shares broker who also only offers shares and Options
- SIPC covered shares broker who also only offers shares and Options + Futures

- UK FSA regulated broker with FSIC cover ( but check with FSA fist .. a representative office in UK may not mean 100 % protection

- CFTC regulated futures broker
- Large FSA regulated or CFTC regulated FX ECN broker

Binary Options...! less said the better

Bear in mind that there's no compensation for US FX brokers - ECN or not- and CFTC futures brokers clients .

 

[moka2]

Bear in mind that there's no compensation for US FX brokers - ECN or not- and CFTC futures brokers clients .

Yes that is 100% Correct

 

[TimWarren12]

Thats hard to believe man I dunno who to trust and who not to

 

[jkane]

every place is risky period

Trade what you can afford to lose

 

[moka2]

Client fund safety

every place is risky period

Trade what you can afford to lose

That is relevant to trading risk .. we are talking about broker risk
As I said before trader know they are taking market risk and JKane you are correct they should only risk what they can afford to loose

But as a consumer trader you want mechanisms to protect you
Just saying every place has risk does not resolve the issue.

So in that regard in US only SIPC ohly for shares ( CFTC futures/ FX = no client money insurance)
UK = FSIC ( but be carful whta it covers)
In Australia =http://www.segc.com.au/ ONLY for ASX shares trading NOT FOR cfd/ fx etc
In Canada = http://www.cipf.ca/public/MemberDirectory/CurrentMembers.aspx

Brokers obeviously don;t like regulations but as consumers you want to have regulations which takes away this stupid risk of broker default...
Brokers and others will use any excuse to avoid regulations .. you got to ask point blank questions..question the legal documents etc

 

[jkane]

I wonder if Australian regulation the best??

 

[moka2]

I wonder if Australian regulation the best??

Certainly not ( except in general terms Australia respect rule of law and there is a high chance of people getting caught and punished if they do dirty tricks but that is all)
may be they are better than some small country but when it comes to Client money safety with OTC products the answer is NO nobody is
search for collapse of Sonray capital markets ( white label of Saxo)
Clients who had CHESS sponsored direct share holding were Ok but because all the money was in a single seg account it took more than 2 years for those clients to get the shares back
Rest got 60c/1.0 but after putting lot of pressure on the Banks involved and the auditor of Saxo etc
In AUSTRALIA for one last time if your OTC broker ( CFD/ FX etc) goes belly up you become unsecured creditor.. end of story.
With OTC client seg account does not mean individual seg account!

Only possibility is FSA/ FSIC insurance in UK which may cover not just stock brokers but other providers...
With other OECD countries.. don;t have enough info

For Binary the best choice is construct your own using exchange traded options SIPC covered US brokers
For Futures use a SIPC broker who keeps the extra money back in to SIPC covered operations, so if you have 20 K for futures whatever is not used for a futures position goes back in to the main share trading account giving SIPC coverage
For FX... the less said the better