How safe is your Spread bet account ?

Pat494

Legendary member
13,490 1,331
Just a thought but just how safe are our spread bet accounts ?
With mighty banks reeling from knockout blows from the market should one lower ones account to minimum size just in case ?
 
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Directional

Experienced member
1,992 251
with most forex firms, and ALL spreadbet firms - if the firm goes bust, your money will be treated as company asset, and your account will be a liability. You'd receive x in the pound after month or years of bankruptcy procedure.

Trading with a firm that gives segregated account protection is the safest way to trade, even though not 100% protection.
 

anley

Senior member
2,730 229
Who knows, but they allow Switch payments which are almost instantaneous so only keep the bare minimum there and get ready to switch money to fund positions as the need arises.

Basically these days don't trust any financial company with large amounts of your money and if you do and they go broke then sorry but you only had your apathy to blame so GET PROACTIVE NOW.

PS. And anyway, say you cash is guaranteed by SBs up to £48k or £35k whatever it is. If they go broke on say Monday, expect to be paid out by Friday about 6-12 months in the future......
 

LION63

Established member
746 33
Just a thought but just how safe are our spread bet accounts ?
With mighty banks reeling from knockout blows from the market should one lower ones account to minimum size just in case ?
We have already seen the failure of one of the new kids on the block (Futuresbetting.com) and others are likely to fail as well if the carnage continues. The higher the level of risk the firm takes on its own books, the higher the likelihood of it failing. Deep pockets alone are not enough to stay afloat especially as most of them are not as smart as they think they are. The most important factor that will determine survival is in house risk management.

For those with moderate size accounts there is an advangtage in withdrawing funds and leaving just enough in the trading account for daily transactions. It is very easy to transfer funds back in with the use of a debit card.
 

Pat494

Legendary member
13,490 1,331
Thx for the above interesting replies.
Are they limited liability companies with shareholders ? or a group of people who have borrowed from a bank or something else ?
I seem to remember reading IG Index was started by 1 man but I expect others bought in or something ?
Could one BIG bad bet end it for them ?
Finspreads who I deal with I note freezes all bets if the market really starts to motor. Really annoying if one is trying to get out quick and haven't got a stop.
 

Lee Shepherd

Senior member
2,164 570
As far as I'm aware theres not a broker on the market place that pays interest on money on account so as always the rule, have enough money only to cover positions and keep the rest in a high interest account ready to transfer within minutes of when needed.

This not only gives you added protection but insures your money is working for you when you are not working with it.
 

Directional

Experienced member
1,992 251
As far as I'm aware theres not a broker on the market place that pays interest on money on account so as always the rule.
Interactive Brokers do in fact pay a pretty good rate of interest on unused Margin money over a certain balance. But you're right, most dont.
 

ns1000

Established member
524 38
One suggestion is to stick with the larger players. Biggest threat to brokers is concentration risk, where a large proportion of a company's exposure is in one or two stocks. This is what b^ggered Global Trader. A reasonable assumption is that the larger the number of clients, the more diverse the stock portfolio should be.
 

Lee Shepherd

Senior member
2,164 570
Thank you Arbitrageur,

I was unaware and stand corrected.
 

foredog

Experienced member
1,879 313
With a lot of brokers, possibly not SB though, you can ask to be treated as a retail investor then you get the FSA protection for £35k
 
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anley

Senior member
2,730 229
With a lot of brokers, possibly not SB though, you can ask to be treated as a retail investor then you get the FSA protection for £35k
I think the protection is also for SB firms as well but as I said earlier the problem is not whether you cash is guaranteed or not, rather how long it takes to pay out. I would assume a minimum of 6 months.
 

the blades

Experienced member
1,336 275
I think the protection is also for SB firms as well but as I said earlier the problem is not whether you cash is guaranteed or not, rather how long it takes to pay out. I would assume a minimum of 6 months.
any idea how safe your money is with interactive brokers?

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