How safe is your Spread bet account ?

[Pat494]

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 ?

 

[Directional]

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]

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]

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]

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.

 

[Phil Mibbutz]

Just a thought but just how safe are our spread bet accounts ?

With the way I trade, mine are in enough trouble already.

 

[Lee Shepherd]

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]

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]

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]

Thank you Arbitrageur,

I was unaware and stand corrected.

 

[foredog]

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

 

[anley]

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.

 

[Phil Mibbutz]

We know FB has folded, but anyone know which other SB co is (according to the CS thread) about to go pop?

 

[ns1000]

We know FB has folded, but anyone know which other SB co is (according to the CS thread) about to go pop?

Global Trader I assume

 

[the blades]

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?

UTB

 

[Pat494]

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.

......

Sounds like good common sense ( rare as hen's teeth these days ) to me. I've got just the minimum plus a bit there now..

 

[happiesmiles007]

Just a quick note here! Would any of you trust global trader with your money?

 

[LION63]

Some of the firms out there are taking steps to minimise the chances of the clients defaulting. Chief among these is City Index that has written to customers to announce a rise in Margn Requirements as of April 3rd.

This will reduce their risk/exposure levels as it gives them a reasonable chance of closing positions before they are owed money. A brutal example of the rises they are to implement is HBOS whose margin rises from 5% to 20%.

 

[0007]

Some of the firms out there are taking steps to minimise the chances of the clients defaulting. Chief among these is City Index that has written to customers to announce a rise in Margn Requirements as of April 3rd.

This will reduce their risk/exposure levels as it gives them a reasonable chance of closing positions before they are owed money. A brutal example of the rises they are to implement is HBOS whose margin rises from 5% to 20%.

Sounds like good sense to me. It's a shame that the bankers (yes, I did say bankers!) also, weren't a bit more responsible in the past.