IC Markets and ECN brokers

[moyes]

I am looking at using IC Markets in Australia as my preferred broker(as I have heard good things about them even though they have been known to post fake replies and reviews on forums), BUT like most brokers, it is not easy to find a reputable and transparent broker. I was doing some research on them and this is what I came up with...

According to the company policy; Clients' money is pooled together within a trust account and so an individual client's balance may not be protected if there is a default by another client which causes a loss to the overall trust account. Under the Corporations Act and the Corporations Regulations, we may pay money out of a trust account in the following circumstances:

Could someone break this down to me layman terms? My main concern is losing all my funds due to a broker going bankrupt for some reason and then not being able see my money. I have read to many horror stories online with other brokers going broke and then the traders are forced to take action and go to court to try and get some of their money back.

I always thought that any company that offers smaller lot sizes such as Micro would most likely be a market maker or a dealing desk and then for most companies offering ECN (Electronic Communications Networks) environments, the minimum margin for interbanking dealing is 100:1. Wouldn't a company offering higher leverage be, most likely, a market maker or a dealing desk broker? Would it be fair to label IC Markets or most so called brokers market makers even though they claim otherwise because there is no proper regulation in place like the futures market or stock market?

I guess the reason why i do contemplate trading the futures market is because it is a very well regulated and transparent compared to the murky world of forex trading.

Any opinions or advice would be much appreciated. Thank you

 

[fredfound]

They are one of the better Aussie brokers that is for sure.

 

[DT]

basically what it means is if something like this happens:

http://www.nytimes.com/1999/01/01/business/futures-trading-firm-files-for-bankruptcy.html

you won't necessarily get your money back... while the client money might be segregated from the firm you're not necessarily segregated from other clients... probably unlikely that an individual would be able to do that in this instance assuming they're mostly serving lots of small retail accounts

 

[fredfound]

To be fair this is a futures company not a forex broker. In forex there is real time margin management and stop-outs. This does not really existing in futures, everything is manual. Also futures are not very liquid compared to forex. This is like comparing a banana to an orange and telling people they are the same piece of fruit.

 

[DT]

There is likely more liquidity in bund futures than these smaller FX ECNs...

Regardless its an example of funds being segregated from the brokerage but not from other clients... I said its unlikely to occur with a firm targeting lots of small retail accounts

 

[fredfound]

I certainly do disagree that unregulated brokers are better than regulated ones. I will however say that brokers should be able to ascertain their clients exposure to determine the likelihood of a default in the event of a large market move or excessive exposure in an illiquid currency pair.

Unregulated brokers that don't do any scenario and stress testing are more likely to collapse as they are not required to have any form of risk management in place.

I would go with and ASIC or FSA regulated broker any day of one based in Malta, Estonia or the Seychelles.

 

[yellowfloyd]

I am looking at using IC Markets in Australia as my preferred broker(as I have heard good things about them even though they have been known to post fake replies and reviews on forums), BUT like most brokers, it is not easy to find a reputable and transparent broker. I was doing some research on them and this is what I came up with...

According to the company policy; Clients' money is pooled together within a trust account and so an individual client's balance may not be protected if there is a default by another client which causes a loss to the overall trust account. Under the Corporations Act and the Corporations Regulations, we may pay money out of a trust account in the following circumstances:

Could someone break this down to me layman terms? My main concern is losing all my funds due to a broker going bankrupt for some reason and then not being able see my money. I have read to many horror stories online with other brokers going broke and then the traders are forced to take action and go to court to try and get some of their money back.

I always thought that any company that offers smaller lot sizes such as Micro would most likely be a market maker or a dealing desk and then for most companies offering ECN (Electronic Communications Networks) environments, the minimum margin for interbanking dealing is 100:1. Wouldn't a company offering higher leverage be, most likely, a market maker or a dealing desk broker? Would it be fair to label IC Markets or most so called brokers market makers even though they claim otherwise because there is no proper regulation in place like the futures market or stock market?

I guess the reason why i do contemplate trading the futures market is because it is a very well regulated and transparent compared to the murky world of forex trading.

Any opinions or advice would be much appreciated. Thank you

I think it's better to choose UK FCA regulated brokers rather than Australian.

 

[lucas_king]

This is just a story fabricated by the regulatory bodies claiming that these brokers do segregate clients money. If a broker knows that it is going to go bankrupt, what can stop the broker from thrusting their hands into the clients fund to stabilize things? How would brokers even know that their account is segregated? Please, let us stop believing in these lies. There is no difference between a regulated broker and an unregulated broker in terms of fund security. However, in terms of better services and trading condition, the brokers that have been tagged as unregulated are by far better than the regulated ones. Open your eyes.

Well, contrary to what you say, the FCA are particularly strict on segregated funds and client money. Funds received from clients “Client Money” must be transferred to a segregated fund on the same day it is received and in a separate bank account.

A “Client Money” audit must be completed every 25 days and any shortfall must be made up on the same day as the audit. Reports must be submitted to the FCA and any discrepancies in “Client money” issues will be picked up by them. So, there is a significant difference between using a regulated and a non-regulated broker. If a regulated broker breaks the rules he loses his license to operate and therefore becomes an illegal institution.

 

[fredfound]

Client money is also pooled by FCA (UK) brokers. The most important thing here is that client money is separated from the company money and held in segregated accounts, this is a requirement of both ASIC and FCA regulated brokers. Both regulators seem to have similar strict requirements regarding client money.

Having said this ASIC and FCA brokers have still collapsed, however in all of these situations it has been fraud, just take a look at MF Global or World Spreads. Just take a look at the article below.

http://www.telegraph.co.uk/finance/...Spreads-directors-accused-of-bet-scandal.html

The only thing we can really do as retail client is not keep all our savings in our broker accounts. The reality there will always be some kind of counterpart y risk no matter how big or small the broker is.

 

[RobCripfx]

basically what it means is if something like this happens:

http://www.nytimes.com/1999/01/01/business/futures-trading-firm-files-for-bankruptcy.html

you won't necessarily get your money back... while the client money might be segregated from the firm you're not necessarily segregated from other clients... probably unlikely that an individual would be able to do that in this instance assuming they're mostly serving lots of small retail accounts

There is little chance of a stp/ecn broker going bankrupt, true stp is a real broker (doesnt trade against client) and profits and loss is paid by liquidity provider that should be forex banks. no issue in going bankrupt

 

[Fxtekkie]

I am looking at using IC Markets in Australia as my preferred broker(as I have heard good things about them even though they have been known to post fake replies and reviews on forums), BUT like most brokers, it is not easy to find a reputable and transparent broker. I was doing some research on them and this is what I came up with...

According to the company policy; Clients' money is pooled together within a trust account and so an individual client's balance may not be protected if there is a default by another client which causes a loss to the overall trust account. Under the Corporations Act and the Corporations Regulations, we may pay money out of a trust account in the following circumstances:

Could someone break this down to me layman terms? My main concern is losing all my funds due to a broker going bankrupt for some reason and then not being able see my money. I have read to many horror stories online with other brokers going broke and then the traders are forced to take action and go to court to try and get some of their money back.

I always thought that any company that offers smaller lot sizes such as Micro would most likely be a market maker or a dealing desk and then for most companies offering ECN (Electronic Communications Networks) environments, the minimum margin for interbanking dealing is 100:1. Wouldn't a company offering higher leverage be, most likely, a market maker or a dealing desk broker? Would it be fair to label IC Markets or most so called brokers market makers even though they claim otherwise because there is no proper regulation in place like the futures market or stock market?

I guess the reason why i do contemplate trading the futures market is because it is a very well regulated and transparent compared to the murky world of forex trading.

Any opinions or advice would be much appreciated. Thank you

Brokers like IC, Yadix, IB (real STP) are the most trust worthy brokers because they dont take risks on clients trades. It means for the client that liquidity provider is the responsible party for paying winnings or benefiting from your loss.

Don't be under any illusion, whenever you trade forex, a market maker is involved, BUT, I prefer that the market maker is the fx banks (the real market) rather than some bucket shop dealing desk that manipulates feeds, charts or whatever to make money on your losses.

These brokers act as the middle man and make money from spread or ecn commission, they are running a no risk model, they cannot win or lose on your trades.

 

[emoun]

I am trading with IC Markets since last 6 months, spreads are extremely tight and execution is good.
I also got a fee discount from ic markets fx ib

 

[danpadcas]

Does anybody know what is the maximum of capital you are able to fund to your account and its guaranteed by ICMarkets?