Unfortunately you will need to read the terms and conditions of each firm VERY carefully. I recently received a change of the ts and cs from Finspreads last week. I don't use them anymore, but it was interesting reading.
To summarise, they reserve the right to hold your deposit/funds in a bank account which could be out of the EU, and thus exempt from any deposit insurance that we have here. So if the bank where the money is being held goes bust, it doesn't matter if it's "in a separate ring fenced account blah blah"-you're screwed (all a bit too familiar isn't it).
In other words, your money is NOT safe with them, and if I remember rightly (please correct me on this anyone?), they were also not obliged to tell you who they place the money with.
I'm sure each company will be different, but as I said, you'll really need to read the contracts to work out where your money is being kept - the devil really is in the detail.
To summarise, they reserve the right to hold your deposit/funds in a bank account which could be out of the EU, and thus exempt from any deposit insurance that we have here. So if the bank where the money is being held goes bust, it doesn't matter if it's "in a separate ring fenced account blah blah"-you're screwed (all a bit too familiar isn't it).
In other words, your money is NOT safe with them, and if I remember rightly (please correct me on this anyone?), they were also not obliged to tell you who they place the money with.
I'm sure each company will be different, but as I said, you'll really need to read the contracts to work out where your money is being kept - the devil really is in the detail.
In the present conditions v imp to check i) Are all your funds segregated - especially those funds which are being used for deposit ii) Which bank in which country are they kept with?
These questions should be easily answered by customer services, or their websites. If they're not, it's probably because they're hiding something.
These questions should be easily answered by customer services, or their websites. If they're not, it's probably because they're hiding something.
£10kLoser
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Your money is as safe with a SB co as it is in a British bank. The funds are 100% guaranteed by the FSA up to £30,000 and then I think it's something like 90% of the the £20,000?
Makes no difference what their terms are or where the money is kept.
Makes no difference what their terms are or where the money is kept.
But the accounts must be segregated, right?
If not segregated, I guess the money can be used by the company covering all kinds of losses in their running operation.
shadowninja
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Perhaps we can have someone reply who knows the fact? Like an IG Index employee?
Would be nice to get a definitive list of which spreadbetting companies are safe...
Would be nice to get a definitive list of which spreadbetting companies are safe...
mechtraderpro
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As far as i'm concearned FINSPREADS are telling us ( I have not got an account with them now) that your money may be at more risk than you think, Nice of them to tell us though !!..they hold there segregation with barclays at the moment.. but if they decide to send it to anyone, at anybank, in anycountry then they are saying its NOT safe.
QUOTE –
CLIENT MONEY AND ASSETS
22,1 Any money you transfer to us, or which is transferred to us on your behalf, which is client money within the meaning of the Client money rules will usually be held with a bank in the United Kingdom. Your money will be segregated from our own money in accordance with the requirements of the client money rules and in the event of our insolvency; it will be excluded from our assets.
22,2 We may hold client money on your behalf in an account with a bank or third party located outside the European Economic Area (“EEA”). This account will be segregated from our money or assets which may be held with the bank or third party, The legal and regulatory regime applying to any bank or third party will be different from that of the United Kingdom and in the event of the insolvency or equivalent failure of that bank or third party, your money may not be as effectively protected as if your money is held with an equivalent bank or third party in the United Kingdom.
22,3 We will not be liable for the failure or insolvency of any bank or third party holding money under clauses 22.1 or 22.2 . However, if your money is held within an EEA country. A proportion of your cash balance may qualify for compensation arrangements in that jurisdiction
Jaydee
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You are protected by the FSCS - Financial Services Compensation Scheme - up to the full £50K. Anything above that in a single spreadbetting account will be risky.
Investments are protected 100% up to £30K and 90% of the next £20K.
FSCS - Consumer home page - Consumer Key Facts - Limitations of the scheme - Compensation Limits
i had money with Global when they went down and made me sweat for a while.
I also had funds with Futuresbetting.com when they stopped trading for a few months dew to Global, but they returned every penny i had with them within 3 days and at no charge to me, they kept the promise that they preach client funds are segregated.
thx for the replies...as usuall the answer seems to be yes and no..lol. However i wasnt worried so much about the bank where your funds are held going bust( although it should be a concern the way thing are at the moment) i was more asking if an sb firm could make your funds dissapear simply because they didnt want give you the money?
thx again
thx again
Lee Shepherd
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Amphiprion
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I too have received notification from Finspreads/ City Index regarding client funds. However, I notice that you did not continue past point 22.3 from their letter. My notification continues as follows & I would be interested to know whether these terms were also in your notification?
22.4 We do not pay interest on Client Money unless we have expressly agreed to do so in writing.
22.5 Where you open & maintain a position with us, we will be entitled to require you to pay to us money as consideration for opening & maintaining an Open Position and such money will be due and payable to us for our own account. Accordingly, where you pay such money to us, we will thereby acquire full ownership of it and we will not hold such money in accordance with the Client Money Rules. You will not have any interest in or proprietary claim over money transferred to us pursuant to this clause and we can deal with it as our own. In the event of our insolvency you will have no rights or claim in relation to this money. We will transfer an equivalent amount of money back to you where, in our discretion, we consider that the amount of money that you have transferred to us is more than is necessary to cover your obligations to us. In determining the amount of money you will be required to pay to us pursuant to this clause and the amount of our obligations to you, we may apply such methodology (including judgements as to the future movement of markets and value) as we consider appropriate, consistent with the Regulatory Syatem and applicable law.
montmorencyt2w
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So is that saying that money that is not actively tied up in a trade is ok, but any money that is tied up in a trade is theirs, until they decide otherwise?
Amphiprion
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Yes, that's the gist of it. The additional concerning factor is that their margin rates have been getting higher & higher, so for some smaller cap companies the rates can be as high as 50% which means that even though you have put up half the value of the holding you have absolutely no protection if City/ Finspreads go down the pan!
Although for sure they will have consulted their legal advisors in depth before implementing this change, it hardly appears ethical to me & skews the risk heavily in the direction of the client.
Although for sure they will have consulted their legal advisors in depth before implementing this change, it hardly appears ethical to me & skews the risk heavily in the direction of the client.
