Qualifications required to trade CFD's

[benjjj6]

Hi

When applying for an account with a CFD provider such as IGMarkets they are required by law to check that you have relevant experience or qualifications in trading derivatives and leveraged products and you can see this on their application form. Many companies also mention that you may need to have a certain amount of money in the bank or a regular income in order for them to feel comfortable offering you an account.

My question is has anyone ever been asked to prove these factors when withdrawing their profits? I don't want to get to a situation where my account is profitable but I can not withdraw because I don't have a CFA qualification or I have never worked in the City etc.

Am I paranoid to think that if my account is profitable and I am leveraging £10k that they will be suspicious, investigative or require me to prove my experience to them?

Does anyone have experience with this?

Many thanks

 

[instant]

benjj

I would not worry.. these are requirements from the FSA as to questions that must be asked by IG. They are virtually impossible to check as experience can be gained virtually anywhere. Normally by trading with another company. Or having used their demo account.

The company is entitled to believe what you put down in your application form (under Mifid rules) but this is more to protect the company from a client complaining that they were permitted to trade in something they did not understand. Mifid put this as a catchall to stop people complaining to the Ombudsman as the company (in your case IG) can legally claim that you stated of your own free will, in the application process, that you understood what you were doing.

Instant

 

[benjjj6]

Thanks for your help, that is useful to know.

Maybe I should be asking you the more general question: what hurdles have people faced when they first start to withdraw money from IG or any broker?

 

[Pferd]

Thanks for your help, that is useful to know.

Maybe I should be asking you the more general question: what hurdles have people faced when they first start to withdraw money from IG or any broker?

I have never had any problems withdrawing money from IG, in fact they are extremely quick to send you money. Even allowing for sending it to Germany (where I am) it does not take more than one day. Let's say, if I ask for it today before midday it will be in my account tomorrow morning.

The only thing you need to have ready is a copy of the credit card statement where you show that the credit card you are using to pay money into IG belongs to you and it is somehow related to the account you are asking the money to be transfered to. They don't ask for this every time but most of the times. You will get an e-mail after you make the transfer request and is just enough to send back a scan of the statement.

I have never tried to have money sent back to my credit card, don't know whether this is possible. I always ask for transfers to my normal account.

In any case, their service desk is very cooperative. Just give them a call and ask them these same questions. They are normally very friendly and helpful.

Hope this helps.

 

[timsk]

Maybe I should be asking you the more general question: what hurdles have people faced when they first start to withdraw money from IG or any broker?

Hi benjjj6,
If a CFD provider allows you to open an account and deposit money into it - then there's nothing they can do (legally) to prevent you from withdrawing it. The experience and qualifications requirement is just them covering the rear ends in case you blow up spectacularly and run amuck with a Glock Mark Barton style. When that happens, the authorities ask questions. Top of the list is to the dead trader's broker: "what steps did you [broker] take to ensure your ex-customer had sufficient knowledge and experience to trade derivatives?"

I would be extremely surprised if anyone has trouble withdrawing funds from the likes of IG Index. Basically, if there's a problem with a broker like them - then there's likely to be a problem with all of them. Sure, there will be one-off instances where someone has an issue - but that applies to every business one deals with. Barclays ripped me off in my youf and I've never used them since. My wife's had an account with them for decades and never had a problem. Horses for courses etc.
Tim.

 

[BeginnerJoe]

Thanks for your help, that is useful to know.

Maybe I should be asking you the more general question: what hurdles have people faced when they first start to withdraw money from IG or any broker?

Well, the first hurdle is that you are not going to withdraw anything because you will be busy putting more money in. The hurdle is over once you realise you need a job or a second job.

 

[instant]

I have never heard of IG refusing to pay money out and they have had hundreds of thousands of clients over the years. They have been in existence since the 1970's

Mind you I have never heard of Capital Spreads or City Index refusing either.

I do know that sometimes there are money laundering /fraud /insider trading considerations that might prevent a company from paying out. If they suspect any of the above they have to call SOCA (i think) and then wait for approval from them. I remember once working for a broker where SOCA (who are/were allowed to take ten days before responding) literally asked us to 'stall' the client while they checked. So we had to lie to the client about problems sending his money back etc . ... So .. if there is a delay in getting your funds back then it is probably not your broker's fault... but you might want to start worrying!

 

[strokey tone]

Hi

When applying for an account with a CFD provider such as IGMarkets they are required by law to check that you have relevant experience or qualifications in trading derivatives and leveraged products and you can see this on their application form. Many companies also mention that you may need to have a certain amount of money in the bank or a regular income in order for them to feel comfortable offering you an account.

My question is has anyone ever been asked to prove these factors when withdrawing their profits? I don't want to get to a situation where my account is profitable but I can not withdraw because I don't have a CFA qualification or I have never worked in the City etc.

Am I paranoid to think that if my account is profitable and I am leveraging £10k that they will be suspicious, investigative or require me to prove my experience to them?

Does anyone have experience with this?

Many thanks

Good CFD broker, now that is a difficult one, I don't think they exist as they will all want to put you into volatile stocks that earn them lots of trading fee's and in many cases lose you lots of money and also bear in mind that when you go short you are also responsible for PAYING the dividend rather than receiving it! If you want to get into CFD trading which the brokers make sound so easy you should ask yourself why don't these brokers do it themselves it is because they would rather take risks with your money rather than theirs because win or lose they get their fee's whilst you take all the risk! I used Logic Investments of London for advisory CFD trading and in twelve months I racked up huge trading fee's, on one month alone they charged me £3500 plus in Cfd trading fees alone on top of that I was paying CFD interest and in a year Logic managed to nearly ruin a portfolio that had taken 15 years to build up! In short Logic Investments of London were easily the rudest, most arrogant and incompetent brokers I have ever had the misfortune to come across and they appear to be the norm! If you still want to trade CFD's then do it yourself through somebody like Saxo Bank London and also have a look at the T2W forum and have a read up but PLEASE think and think again!

 

[BobbyBB]

As others have said they only want that info to cover their backside.

Assume a client with no experience and no money (apart from his £10k stake) opens an account and signs saying 'yes' he does have good experience of trading leveraged products, 'yes' he does understand the risks, and 'yes' he does earn £50k+ a year etc.

Now, assume the client drops the £10k in the first week, he can't then complain to anyone, especially the FSA, that it was all so unfair and the broker should never allowed him to train these nasty products because he never knew the real damage they can do.

If he were to try it on to get compensated (who isn't trying that on these days), all IG would say is 'but you signed the form, you told us you DID have experience and you DID realise the risks and you HAD a fair amount of money etc, ie you WERE what's known as a 'sophisticated investor' so hard luck. FSA would say the same.

Overall, don't worry one bit. Keep trading and good luck.

 

[Pi3141]

Does anybody know roughly how much money you have to have in the bank to open an account with IG index if you dont have a regular income?

 

[timsk]

Does anybody know roughly how much money you have to have in the bank to open an account with IG index if you dont have a regular income?

Hi Pi3141,
Unless brokers are routinely asking prospective new clients to provide proof of income and/or savings (which I very much doubt) - then the answer to your question is £0.00. Of course, if you tell them that in answer to any questions about income and savings, their compliance dept' will probably throw your account application in the reject bin!
Tim.

 

[Pi3141]

thanks for the info Timsk

 

[BobbyBB]

Does anybody know roughly how much money you have to have in the bank to open an account with IG index if you dont have a regular income?

It's simple, if you earn nothing or have little or no savings and add that to your appication you will be rejected.

If you lie, say you earn £50k and have £100k in cash then they'll open the account no problem at all.

If I was me and I wanted to trade then I would have only one option, and I'd take it.

 

[neil324]

What's the issue with earnings and savings. Is it to risk profile or just in case they need to chase you for money.

 

[kalott]

What's the issue with earnings and savings. Is it to risk profile or just in case they need to chase you for money.

i think its the old

"You can lose more than your initial deposit."

thing

 

[instant]

Actually the earnings and savings bit is where the risk comes in for the broker.

All FSA regulated companies are the first line of defense against money laundering , proceeds of crime/tax evasion etc. Nearly all criminal prosecutions in these area start with a notification from an FSA regulated company.

If, for instance, you say " I earn 40k" and have 20k in savings and then you proceed to fund the account with £200k it is the responsibility of the broker to ask where you got the money from.

If the broker does not ask these questions they run the risk of getting into trouble with the regulators (who inspect this type of information at regular intervals). So actually brokers would rather not ask this question as its answer puts an obligation onto them. In reality the regulator could kill off retail broking/cfd/futures etc in one fell swoop by insisting that the regulated company actually got proof of the financial situation of their clients BEFORE opening an account. This would make opening an account very slow and not many people like their personal financial details known to others.

Just the kind of thing that Mifid might try to bring in (of course under the guise of 'protecting the client' and 'fighting crime')

 

[yellowfloyd]

Hi

When applying for an account with a CFD provider such as IGMarkets they are required by law to check that you have relevant experience or qualifications in trading derivatives and leveraged products and you can see this on their application form. Many companies also mention that you may need to have a certain amount of money in the bank or a regular income in order for them to feel comfortable offering you an account.

My question is has anyone ever been asked to prove these factors when withdrawing their profits? I don't want to get to a situation where my account is profitable but I can not withdraw because I don't have a CFA qualification or I have never worked in the City etc.

Am I paranoid to think that if my account is profitable and I am leveraging £10k that they will be suspicious, investigative or require me to prove my experience to them?

Does anyone have experience with this?

Many thanks

There is no requirement for a client to provide evidence of income or experience when withdrawing funds from an account. I never face such a thing. If you have any confusion, why don't just give them a call.