Trading without the middle man?

i can see that High Frequency Traders would probably not use a MM platform but aside from them i really struggle to see a genuine advantage in 'not knowing' who your counterparty is.

Trying to understand teh above
SO am I correct in assuming that what you mena is in True exchanges you don;t know who teh counterparty is?
My main concern with OTC is
- Counterparty risk.. no matter what they say
- Tranparancy in Depth of markets prices
read my other posts
Non seen INSTO OTC might be big but we are talking about normal Retail punters who need clarity and protection
OTC MM does not have to be bad if they genuinly act as a true exchange agree.. but then again you are dealing with somebody who is judge and jury sam etime
 
As for protection , this has nothing to do with the debate here , ie : futures accounts in the US are not really protected , accounts with UK fsa regulated marketmakers are protected by the fscs up to 80K quids i think ...
 
moka2 said:
i can see that High Frequency Traders would probably not use a MM platform but aside from them i really struggle to see a genuine advantage in 'not knowing' who your counterparty is.

Trying to understand teh above
SO am I correct in assuming that what you mena is in True exchanges you don;t know who teh counterparty is?
My main concern with OTC is
- Counterparty risk.. no matter what they say
- Tranparancy in Depth of markets prices
read my other posts
Non seen INSTO OTC might be big but we are talking about normal Retail punters who need clarity and protection
OTC MM does not have to be bad if they genuinly act as a true exchange agree.. but then again you are dealing with somebody who is judge and jury sam etime
Click to expand...
You can talk youself blue in the face promoting the DMA model. Still there are those with many years of experience like me that for some instruments prefer to trade the MM model. Both are good in their repective areas and should be adopted where they do most good. I don't see why their have to be a conflict between the two, as they both give an advantage in having many options to trade.
 
"some instruments prefer to trade the MM model" yes I myself experienced that with FX Options with Saxo becasue there were no other Exchange Traded Option on SPOT FX
But when I saw a white label of Saxo go down with 47 million of Client money that too ina bigger jursdiction like Australia I started worrying about MM mode ( By the way Saxo settled with the creditors )
as long as you are aware of the risks that is fine .. you can trade witha bookmaker from Timbktu it is your money
many small investors are not aware of these risk and MM promotoers sometimes do not make it very visible... and worst brush away the risk
People attracted by Leverage and simpler platform and overlook at inherent risk
The worst of the kind are the Binary Options and FX coming out of small jursdictions
 
moka2 said:
"some instruments prefer to trade the MM model" yes I myself experienced that with FX Options with Saxo becasue there were no other Exchange Traded Option on SPOT FX
But when I saw a white label of Saxo go down with 47 million of Client money that too ina bigger jursdiction like Australia I started worrying about MM mode ( By the way Saxo settled with the creditors )
as long as you are aware of the risks that is fine .. you can trade witha bookmaker from Timbktu it is your money
many small investors are not aware of these risk and MM promotoers sometimes do not make it very visible... and worst brush away the risk
People attracted by Leverage and simpler platform and overlook at inherent risk
The worst of the kind are the Binary Options and FX coming out of small jursdictions
Click to expand...
Yes there is always a small risk of bunkruptcy with any broker. If you are trading with a white label you are for the most part safe if you chose the right one. I know Saxo uses London Capital Group Ltd. (Capitalspreads) for their spread betting operation, at least they use to. So the money is segregated and secured up to £50.000 under UK juristiction.
 
gle101 said:
Yes there is always a small risk of bunkruptcy with any broker. If you are trading with a white label you are for the most part safe if you chose the right one. I know Saxo uses London Capital Group Ltd. (Capitalspreads) for their spread betting operation, at least they use to. So the money is segregated and secured up to £50.000 under UK juristiction.
Click to expand...

85K pounds

FSCS > Compensation Limits
 
hacks said:
gle is right - it is 50,000 for investments including cash held at investment firms and £85,000 for bank deposits etc. KPMG (re MF Global) say £50,000 as well.
Click to expand...

It didn't say bank deposit , all deposits at FSA regulated firms , your deposit at a spread betting account is not an investment IMHO , this needs a further check ...
 
tar said:
It didn't say bank deposit , all deposits at FSA regulated firms , your deposit at a spread betting account is not an investment IMHO , this needs a further check ...
Click to expand...

You're quite right, it is confusing. Don't know why KPMG said £50,000 maximum.
 
hacks said:
I found this (see question 8):

FSCS > Q&As about MF Global

Does that mean they are not following their own rules?

Not trying to argue, just trying to understand the rules.
Click to expand...

hmmm , Jargon Buster :

Deposits
money placed in a bank or similar institution to earn interest or for safe-keeping.

Investment
a financial product in which money can be invested to earn interest or profit (although the value of investments can go down as well as up).

so it is only 50K :mad:
 
Gle WHy one is safe if trading with white label...? ( within UK situation)
Saxo White label was in Australia.. so no FSA
To make matters worst and complicated Sonray had some money with Saxo as cash and OTC and some actual shares...( Shares are identified by HIN ( HOlder Identification no)

and in Australia only Equity is proteced under Investment Gurantee fund
BUT ther is more ...the word "Client Seg funds" is sligthly misleading...Why becasue at least in AUS that mean ALL clients fund are in 1 pool.. NOT Individual Seg account.. meaning when Sonray goes bust everybody shares the losses... and now becasue soem of the investment ( in form of HIN identified shares) is visible those who had it are claiming that they should not be part of the POOL!
Messy


By the wya with FSCS . is it clear that they protecte OTC FX, CFD FUTRES broker client also or only Share Broker clents
What if broker has all 3 mixed up!
 
moka2 said:
Gle WHy one is safe if trading with white label...? ( within UK situation)
Saxo White label was in Australia.. so no FSA
To make matters worst and complicated Sonray had some money with Saxo as cash and OTC and some actual shares...( Shares are identified by HIN ( HOlder Identification no)

and in Australia only Equity is proteced under Investment Gurantee fund
BUT ther is more ...the word "Client Seg funds" is sligthly misleading...Why becasue at least in AUS that mean ALL clients fund are in 1 pool.. NOT Individual Seg account.. meaning when Sonray goes bust everybody shares the losses... and now becasue soem of the investment ( in form of HIN identified shares) is visible those who had it are claiming that they should not be part of the POOL!
Messy


By the wya with FSCS . is it clear that they protecte OTC FX, CFD FUTRES broker client also or only Share Broker clents
What if broker has all 3 mixed up!
Click to expand...
There was a discussion on the Capitalspreads thread about the issue of security for white label operations. According to Simon all white labels were under the umbrella of London Capital Group Ltd., and thus under the protection of FSA, segregated funds and a bank guarantee of £50.000 in case of a white label bankruptcy. This even if the white label operated abroad it is still under UK jurisdiction. Some white label might have some other setup with LCG Ltd. which I do not have any information about if that was the case with Saxo white label operation in Australia.
 
Good for UK customers... I hope both for worldspread and MF gobal FSCS pay out
So then people can see that regulated markets are better than unregulated jurisdictions
 
By the way for Non Exchnage Traded ( FX, CFD, 2 Binary Options) if anybody is thinking of trading with Australian licneced firms PLEASE raed the segment in the PDS about "Client Money "
YOu becoem a normal creditor along with others
AND you money is pooled in to a single seg account
Current ASIC money protection rules sucks...
 
moka2 said:
Good for UK customers... I hope both for worldspread and MF gobal FSCS pay out
So then people can see that regulated markets are better than unregulated jurisdictions
Click to expand...
Yes they will all (UK) eventually get their money up to the bank guarantee of £50.000, it will take some time though.
 
moka2 said:
By the way for Non Exchnage Traded ( FX, CFD, 2 Binary Options) if anybody is thinking of trading with Australian licneced firms PLEASE raed the segment in the PDS about "Client Money "
YOu becoem a normal creditor along with others
AND you money is pooled in to a single seg account
Current ASIC money protection rules sucks...
Click to expand...
Yes, good to know.
 
To add a bit of colour....... at Capital Spreads and all White Labels of LCG (including our Australian and Gibraltan units) ALL client funds are segregated into specified accounts (registered as such with the various banks concerned). These funds are split amongst a wide array of banks to avoid counterparty risk.

Unfortunately Aussi client money is not protested with an FSCS style guarantee but LCG segregates the monies in line with the UK regulations which are far more stringent than those prevailing in Australia.

We cannot touch this money to use as hedging margin when we cover client positions and must use our own funds to do this.

Money held with Capital Spreads is just about as safe a pot as you are going to find anywhere. Particularly in this world where banks themselves are not as safe as you might like. In fact our risk management committee regularly looks at the banks we use and (if we are not happy with the risk) we move the client money (and our own) to another bank.

Over the last four five years we have done this a few times. To be fair our fears have never actually come to pass but LCG would rather be safe than sorry.

Simon
 
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