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How Safe is Your Money? 6 replies

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Is your money safe with your broker?

I'm wondering how many people have larger accounts w/fx brokers and
feel comfortable with that. 10k, 50k, 100k?
are these accounts safe or insured against fraudulent withdrawals or the broker just taking it?

Thanks.
small account, large account... it doesnt matter if the broker is fraudulent.
that's why we have to research on brokers.
some offer segregated accounts &/or insurance

if u have such concerns, then why not try putting in only a small amount ($1 up for some brokers)... until u feel comfortable adding some more.
no one is obligating u to put all your money in one/several of them.

u really have to be self-reliant.
but asking around helps too. (not the basic questions which u can read up on your own)
If you plan to deposit these amounts with a broker, then choose a futures broker , then your funds will be insured and you will not have to worry.
PFGbest is one
If you happen to be a Canadian citizen, then some Canadian brokers are covered by CIPF protection.

Oanda Canada is one example.

CIPF covers up to $1 million per person in investments against the broker going under and your deposit is lost in the process.
can i hold govenment bonds instead of cash and trade against the margin. would this prent the broker from using up my funds.
Quoting CHFJunkie
If you plan to deposit these amounts with a broker, then choose a futures broker , then your funds will be insured and you will not have to worry.
PFGbest is one
Tell that to MF Global clients... No one is safe
Brokers are angels
my money is safe as it gonna be, i trade with citifx pro part of citigroup and also have an account with pfgbest, this is as safe as it comes, you can also trade with admd, fcstone or set up a bank gan where your money stays in your own bank, start at 250k+
yeah,make sure to check is a reliable broker firm..
Quoting forexpoor
yeah,make sure to check is a reliable broker firm..
But how do you know?
Quoting PoundTrader
my money is safe as it gonna be, i trade with citifx pro part of citigroup and also have an account with pfgbest, this is as safe as it comes, you can also trade with admd, fcstone or set up a bank gan where your money stays in your own bank, start at 250k+
Not everyone has 250K to start with.
I have a shotgun, plenty ammo and patience to find them. Be sure my money is safe.
Quoting neesh24
I'm wondering how many people have larger accounts w/fx brokers and
feel comfortable with that. 10k, 50k, 100k?
are these accounts safe or insured against fraudulent withdrawals or the broker just taking it?

Thanks.
For more serious deposits pick a bigger and a reputable broker. Choose some jurisdiction you trust. Swiss one would totally do - so look for a Swiss Bank that provides people with such service. They are under the regulation of FINMA. I won't mention any names here but you can google them.

If you can afford to deposit some 50k there is plenty of firms to choose for you.
I had an account with Avafx, opening was so easy, but the withdraw has a terrible delay, seven to 10 days, i started with $650 and end of year i had $2000 so i decided close it, but they only give me back $1000, someone has had bad experience with Avafx? i will call after the holidays...
After two weeks of delay and Avafx, give me my withdraw back... all Ok.
I only have accounts with FSA regulated companies. At least I am good up to £50,000 that I know I will get back if a company goes under. Its worth checking the T&Cs. Client funds should be segregated. I have accounts with IG, ETX, Smartlive and Hirose Financial in the UK which are all regulated and I am confident I will get my money.

As to withdrawal procedures it generally takes up from 2 to 5 days to get funds back. However there is a quick pay process (same day) that is being implemented but not sure how many companies will adopt in the near future.
How is your trading account deposits safer with UK brokers who are regulated by the Financial Services Authority (FSA)?

Even though in the UK depositors' funds are segregated and through the FSA's Financial Services Compensation Scheme (FSCS) they state:

Quote
If a UK financial services firm is unable, or likely to be unable to pay money owed to its customers – such as when it goes bust – the Financial Services Compensation Scheme (FSCS) may be able to help.
And compensation limits are only £85,000 for Deposits and £50,000 for Investments.

http://www.fsa.gov.uk/consumerinform...nsation/limits

But all of that still means nothing because according to the following information I read from an article that appeared in the Market Oracle entitled, "How MF Global Collapsed by over Hypothecat​ing and Who is Next," the UK firms are free to use depositors' funds as collateral for their own trades and investments-- that's called Re-hypothecation. And up to Feb 2012 US firms like MF Global did the same in the US to a certain extent as allowed by law and unlimitedly through their UK offices as allowed by UK law.

Here is the link:
http://www.marketoracle.co.uk/Article32087.html

And here is the relevant section:

Quote
Re-hypothecation is a practice that occurs principally in the financial markets, where a bank or other broker-dealer reuses the collateral pledged by its clients as collateral for its own borrowing or in a process call Churning.

In the US, re-hypothecation is capped at 140% but in Europe it is unlimited or up to the imagination of the borrower. What does it mean when it is capped at 140%?


Under the U.S. Federal Reserve Board's Regulation T and SEC Rule 15c3-3, a prime broker may re-hypothecate assets to the value of 140% of the...
Also, according to another article on Reuters blog, there are now new rules in place to reduce this sort of exploitation of customer deposits.

http://blogs.reuters.com/financial-r...ng-collateral/

Quote
The fervor over the missing MF Global money has forced the U.S. Commodities Futures Trading Commission to approve a rule that would impose tighter limits on how brokerage firms can invest customer funds.

The rule, which takes effect in February 2012, prevents Futures Commission Merchants like MF Global from engaging in “in-house” repo transactions. It also bans firms from investing customer funds in foreign sovereign debt. The firms often use repurchase transactions to bolster returns from money sitting in customer accounts.
My question now is, how much protection does this new rule/law really give forex traders who have deposits in US firms? Even though some brokers segregate depositors' funds from their own funds, does that now mean that they can't use some or maybe still even all of those funds as collateral for their own trades as MF Global did? What is now the extent of protection after the new rule and where can we read about the new rule in detail. Once depositors' funds are segregated, brokers should not be allowed to re-hypothecate those funds at all, only then would our deposits be safer if the broker goes bankrupt, but how safe? Can anyone answer this?
Nice pick up. Here is another article that refers to the (lack of) regulations in the UK regarding safety of funds deposited with brokers due to "Re-hypothecation".

http://blog.rogermontgomery.com/hyper-what/
AUD, thanks for sharing that very informative article. Seems like nothing has changed to protect depositors. Now the question is this, is there any way for a trader to ensure the safety of his/her funds deposited with a broker? If there is a way, then please describe it and give us examples of brokers and countries where this can be achieved. Can anyone answer this? Many thousands of people worldwide have already lost many many thousands of dollars of their hard earned money with brokers and investment firms so I'm sure any advice on this would be appreciated by everyone in this forum.
fact is after mfglobal customers lost 30% of their funds I don't think your money is safe with any broker whatsoever especially a forex broker unless you can privately insure your funds from the broker going under. Best thing is to approach an insurance company request them for a quote and pay the premium in your own capacity.
Quoting fugly
fact is after mfglobal customers lost 30% of their funds I don't think your money is safe with any broker whatsoever especially a forex broker unless you can privately insure your funds from the broker going under. Best thing is to approach an insurance company request them for a quote and pay the premium in your own capacity.
Thank you for your response fugly, now suppose you are trading for example through a US or UK broker but you are not a US or UK citizen nor living in the US or UK, I suppose that you would you need to insure your deposit with that broker through a US or UK insurance company respectively and if so, what insurance companies in the US or UK would be best for that purpose and can such an insurance be take out online?

The so-called protection offered by the Securities Investor Protection Corporation (SIPC) in the US is practically useless since it is very difficult, if not impossible to recover deposited funds as explained here:

Inserted Code
http://www.bankrate.com/brm/news/investing/20020605a.asp
Plus the protection does not cover Foreign-exchange contracts, commodities and futures contracts, as well as options on these as explained here:

Inserted Code
http://www.investopedia.com/articles/stocks/08/sipc-fdic-bank-failure.asp
And as I already explained in a previous post, the Securities Investor Protection Corporation (SIPC) of the FSA in the UK is also practically useless because UK law allows unlimited re-hypothecation. So the only real option must be personally insuring one's deposits with some reputable insurance company as fugly explained--but which companies would be the best for this and can this be done online?
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