Safe Broker...

I am looking for a SAFE forex broker that will actually give me some type of security on my funds. From what I have read a NDD broker would be the best as far as spreads of course, but which one of those is the safest? I have looked at companies like oanda and interbankfx, and even DBFX and can not tell which one is the safest bet. I mean when you are dealing with large sums and have no desire for them to go out of business. I figure the safest place may be DBFX even though their spreads kind of suck. I have developed a great strategy for trading and just want to put it into motion... Thanks guys.

I believe FXCM offers bonded accounts.

One possibility is to divide your funds into several different brokers that you find the safest if you have a large amount to deposit.



Frank

You may want to look at future brokers rather than strictly forex. Brokers like Interactive Brokers and MBTrading are a tad more regulated than forex brokers, thus I can only assume your funds would be a bit safer. However, this could be a dangerous assumption on my part.

You may want to look at future brokers rather than strictly forex. Brokers like Interactive Brokers and MBTrading are a tad more regulated than forex brokers, thus I can only assume your funds would be a bit safer. However, this could be a dangerous assumption on my part.

Actually you're right on.
Reference REFCO debacle.
Futures accounts received all their money back , almost immediatly.
FX, still waiting and for what percentage, who knows.

My priorities would be :

1) an insurance scheme (FSA gives you 50K GBP per account === it's not huge, but it's something)

2) a client fund account at a good bank *segregated* from broker operating funds.

#1 is best. #2 is pretty good.

Unfortunately, there is no forex broker in the US that gives you any sort of protection on your funds like this. So you're left with trading offshore.

Hope that helps.

http://masnet.mas.gov.sg/fin/findir/...?OpenView#top1
Institution Name:
CITIGROUP GLOBAL MARKETS SINGAPORE PTE. LTD.
CITY INDEX ASIA PTE. LTD.
CMC MARKETS SINGAPORE PTE LTD
CUSTOM HOUSE CURRENCY EXCHANGE (SINGAPORE) PTE. LIMITED
DBS VICKERS SECURITIES (SINGAPORE) PTE LTD
GFT GLOBAL MARKETS ASIA PTE LTD
GOLDMAN SACHS (SINGAPORE) PTE.
G.K. GOH FINANCIAL SERVICES (S) PTE. LTD.
IG ASIA PTE LTD
KIM ENG SECURITIES PTE. LTD.
MF GLOBAL SINGAPORE PTE. LIMITED
MORGAN STANLEY ASIA (SINGAPORE) PTE.
OANDA Asia Pacific Pte. Ltd.
OCBC SECURITIES PRIVATE LIMITED
ONG FIRST TRADITION PTE LTD
PHILLIP FUTURES PTE LTD
SAXO CAPITAL MARKETS PTE. LTD.
TRAVELEX GLOBAL FINANCIAL SERVICES (SINGAPORE) PTE. LTD.
UOB BULLION AND FUTURES LIMITED

For those in Singapore, these are the forex firms regulated by MAS and holding a Capital Markets Services License. As required by Securities and Futures Act(SFA) they must set up trust account and keep client deposits segregated from operating expenses or obligations.

[quote=tx_sandman;4153040]My priorities would be :

1) an insurance scheme (FSA gives you 50K GBP per account === it's not huge, but it's something)


That is what I thought but when I checked with the FSCS

The response I got meant ( to me) at least "Although a UK firm might be covered under FSA insurance... BUT is the PRODUCT covered?

Her is an email from Mr. Gary.Robinson of FSCS uk

...."

Thank you for your E mail of 16 August 2010 about protection for investments involving FOREX companies under the Financial Services Compensation Scheme (FSCS).

You should seek clarification from the relevant provider, whose responsibility it is to determine and clarify what type of product it is that your are purchasing and how it would be protected by the FSCS as a result.

I hope this is helpful. However, if you have any further questions please contact us again or telephone our helpline on 020 7892 7300 or freephone 0800 6781100.

Yours sincerely



Gary Robinson
Senior Claims Officer


[email protected]

Overall I would say Client money safety with FX brokers is a big issue ( the brokers will say it is not but it is.. search REFCO in US, Sonray in Australia )
FSA:

CitiFX ( Citi bank) claims that they swipe the clients funds in to Citbank thus protected by FDIC...

Singapore might be a good place because MAS of Singapore and Sing Govt in very strict...

Client Seg accounts does not really protect client money..

What is critical is " How secure is the client money in case of broker going out of business... for whatever reason.

Perhaps another way to trade some FX pairs with some sort of protection of client moeny is
to trade Currency ETF like FXA etc with a regular US registered and insured broker...
http://www.currencyshares.com/
There are even ETOs on these shares

Obviously trading ETF means leverage of only 1:1:slightly_frowning_face:

I would worry first about NOT losing the money (over time) through ones own bad/poor trading skills. Once your account size got to certain amounts that you really need protection, there are other firms providing such services that are different category from the popular retail forex brokers.

http://www.cfhmarkets.com/About_Us/
Protection of Client Funds
Segregated clients trust accounts with top tier banks ensuring full client money protection.
CFH Markets was founded in April of 2008 and authorized under the FSA on 8th September 2008 with UK Financial Services Authority number: 481853.

Accounts with CFH Markets are kept fully segregated with either HSBC or Barclays Bank Plc in client trust accounts in accordance with the UK Financial Services Authority client money rules. The UK Financial Services Authority, one of the world's most respected financial regulatory bodies, regulates CFH Markets. Accordingly, in the unlikely event of default, client funds held in segregated accounts are protected, and cannot be used to benefit other creditors.

All eligible retail clients on-boarded via partners of CFH Markets are offered a full guarantee on the safety of their funds by up to £50,000 by Financial Services Compensation Scheme. CFH Markets does not target retail clients directly.

bstay2
Member

Would you know what kind of accounts they have, in terms of Min trade size or Min funds required to be deposited?

Thanks,
mmont

Bestya2
The issue is no matter how big or small the client account size is it should be protected.. just becasue somebody has 1-2K only does not mean no protection is necessary
Any way with FSA ... if you read the correspondence that I had with FSCS they could not categorically say that FX is covered!

So it is still confusing..

It's not confusing. You did not ask the FSCS person specifically if your "trading account deposits" with a forex broker is covered under FSA's £50K insurance. Instead they wanted you to clarify which "investment products involving forex companies" such as a chatroom subscription, or signals subscription, or automated trading robot, etc. Check the FSA site for policy details, it is very clear as CFH Markets explained too at their site.

Similarly, Singapore's MAS is very clear on their site and that's where I found the list of 19 forex broker/dealers with Capital Markets Services License. I saw Oanda, GFT, Saxo, CMC, MF Global, IG Markets, on that list.

I did ask them specifically about FX
Here is what Mr. Robinson said
By the way you are correct about MAS in Singapore... the only reason I would trust Singapore is "Changi prison is a horrible place " and would deter people from committing fraud...

"Thank you for your E mail of 29 July 2010 about protection for investments involving FOREX companies under the Financial Services Compensation Scheme (FSCS).
I have been liaising with our legal department.

The important question is whether the contract here is a regulated “future” (and so falls within the definition of a “designated investment”, and in turn, is in principle covered by FSCS if the claim made is “in connection with protected investment business” or whether the contract is an unregulated forward FX contract (which falls outside the definition of a “designated investment”) and therefore would not be covered.

As stated previously, unfortunately, until a claim is presented we would be unable to provide a more definitive response as only then would we be able to carry out a full assessment of the eligibility of any claim.

I hope this is helpful. However, if you have any further questions please contact us again or telephone our helpline on 020 7892 7300 or freephone 0800 6781100.

Yours sincerely

I am pretty sure Dukascopy has fund protection up to about 100k give or take being they are a Swiss Regulated Bank.

You put "Safe" and "Broker" in the same sentence.
Your grammar teacher would have you expelled for that.

I asked the question to LCG

Here is the response
ONCE again this does not give 100% guarantee that FX is covered by FSA insurance.

So no matter what they say afterward they admit that FX is not covered!

[email protected]

Hi Sir,

As Spot Forex is not a regulated investment instrument, the FSA’s client money rules (including those of trust status through segregation) cannot apply to this business. However, to put your mind at rest I can confirm that LCG is deemed a “full scope” firm by the FSA (which will not be the case for many of our competitors) and as such, meets stringent capitalisation requirements at all times. In addition, we carry out full capital based stress testing as part of our internal capital adequacy assessment process.

1) The minimum account size for Currenex is US$20,000 or equivalent in any currency.
2) LCG does not run a dealing desk all trades for 50k or 50m are all matched with other clients or liquidity providing banks.
3) Not on Currenex but we have an institutional Metatrader solution running 0.6 pip EURUSD spreads that you could use this on. Again we are not a market maker.
4) Only on Metatrader
5) No. We will be launching a FX Options platform in the first half of next year.

Regards


Graeme


Graeme Watkins

FX Operations Manager

Direct: +44 (0)20 7456 7032 Mobile: +44 (0)7894 614 350 24 Hour: +44 (0)20 7456 7030

i think he explained clearly that LCG met FSA's "stringent capitalization requirements". other USA brokers registered with CFTC and member of NFA had to meet the $20million capital requirement.

quoted from another site:
"In 2007, NFA President Dan Roth testified at a hearing before the Subcommittee on General Farm Commodities and Risk Management Committee on Agriculture regarding the need for a higher minimum capital requirement for forex dealers. He stated, “The second trait that marks the problem firms in retail forex is that most, though not all, have been thinly capitalized. Congress long ago recognized that acting as a dealer involves greater risk than acting as an agent in futures trading, the way a traditional FCM does. That is why Congress in 1978 imposed a $5 million net worth requirement for firms granting dealer options and why the CFTC created a $2.5 million capital requirement for leverage transaction merchants in 1984. Congress should amend Section 2(c) of the Act to require FCMs acting as counterparties to retail forex transactions to maintain minimum capital of at least $20 million. NFA has raised the capital requirements for forex dealers several times but this congressional action could ensure that firms can meet their obligations to their customers and have a significant financial stake in their business.” Subsequently, the CFTC Reauthorization Act of 2008 imposed a $20 million capital requirement on retail forex counterparties that are Retail Foreign Exchange Dealers or that are FCM-only firms primarily or substantially engaged in on-exchange futures activities. Following the requirements outlined in the legislation, NFA amended its Financial Requirements to increase Forex Dealer Member capital requirements to $20 million, on a gradual basis, by May 16, 2009."

if you think these are still insufficient early warning auditing to a broker's insolvency, then forget about spot forex and trade a regulated investment instrument instead.

Does this not mean anything to you?

As Spot Forex is not a regulated investment instrument, the FSA’s client money rules (including those of trust status through segregation) cannot apply to this business.

Why are you so keen to show that there is little risk!

When 4000 accounts loose 47 MIllion as a consumer we are bound to ask the fine print.

With Refco don;t know what teh damage was

Even on this forum why are so many people ask about Is XYZ brokr is safe or not?

How come we don;t see people asking the same question about Exchange traded product brokers?

Becasue with OTC brokers there are lot more scrupulous people than those involved with Exchange Traded product market

just make sure you read the Risk Disclosure Statement when you sign up with any forex broker. understand the risks involved if you still want to trade spot forex.