Hi All,
Apologies for the longish post, this is the first time I’ve reached out to the online fx trading community looking for some serious answers.
I began looking at fx trading just over a year ago as a possible source of second income and potentially a career change in the long term. Since then I have spent time working with demo accounts, failing to make the right decisions many times, but now I am in a position where I am consistently making a profit on a demo platform and plan to open a live account within the coming months - once I have finished writing my business plan, finalised my strategy and achieving my own personal goal of doubling the balance of a £10,000 demo account.
After looking at many brokers as we all do, and trying to weigh up the pros and cons of each, one thing is for certain, and that is that I want to open an account with an STP / ECN broker.
The demo account that I’ve been practising with is from intertrader.com, and have found them to be incredibly helpful, their service and platform reliable, and as far as I can tell, transparent.
When I opened the demo account I hadn’t decided that what I actually needed was an STP/ ECN broker, so I’ve been working with their dealing desk demo account. When I approached them and said I was considering opening a live account but was concerned about the conflicts of interest associated with there dealing desk platform, they immediately directed me from intertrader.com to intertraderdirect.com, which is their STP / ECN equivalent, or at least I thought it was.
At first look it seemed like the perfect platform: STP / ECN, integrated ‘Trade Terminal’ EA that allows SLs and TPs to be placed at the same time as market executions, very low spreads and leverage of up to 1:200 which is fine for me. Then almost by accident I came across the bombshell that while intertrader.com ltd is regulated and authorised by the Financial Services Authority in the UK (I am based in London), intertraderdirect.com is regulated by the Financial Services Commission in Gibraltar! I approached them and asked them why, and this is the reason: intertrader.com is a white label of Lodon Capital Group, but intertraderdirect.com is wholly owned by online gambling giant bwin.party. Lodon Capital Group is regulated by the FSA and bwin.party is regulated by the FSC. It’s confusing because even after using both intertrader.com and intertaderdirect.com’s demo platforms for a while, I thought they were the same company.
Up until this point, FSA regulation was high on the list of priorities for me when choosing a broker - The FSA will protect £50,000 of my money if the company goes under, whilst the FSC will only protect €20,000. That’s a big difference, and spread betting companies do go under.
So, after an email from intertaderdirect.com asking me how I was getting on with their platform I replied and told them that I wouldn’t be opening account because of the FSC discovery. I put my number in the email and 5 minutes later I got a call from them, which I was happy to take. I had this conversation with one of their representatives, and I will say again that the guy I spoke to was very helpful, seemed to be talking very openly and I actually did get the sense that he was trying to be as honest as possible, which I am grateful for. And here’s what he said: FSA regulation is not the big issue. The issue is how segregated client funds are. He said that bwin.party is a company that has a market cap of £1.25 billion, and that intertraderdirect.com has what he called a ‘parental guarantee’ with bwin.party, and in the unlikely event that they go bust, my funds will be safe and segregated, and I won’t even need to make a claim from the FSA - bwin.party will cover it becuase of this guarantee.
Another broker that seems to be very good to me and ticks all my boxes is Vantage FX UK, and they are regulated by the FSA.
So my question is this - In light of searching for the broker that will be the most secure should it go bust, do I go with one that is regulated by the FSC, has a market cap of £1.25 billion (bigger than IG Index, the largest broker on the planet) and seems to put slightly more emphasis on the safety of client funds, or do I go with a broker that is regulated by the FSA in the UK?
Many thanks for any help I get from you guys.
t.