I’m new to trading and have recently just placed a deposit with Vantage FX an Australian broker with their office registries in Cayman Isles.
On reading their disclosure statement the part about clients funds says that in event of insolvency they can only guarantee you would end up not owing money, i.e you could lose everything you have in account but no more.
It also says your money “co-mingles” in an trust account in Australian bank and not with their business funds but should another client default from that fund it could possibly effect your balance.
Is this the norm, should I be worried?
I’m in U.K. and som brokers offer FSA protection of up to €85k but the leverage is more like than 50:1 as oppose to 500:1 with Vantage and others.
I’m in the UK and use IC Markets and EagleFX. EagleFX are offshore but that is price you pay for the 24/7 crypto trading. IC Markets now offer new accounts in the Seychelles which offer 1:500 leverage and FSA protection. What made you pick Vantage incidentally?
There are two important types of financial protection which an FCA-regulated UK broker offers which differ from off-shore firms -
Financial Services Compensation Scheme - This scheme will reimburse you if your broker goes bust. The maximum is £85k as has been said but the funds reimbursed will only be funds you have deposited, not profits these may have generated. So if you deposit £2k and trade it up to £20k and then the firm goes bust, you will only get £2k back.
Negative Balance Protection - So if you deposit £2k and open a long EUR/USD at 1.1800,but price falls to 0.0001, you will lose your £2k plus any profits in the account but the rest of your finances and assets are safe.
UK firms segregate their clients’ funds from their own capital so that a debtor cannot swipe your funds to cover their outstanding bills. Plus, has to be said, its very very rare for a UK-regulated broker to go broke.
Thanks for the info… I’ll probably end up putting it into a broker that is covered under fcfs, I just can’t imagine feeling ok with have 10’s of thousands with a broker that could essentially go bust and take the lot. Suppose we all have different views on risk.
They look the same as vantage tbh, if they go bust so does your deposit essentially… starting to look like it’s the same for most non U.K. brokers. Suppose it’s a risk you take if you want high leverage.
