Here’s some additional info that applies to brokers in general, and it NOT specific to FXDD but applies to this thread:
How do you know whether your spot broker is one of the reputable ones or one of the sleazy ones? Since retail spot brokers are now regulated by the CFTC, you can check out their capitalization and selected financial information at http://www.cftc.gov/tm/tmfcm.htm.
Of course, high capital is needed only if every trade is not offset immediately. Low capitalization doesn�t tell you anything about the quality of the operation, which depends on management. Some retail brokers have capital of $250,000 (the minimum) whereas others have hundreds of BILLIONs. Are any of us qualified to evaluate capital adequacy? Probably not. But remember that it�s all your capital at risk when it�s entrusted to a retail spot broker. You may want to find out whether your broker is a market maker or offsets every trade with a third party.
In contrast, in futures, a rogue broker which takes a big loss because it was improperly position-taking is drummed out of the Exchange–and the customer is safe, because the Exchange guarantees every trade. The Exchange keeps a contingency fund, made up of assessments from every member, for any such occasion.
From a friend who has been through the crash of a broker:
One other noteworthy item of futures funds vs spot: Be sure you select a broker that is not a fly-by-night–has been in business for over 5 years,member of the exchange, etc. These brokers do go bust, sometimes but a member of the exchange is guaranteed by the exchange, a nice thing to have. I was at Refco trading futures and didn’t lose a penny when it went under while those trading spot at Refco lost everything.
Just some references, and again they apply to ALL spot brokers, not just a select few.
Not trying to start a debate on which is better, futures vs spot, just pointing out when it comes to “insuring” funds, futures appears to have a stronger position, as spot brokers don’t have any requirements nor does the “spot market” have a centralized body that insures the accounts of those involved, so if your broker goes belly up and you’re trading spot, you can lose your whole account.
Just some food for thought and additional info, but please verify everything as I’m far from an authoritative expert on any of these legal matters.