If a broker goes bankrupt what happens to our account balance?
I think its a good time to dream to be able to withdrawn your money
Depends a) on whether customer funds are in segregated accounts, and b) on whether the broker fraudulently moved funds around so they weren’t actually in the segregated accounts.
That is wy i don’t recommend U.S. brokers.
I like GFT, UK based is a great broker. Have there been many US FX brokers go bust?
I have found out off Pepperstone that in Australia the ACIS (the countries securities and investments commission) make sure that segregated funds are delivered back to the rightful owners if the broker goes bust, merges, loses its license etc.
And if the bank that is holding the funds goes bust etc. then this will depend on the countries deposit protection scheme.
ASIC recently released guidelines that deal with how a broker handles client funds. Many brokers including FXOpen were surveyed as to how they used client funds in the past and how they will use them in the future. FXOpen AU uses client funds only to cover margin requirements in your trading, and not for other investments which is how it should be.
Thanks fxfrench for your helpful reply. Can you share website link to know complete ASIC guidelines?
You can have a read of the RG227 guidelines. Benchmark 1 deals with client funds and how they are used.
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/rg227-published-12-August-2011-1.pdf/$file/rg227-published-12-August-2011-1.pdf
You can also read FXOpen AU’s PDS which goes into detail how FXOpen would use your funds and where they are held.
FXOpen | Account Documents
IBFX Australia is registered with ASIC but does not play under ASIC rules, be careful.
In what way? If they are not by the book, they won’t last long in Australia.
In famous Aussie language. “Please Explain”
That is assuming your broker is FSA regulated. If you give your money to a bunch of Russians ‘regulated’ in Cyprus or Mauritius then you can forget about it.
[B]PFG’s Forex Customers Told to Get In Line[/B]
Last week the Trustee of PFG’s estate announced a series of limited distributions to customers of the bankrupt firm. Of interest to retail forex traders is that the estate is not making any current distributions to PFG customers who were trading off-exchange forex:
http://www.omnimgt.com/CMSVol/CMSDoc...333616_147.pdf
Quote:
“The Forex Customers and the Metals Customers, however, do not hold claims against the Debtor on account of “commodity contracts” and therefore, are not “customers” under § 761(9) of the Bankruptcy Code and the Part 190 Rules. Accordingly, in accordance with subchapter IV and the Part 190 Rules, the distributions requested under the Motion, discussed below, will apply solely to the Futures Customers. Forex Customers and Metals Customers will not be included in such distributions and their claims will be addressed separately as part of the case."
The way the law is written the trustee is justified in putting futures customers first. This is why it has become urgent that regulators take additional steps to bring transparecy to the futures/forex industry so that customers can have a look at their broker’s finances in order to weigh the risks invovled before putting funds on deposit with them. Since the law is not designed to currently protect forex investors, then traders need to protect themselves. This starts with granting traders the ability to conduct greater due diligence. If regulators can mandate that brokers disclose profitability ratios surely they can also mandate greater financial disclosure.
CFTC to announce initial recommendations this week. Contact <[email protected]> with your thoughts.
Well, you have to trade with them for a while to know, really hard to acsplain as you say in aussie
Is this a realistic propistion, a broker going bust? They always seem quids in to me :33:
The CFTC has released a transcript from the public roundtable that was held in August.
While retail forex is absent from the discussion the issues pertaining to FCM’s is of importance to retail forex customers since FCM’s like PFG routinely offer retail forex as part of their suite of products.
One of the arguments against additional financial disclosures for FCM’s is that these disclosures may weaken the fragile, financial health of less profitable FCM’s. Warren Davis of Sutherland, Asbill & Brennan made the following point in response:
“In the case of a FCM, the money that the customer gives the FCM is not for the use of the FCM. It’s solely to protect the customer, so it seems to me that the run on the bank analogy is not altogether appropriate here. But what is appropriate is to ensure that customer money is, in fact, used for the only purpose for which it’s given which is to secure the customer’s obligations to the FCM and the clearinghouse. And therefore, if information is released which causes a customer to move its account from one FCM to another, that shouldn’t be viewed as a bad thing. That’s sort of the way the futures world is supposed to work.”
Unfortunately, that is not currently the way the futures world works. Because FCM’s are able to keep their financials hidden from the public there is no way of truly knowing if the firm traders are doing business with is healthy or unhealthy. The net result is that traders are left to play a guessing game about whether their funds are safe or not.
CFTC has yet to announce when they will unveil their reform proposals.
If you don’t want to be bankrupt or you want to be confident to withdraw your money with a good broker – you must choose at least 3 brokers with a solid background,with many years in the markets,well respected,with a sound capitalization. They could be one n America,one in Europe and one in Asia.Then you spread you capital among them and plan to withdraw regularly.
I am not sure what you’re all talking about. You have MifID and Investors’ compension fund. It means if your broker goes bankcrupt you will receive back up to a certain amount, it is like insurance. It varies but it may range anywhere from $50,000 to $100,000. There is an organisation in Germany that insures clients up to EUR 1 billion but the minimum investment for these investment banks (such as Deutche Bank) is relatively high