FOREX QUANT

November 14, 2007

Safe Country to Have Trading Account

Filed under: Uncategorized — by TraderMade @ 1:54 pm
Tags:

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Safe country to have trading account? It would be Singapore, Canada and the UK. In those countries, brokers or dealers are required to segregate clients’ accounts, so that in the event of a broker’s bankruptcy, clients would be considered secured creditors and receive priority in bankruptcy proceedings.
Indonesia also have this arrangement, but the trading condition for trading OTC-FX and regional indices through regulated futures brokers in Indonesia is not good. Spread and commissions are gigantic. And not to mention the phony trade routing path.procedure. If you know how client’s trades are routed, where to, etc, you’ll get the best laugh of the day. lol.

Brokers Can Go Bankrupt
Posted by Grace Cheng on Nov 13 2007

Have you heard the latest big news about E*Trade Financials? E*Trade is an online low-cost brokerage company whose shares dropped 59% Monday after a Citigroup analyst estimated there is a 15% chance E*Trade will be forced to file for bankruptcy protection after the company warned in a filing that bigger-than-expected losses could result from its banking arm which invests in securities backed by mortgages.

It is startling to have such a massive plunge in stock price, but what is of main concern is that retail investors who have accounts with them are at risk of losing their money, even though SIPC’s protection cover securities customers up to $100,000 for claims for cash.

Luckily, E*Trade is mainly a securities/options broker, not a forex broker otherwise forex traders will have to start transferring their funds to rival brokers.

Are you trading through a broker that is situated in a country that requires brokers to segregate clients’ funds according to the country’s financial regulations? Countries such as Singapore, Canada and UK require brokers or dealers to segregate clients’ accounts, so that in the event of a broker’s bankruptcy, clients would be considered secured creditors and receive priority in bankruptcy proceedings.

Trade safe folks.

Yes, trade safe
(*)

3 Comments »

  1. are you sure that Indonesia’s law require forex brokers to segregate all clients’ fund? that would be interesting🙂

    Comment by Soe — November 24, 2007 @ 10:31 am |Reply

  2. yes, i’m sure about it. but if safety of fund is the main concern, you should just keep the money in the bank as a CTD, because trading FX or Indices through the regulated brokers in Indonesia is ridiculous, with the sky-high spread (5-6 pips) and comission (another 4-6 pips). LOL.🙂
    Only uninformed gamblers would trade with them.😉 :p

    Comment by darma — November 24, 2007 @ 9:14 pm |Reply

  3. Nice comments about a very difficult subject.

    I think comment about Futures Clearing Merchants (FCM’s) and their backing by the exchanges in the Futures Markets would be helpful as no clearing firm member, FCM has ever gone out of business without all of the customer funds made whole. This even includes the Refco situation. The exchanges and exchange members stand behind segregated customer funds in the futures markets.

    Comment by Ira — December 20, 2007 @ 12:12 am |Reply


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