HotForex

[global trader]

Aryabhatta
I agree with you that Insurance or Compensation fund is useless if it does not cover the trader properly
SO lets examine it case by case ( For Margin FX NOT for Fx futures or FX Optiosn or ETFs etc)

1) FSCS in UK : It was also difficult for me to get a direct answer However I did get it indirectly .. here is the text from one of the emails


My take fro the following is
"Since SPOT fx does not involve delivery of actual currency it would fall under designated investment”
However it is disappointing not to get a straight forward answer
Also it is perhaps possible to be covered for idle cash seating with a FSA regulated broker
By the way FSA regulated claims need to be thoroughly checked ... just a rep office or worst a virtual office in Uk does not mean FSA 100% regulation

From Tania Gunasingham <[email protected]>;,,,,,,,,,

Please note that not all FOREX transactions/accounts are protected by FSCS. Ultimately, it depends on whether the particular product comes within the definition of a “designated investment” per the Regulator’s Handbook (which derives from the Regulated Activities Order in the Annex to FSMA). In summary:
(a) A Spot FX Transaction will not be a designated investment unless the parties intend never to deliver the other currency.
(b) If a Forward FX Transaction is settled financially, it will be a designated investment. If it is settled physically then it will not be a designated investment.
(c) A Currency Future is a designated investment.
(d) A Currency Option is a designated investment.

2) FX in USA:
No CFTC or FDIC or SIPC insurance will cover broker failure.. I agree with you
The only silver lining is
- CFTC regulated means perhaps it prevents any tom dick and Harry with a $ 2 company from staring as a broker
- Insolvency practices might be better managed
3) FX in Australia
Same as US , just replace the word CFTC with ASIC
4) FX in Cyprus/ malta etc
SOem claim MFID cover for $20000 but Does MFID cover FX?

HOWEVER POINT REMAINS THAT IT IS BETTER TO CONSIDER A BROKER IN A BETTER REGULATED INVIRONMENT RATHER THAN SOME DODGY ONE.. I hope you agree.
My fear is specially in South Asia people get "mesmerized" when they see a "Foreign firm" holding flashy events etc may that be from a tin pot nation!
Be it broker / seminar seller!
Worst wait till the "Binary Options" scams start heating India

Simple fact is most of dodgy ones go to jurisdictions like BVi/ Cyprus/ malta etc BECAUSE THEY DO NOT WANT THE SCRUTINY OF
SEC/ CFTC/ FSA/ ASIC/
MAS ( SINGAPORE) OR EVEN SEBI IN INDIA

One more clarification If a US Equity broker ( Not FX or Futures) goes down there is SIPC which is not BS
The SIPC serves two primary roles in the event that a broker-dealer fails. First, the SIPC acts to organize the distribution of customer cash and securities to investors. Second, to the extent a customer's cash and/or securities are unavailable, the SIPC provides insurance coverage up to $500,000 of the customer's net equity balance, including up to $250,000 in cash.[5][10]

 

[aryabhatta]

Yare I don't know why you're playing all this ringmarole??

This is not what you wrote in your post, you did agree with me that FX insurance in US is useless but you told me you were referring to UK for FSA brokers who are covered by FSCS scheme and they will get 50000 pounds now that I am right you are trying to cover up with some big eyewash post.

All you have to do is admit "aryabhaata you were right insurance in FX is useless B.S. and you were especially right about FSCS protection not being applicable in FX I was under the fallacy (or fooled by the broker) into believing we will get FSCS protection of up to 50000 pounds but now after reading your post I checked & realize I was wrong indeed FSCS protection is not applicable to FX & total useless BS as well"

A "thanks" for clearing up your funda about FSCS protection not being applicable to FX (as you had believed) would have been the more noble thing to do rather than all this big gobbledegook cover up post you have made.

See its ok if you don't know but you should have the humility to accept your mistake and take it as a learning experience and not uselessly argue.

Anyway I'll address your points once again ....

Now ...

Btw ..... regarding SIPC I don't know why you keep uselessly bringing it up I never alluded to it in my original post, that is totally irrelevant to FX and this is the forex section. So please stop with all that SPIC which you're trying to use as a face saver.

2) FX in USA:
No CFTC or FDIC or SIPC insurance will cover broker failure.. I agree with you

Good you agreed with me on this one from the start but if not I could also have explained this to you why its useless B.S. (please note SIPC is irrelevent to FX)

3) FX in Australia
Same as US

Good ..... otherwise I could have explained that also to you

1) FSCS in UK : It was also difficult for me to get a direct answer However I did get it indirectly .. here is the text from one of the emails.

"Since SPOT fx does not involve delivery of actual currency it would fall under designated investment”

Yare I already told you the answer didn't I? , but good that you mailed them and got your fundas cleared ... this is what I want to see ... verify for your self don't blindly believe or be fooled by what brokers tell you.

Lets assume this lady mailed the reply and told you "For forex with a FSA regulated FX broker covered by the FSCS as a customer you will be compensated upto 50000 pounds in the event of broker bankruptcy" ...... (just like you believed)

Que: Does that mean its true?

Ans: No it doesn't ... (emails phone numbers etc ..don't matter in court)

What you need to do is check the rule book.

So lets see what the rule book says.

When is FSCS cover triggered?

1) Deposits
2) General insurance
3) Long-term insurance (e.g. pensions and life assurance)
4) General insurance advice and arranging
5) Investments
6) Home finance (e.g. mortgage) advice and arranging

Now lets consider what they say under point number 5 i.e. Investments. The rules say ...

Investments

FSCS provides protection if an authorised investment firm is unable to pay claims against it. For example:

for loss arising from bad investment advice, poor investment management or misrepresentation;
when an authorised investment firm goes out of business and cannot return investments or money.

Investments covered include: stocks and shares; unit trusts; futures and options; personal pension plans and long-term investments such as mortgage endowments.

Q: So was forex mentioned in the rule book?

A: No it wasn't ... only stocks and shares; unit trusts; futures and options; personal pension plans and long-term investments such as mortgage endowments were mentioned.

so it doesnt matter what she says ... she could even say I'll come to your house tonight and explain to you all night long ..... It makes no difference.

So now that in points 2 & 3 in your post above you agreed with me, and in point no 1 (on which you were wrong) you have verified for yourself and found what I said was true (good job) we can conclude what I will repeat for the third time

"THE INSURANCE BUZZ IS BASICALLY BS, PEOPLE HEAR ABOUT INSURANCE & THINK THEY'RE MONEY WILL BE PROTECTED .. IT WILL NOT BE."

n.b.: I do hope no member read your post about FSCS 50000 pound protection against broker bankruptcy and opened an account with a FSA/FSCS protected FX broker based on your factually incorrect statement

 

[global trader]

Yare I don't know why you're playing all this ringmarole??



n.b.: I do hope no member read your post about FSCS 50000 pound protection against broker bankruptcy and opened an account with a FSA/FSCS protected FX broker based on your factually incorrect statement

Are you implying that I am misleading people???
Mate all I am doing is saying "the list one can do is use a FSA regulated broker instead of going to some thinly regulated broker"

In fact I don;t like OTC marketplace as such becasue of al these issues any way I prefer Exchange traded products environment
I was part of creditors committee where 47 Million was lost by FX/CFD OTC broker and that is when I started digging in to this client money safety issue

Sorry But I don;t think it is wrong in believing in official correspondence the from an official of FSCS !

Also although It does not clearly mention the FX is covered the wording about If FX is not physically delivered then it could be covered
ANy way so where do you stand do you want people to go with some tin pot country based brokers!

Aryabhatta I don;t know why are you so uptight about this thing.. I was just sharing info, I think we both want to warn traders to be careful about FX brokers.. the only thing we disagree is about FSCS
If you want to have last word and show you have won the argument.. so be It you are great...and correct you win ok Happy now

 

[aryabhatta]

Its not about winning an argument its about accepting a fact.

Picking on you is not my intention, sure you need more knowledge but so what? Study more, read regularly, you will get the knowledge.

If you don't know something or are not sure about something its fine but don't advise members because although your intentions may be good you will only end up misleading them & they will suffer.

You being conned by the Australian broker was unfortunate.

Just like you were conned I don't want some other member to be conned by false beliefs so when you referred to my post & claimed FSCS protection I had to reply.

My parting words or should I say advice to you is "Jago grahak jago"

Good luck

addition:

Actually there is a method wherein you can ensure safety of your funds to some extent in the event of broker bankruptcy, its called "credit line" you keep 80%~90% of your funds in your own bank after the bank locks in the amount and issues a bank guarantee which you forward to the broker. so the broker only has 10%~20% of your balance in their possession so even if the broker goes bankrupt you will only lose 10 or 20% of your money. Dukascopy used to offer this I had mentioned this in one of my previous posts but I have never personally availed this facility. If anyone has a very large fund it may be well worth looking into this option.

 

[throwawayacc123]

I m assuming that you people are not Indian residents discussing FOREX. I sure hope that is the case otherwise you all are misleading Indian traders here.

you should know by now that it is very clear that Indian resident cannot trade FOREX legally.

If anyone does indulge in it , they will get caught and will have to pay fines.

 

[global trader]

throwawayacc123.....
With all due respect I am not challenging your opinion about what Indian residents are allowed to trade or not.
I am only discussing the Pros and Cons of choosing a Broker in FX
Irrespective of where the trader is based!
SO in that sense I am not misleading any Indian residents ( Neither I think Aryabhatta is misleading)
We did not say " Indian residents can trade Margin FX legally" did we?

Traderji moderators have a thread group for Forex hence my posting
+ it is not necessary that every trader will be a resident Indian !

There are other products like Exchange traded Binary options, (Nadex) CFD and Warrants ( like Options) and spread betting ( legal )
These are not currently in India does ... that mean if some of us discuss them on Traderji .. it automatically mean we are misleading Indian residents?
I don;t think so!
Unless Traderji owners declare that "Products which can't be traded by Indian residents MUST not be discussed on Traderji ).. these discussions do not equate to misleading Indian residents..
I agree these discussions may not be relevant to many in India but for some they may be!.

 

[throwawayacc123]

With all due respect I am not challenging your opinion about what Indian residents are allowed to trade or not
I am only discussing the Pros and Cons of choosing a Broker in FX
Irrespective of where the trader is based!
SO in that sense I am not misleading any Indian residents ( Neither I think Aryabhatta is misleading)

Traderji moderators have a thread group for Forex hence my posting
+ it is not necessary that every trader will be a resident Indian !

There are other products like Exchange traded Binary options, (Nadex) CFD and Warrants ( like Options) and spread betting ( legal )
These are not in India does currently that mean if some of us discuss them on Traderji .. it automatically mean we are misleading Indian residents?
I don;t think so!
Unless Traderji owners declare that "Products which can't be traded by Indian residents MUST not be discussed on Traderji ).. these discussions do not equate to misleading Indian residents..
I agree they may not be relevant !

:lol::lol:

you think that is a opinion. Let me be repeat again.

INDIAN RESIDENTS CANNOT TRADE OTC FOREX AS PER FEMA ACT.

Globaltrader, take time to read that above sentence again and again because somehow you are not convinced or you don't understand the laws.

Apart from that you can surely discuss about how forex brokers operate , no harm at all in that. Most of it is irrelevant to Indian residents anyways.

I hope you have no more delusions about whether forex trading is legal not. I just want to make sure about it.
:thumb:

 

[global trader]

OK I never said it is legal! for Indian residents Did I ??? and I never had any delusions about whether forex trading is legal for Resident Indinas as it does not affects me!
Issue is why did you think this discussion was misleading any Indian residents?

What are you on about? we were just discussing a side issue!

I am very much with you when it comes to Client protection legality etc
For example in my country I won;t be able to just start a "Share market tipping service" without a financial licence.. which means I will be scrutinized, Legally liable etc
On a side note:
Look around you in India all those "tipping services" .. they are not regulated by SEBI etc have no requirements to prove their "past performance" so they go on advertising all sort of things

I suggest you keep up your good work by exposing the legality and morality of such business practices
How many people are misled by such seminar / software sellers// not just in India but even in US too ! and even in highly regulated place like Singapore
I would agree with you that legality and regularity control and consumer protection is very important

 

[rourkem]

Just to add my two cents. It's a marketing/sales idea basically to mislead users. I mean, brokers need to do this to attract new users and the worst part about this is they get away with it just because they do not choose to explain it but it's written on a fine print.

 

[mohideen171]

hi
i recently opened a forex trading account with hotforex. The Mt4 platform is absolutely user friendly quick to close and re-open. Very good friendly order execution.
Dont know weather India ever wants to grow, matching the international standards