what happens when a SB Firm goes bust

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davidh1819

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Hi everyone

question

if i hade alot of capital in my spreadbetting account and the firm goes bankrupt or collapses due to bad speculation what happens to the punters monies will you be able to retrive it?
 
Re: what happens when a SP Firm goes bust

I don't think that's ever likely to happen.
 
Re: what happens when a SP Firm goes bust

I believe some companies are protected by Financial Services Compensation Scheme http://www.fscs.org.uk/what-we-cover/
I will get back upto 50K.

Here is an example.
http://www.igindex.co.uk/spread-betting/risk-disclosure-notice.html

Each spread bet you open constitutes both a contract and a wager with us; these contracts/wagers can be closed only with us, and are not transferable to any other person. This also means that you may be exposed to the risk of our default. In this unlikely event then we are members of the Financial Services Compensation Scheme which, in respect of proven and eligible claims, provides protection of 100% of the first £30,000 and 90% of the next £20,000 - a maximum of £48,000 – rising on 1 January 2010 to cover the first £50,000 of any claim.
Click to expand...
 
Re: what happens when a SP Firm goes bust

"if i hade alot of capital in my spreadbetting account..."

I didn't think that was ever likely to happen.
 
Re: what happens when a SP Firm goes bust

I believe that your protection depends on your status retail (high) or professional (low). In the contract isn't it?
 
Re: what happens when a SP Firm goes bust

Depends on whether your funds are segregated, and what your firm's definition of segregation is. Ideally, you want your cash and running profit segregated. Some firms try to get away with segregating cash - margin used, or just cash. Should be an FSA paper coming out on this next month, which should force them all to use the first option. If you're asked to transfer title to the funds, this means your money wouldn't be segregated and if the firm went bankrupt, you would be an unsecured creditor, and likely lose most of it.
 
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Re: what happens when a SP Firm goes bust

ns1000 said:
Depends on whether your funds are segregated, and what your firm's definition of segregation is. Ideally, you want your cash and running profit segregated. Some firms try to get away with segregating cash - margin used, or just cash. Should be an FSA paper coming out on this next month, which should force them all to use the first option. If you're asked to transfer title to the funds, this means your money wouldn't be segregated and if the firm went bankrupt, you would be an unsecured creditor, and likely lose most of it.
Click to expand...
Good research, get back to us when you have read the paper on this.
 
I would spread money out over 2 or 3 brokers if you have enough to do so without affecting your trading too much. If your broker goes belly up, even if your money is insured by whoever, you won't get it back very quickly and you'll still have money with the other broker(s) do continue trading or withdraw if you need to.

Peter
 
wackypete2 said:
I would spread money out over 2 or 3 brokers if you have enough to do so without affecting your trading too much. If your broker goes belly up, even if your money is insured by whoever, you won't get it back very quickly and you'll still have money with the other broker(s) do continue trading or withdraw if you need to.

Peter
Click to expand...

Also, you don't need to keep all your trading resources within the SB or broker account - just enough to permit your style of trading. The rest can be on instant deposit.
 
0007 said:
Also, you don't need to keep all your trading resources within the SB or broker account - just enough to permit your style of trading. The rest can be on instant deposit.
Click to expand...

Totally agree... I never deposit all the money I have and add/withdraw resources as needed.
 
On that subject, how long do people find it takes to get the money from their SB firm into their bank account?

With mine, it takes either 2 or 3 business days depending on the firm.
However, when I closed an account with one firm they managed to get it back the same day somehow.

In all cases, accounts had been funded by debit card, and the money went back to the account linked to the card.
 
davidh1819 said:
Hi everyone

question

if i hade alot of capital in my spreadbetting account and the firm goes bankrupt or collapses due to bad speculation what happens to the punters monies will you be able to retrive it?
Click to expand...

I think client funds are segregated for spreadbetting under new FSA regulations, so you won't have to worry if the spreadbetting firm goes bust, only if the bank they have the funds with goes bust.
 
Let's hope IG folds, then because my account has been empty for years and I'd be quite pleased with £50k.
 
due to their nature of business, sb firms will usually only not make much money if either no one trades (and this only happens during low volatility - would you put a trade on if the market hadnt moved in 5 days?!) or if they dont hedge very large positions that clients take with them. otherwise i think theyre fairly safe (we can see the number of sb firms increasing not decreasing). i think with echelon there were other more sinister reasons behind its collapse. but i couldnt possibly comment here.....!

rule of thumb, if you must spread bet, go with a big name. like lehmans! ;)
 
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