FX broker failure

[moka2]

It would be interesting to see if in UK the FSCS insurance will cover the clients of any FX brokers (Alpari) who have gone burst
I tried to get a straight answer from FSCS twice
The question was very simple:
Does FSCS cover OTC fx the same way it protects clients of Equity brokers?

But I never got a straight forward answer it went in circles around the definition of "approved product"


Does anybody know what is the situation in US,
What if there is a massive fraud in the client money a/c and the broker has not kept the client money segregated?
In Australia client money is not safe if fraud happens!

 

[highbury fx]

It would be interesting to see if in UK the FSCS insurance will cover the clients of any FX brokers (Alpari) who have gone burst
I tried to get a straight answer from FSCS twice
The question was very simple:
Does FSCS cover OTC fx the same way it protects clients of Equity brokers?

But I never got a straight forward answer it went in circles around the definition of "approved product"


Does anybody know what is the situation in US,
What if there is a massive fraud in the client money a/c and the broker has not kept the client money segregated?
In Australia client money is not safe if fraud happens!

If Alpari are regulated by the FCA they will be a contributor to the FSCS.

Alpari have been regulated by the FCA since 2006. They do contribute to the FSCS.

The FSCS covers any client account shortfall up to £50,000. It doesn't matter if its OTC or RIP.

If Alpari do not have the necessary funds to pay back the full balance on their clients accounts, including running profits and losses, the FSCS scheme steps in and guarantees the balance up to £50k.

Its very straight forward and you shouldn't panic as there is previous evidence that the FSCS scheme works (think of World Spreads)

 

[moka2]

If Alpari are regulated by the FCA they will be a contributor to the FSCS.


Its very straight forward and you shouldn't panic as there is previous evidence that the FSCS scheme works (think of World Spreads)

Ok
What you guys make of this response I got some time back
Point c) and D) is very clear but point a)
Pm me if you want a complete copy of the email from FSCS officer


"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."

 

[tar]

Point a is very clear as well , Alpari doesn't deliver currencies to your home ...

 

[moka2]

Point a is very clear as well , Alpari doesn't deliver currencies to your home ...

It would have been much easier if it said Spot Fx margin trading is a designated investment like Fx Futures and Fx Options!