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17:05
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Originally posted by cupidity:
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Apologies if I am straying from this particular thread commentary but as we appear to be skewing the topic towards ultimately discussing 'capital protection' I offer a few thoughts of my own. The machinations of trade execution processes, liquidity providers, account segregation etc can clearly be complex and lacks clear transparency at times hence all the small print in 'product disclosure statements, customer agreements' etc. There is of course a degree of risk in depositing funds with any broker or financial institution for that matter. The degree of regulated protection (perceived at times?) offered varies immensely from Country to Country and when tested can reveal many deficiencies and loopholes which can subsequently involve years of protracted work challenging lawyers and insurance companies to fight for some recompense. I, like many other posters, personally don't put all of my eggs in one basket when it comes to brokers or banks for that matter. One of the features I like about IB is their risk management process in automatically 'cutting losing trades' to protect 'the house' when margin limits are breached. This isn't foolproof of course as was highlighted with the Swiss Currency losses incurred by traders a few years ago but it is a process to limit day to day risk. As IB are a listed entity (like many other brokers are of course) you have access to a reasonable amount of information to assess their financial performance and ratings. The moral of all this is not to put too much weight on 'highly regulated' oversight and manage (spread) your risk accordingly. Have a great weekend. Cheers
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As a sophisticated investor with wholesale CFD accounts appreciate the risk and the benefits far outweigh paying a premium service. Client money is segregated and pooled with other clients which means 50% of them could be on the wrong side of whatever the catastrophe could be and run up a deficit anyway.
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