What happens if bank of brokerage firm blows up?

arsenal009

Recruit
Messages
3
Hi guys, let's say I am trading with a brokerage firm & the bank they work with goes bankrupt.

Does that mean all my money I have in my account with the brokerage firm is gone too?

Basically a brokerage firm I am looking into works with a really small bank & I am wondering what my risks are.

Thanks
 
Depends on what licenses it has. FCA, ASIC, CYSEC has compensation funds, so your deposit should be in safe hands I guess, but the procedure of recovering your money can take weeks, months (even years).
 
If you try to find a broker that wants to make their clients a success you will not find one. That is not the business they are in. If a broker opens up 200 live forex accounts and 100 people blow up their account and they keep 100 accounts active this is the statistic they use to measure their success. They opened up 100 "net" new accounts. The 100 people who lost their accounts is not their concern and never will be.
 
Make sure you're legally protected from broker bankruptcy by checking if they include investor compensation fund. Many broker s from solid regulators have it, but if your broker offshore you may have no guarantees in case it goes bust.
 
Basically there are no broker who actually work for their client’s success. They works only for their success. Because if their client got success they would be succeed in their business. This is the business. In this business from the total number of traders minimum 50% trader will blow up their account so they will keep only those account which are active. Thus how broker’s success is measured. So, those accounts which are blow up is actually not concern of them.
 
In any case, you are absolutely right, Makenzie Malachi. However good a broker may be, he or she will always think about their benefit first, and only then about the client's interest. Unfortunately, this is the truth.
 
Because any condition indeed possible brokerage firm gets into bankruptcy, but usually regulated broker has better than unregistered one because as the regulation firm they have certain rules to protect the client.
 
Do not recommend brokers in General Forex Talk.
Hi guys, let's say I am trading with a brokerage firm & the bank they work with goes bankrupt.

Does that mean all my money I have in my account with the brokerage firm is gone too?

Basically a brokerage firm I am looking into works with a really small bank & I am wondering what my risks are.

Thanks
Firstly it is a very unlikely scenario. Secondly if it does happen, most probably you will lose your funds. However, if your broker is regulated by a couple of regulations like CySec, FCA, ASIC etc you are still better off.

Most of the regulated brokers keep their funds in segregated multiple bank accounts instead of 1 bank account. Thus the risk of all banks going insolvent at once is next to impossible thus your funds are protected.

I was concerned about my capital as well and did a detailed research on how the brokers manage their clients money. I go to know about the Investment compensation fund of various jurisdictions which protects the investment of retails clients up to some extent.

My research was complete when I got to know about REMOVED, they are regulated with CySec and also a member of Investment compensation Fund. I was pretty much convinced with all their offerings and my trading has been good so far with them.

FPA Forums Team Note: Do not recommend brokers in General Forex Talk. This is a non-commercial folder. You can compare brokers in Forex Company Comparisons.
 
Much more depends on the company's user agreement. In fact, there should be data on how your rights are protected if you find yourself in this situation. So be sure to study this issue in as much detail as possible!
 
Back
Top