I am curious about the details of FCM investments of clients' deposits. I know they are restricted to banks and Treasury securities meeting regulatory requirements. My account statement shows a certain cash balance but, in reality, these funds may be invested in Treasury securities whose market value fluctuates and this is not reflected in the statement. Is this not misleading, to say the least? How can FCM ensure they are able to pay out the cash that each client thinks they have in their accounts?
I think that should be the least of your worries. Where did you get the idea that they do that? You have proof? As long as they make your money available for you to carry out your trades and also complete your withdrawal requests, you should not be worried.
The other option is to keep the money in a black box under the bed. Fairly secure. Any one daring to get that will need to go through you first. No one can say anything that would change the mindset of a paranoid.
https://www.cftc.gov/sites/default/files/tm/finseginterp_7-1.htm I know it does happen and is apparently legal but what interests me is - how can they write: "$100 cash balance" in my account statement where this cash is actually not there - I understand it to be FCM's promise that they will be able to sell whatever they invested in and return $100 cash to me. Is that correct?
I guess I could treat it the same as "cash" in a bank account which might also be invested in a car loan, mortgage, etc. but when I request that cash the bank should fulfil their promise to pay me. Is that the same with FCM investments?