Everything does involve risk but I, for one, want to take my counter party risk with guys who are not demonstrably insane. They had a director do a self dealing transaction to invest a significant and material portion of their net capital in a freakin' racetrack. Either their controls were so pathetically perverse that he could do that without an investment committee approving of it or else the directors as a group knew. Do you want this carload of clowns as your counter party? I do not. Can someone please make the reasoned argument to pick a weak counter party? I have missed things before in life and maybe I am missing something here. Convince me. Use logic and reason to tell me why I should entrust my money (not $50 but thousands) to people who have proven to be unreliable at handling a significant chunk of their own equity. Do they provide services that you cannot purchase on similar terms elsewhere? I believe I buy those services everyday on similar terms from counter parties who are probably not certifiably insane. And I believe you could do the same. I'm not suggesting you do not have the right to your decision but I am curious as to what makes you believe that it is a well reasoned decision.
I know their history and its your money so you get to decide what to do with it. I dont need to convince you because its "your" money..
Your equity with an FCM is not supposed to be "counter party" to anybody's anything. If you suspect such is the case, you should GET THE HELL OUT.. as you're unknowingly taking a risk for which there is no reward.
It is always counter party. Since I do not know if it is properly segregated -- a BILLION dollar problem under British seg rules for Lehman clients and a problem here at MF Global -- or even if properly segregated there might be a major client blowing up or a custodial bankruptcy which of course would not be sufficiently covered by the FDIC. Admittedly the last possibility is extremely remote. Additionally FOREX funds may turn out to be neither segregated or SIPC insured. Given that at any given moment any or all of those conditions might be in play I look at sending money to any futures or forex broker as a straight counter party risk. On Wednesday at 1:37 PM EDT I might be wrong because I might have segregation on my side with adequate funds to be "money good". But by 1:40 PM it might have gone sideways. That's my mindset. And I do not believe i pay any meaningful price for thinking that way. It is, in my mind, a free bet.
FX funds are a separate account that is not a futures account. Futures accounts are segregated. If there is a bankruptcy, all FX clients would become creditors. Counter party risk is a different issue. Each time you enter into an FX transaction, your FCM becomes the counter party on all your trades, even if the trade was done with another bank. Bob
people who scream by using IMHO are never humble and rarely knowledgeable. penson is now under strict regulatory oversight. that may be of small comfort to some people.
LOL your first statement sounds ignorant in itself. You realize people form their own opinion from experience. The last I check I am allowed to have my own opinion. Your second statement is factual and amazing compare to your first which is also an opinion btw.