the coverage of UK FSCS

Discussion in 'Forex Brokers' started by paulcai, Nov 18, 2011.

  1. paulcai

    paulcai

    I downloaded a brochure in PDF format from FSCS (http://www.fscs.org.uk/), and noted that it says:

    Regulated investments covered include: stocks and shares; unit trusts; futures and options; personal pension plans and long-term policies such as endowments.

    Forex trading is not mentioned therein. Is forex trading covered by FSCS? I have an account with Oanda Europe, and Oanda said in an email:
    Your deposits are held in segregated accounts under trust status, and are protected by the Financial Services Compensation Scheme up to ¡ê50,000 per account.

    Worried about the recent case of MF Global, I'd like to get some specific information about whether or not forex is under the protection of FSCS.

    Anyone is familiar with FSCS?
     
  2. paulcai

    paulcai

    Here is what I got from FSCS' reply:

    Spot Forex Contracts are unregulated products and therefore not protected by the FSCS.

    :( Is Canada the only country which gives protection to forex traders' funds? Any suggestions?
     
  3. Is this info correct?

    Which canadian broker is good for Currenex trading?
     
  4. paulcai

    paulcai

    If you visit Oanda Canda's website, you will get some info on CIPF.
     
  5. Pippi436

    Pippi436

    "Spot Forex Contracts are unregulated products and therefore not protected by the FSCS."

    Your margin on open position apparently is not covered by the FSCS. I assume the free cash in the account is? At least thats what most firms tell their clients. Altho the fineprint says "may be eglible for compensation by the FSCS" most of the time.
     
  6. Rocky2

    Rocky2

    Is Oanda bucketshop or not
    Can anyone tell me
     
  7. Pippi436

    Pippi436

    By the way, every EU country needs to operate a similar compensation scheme for retail investors, its in a EU directive. I dont really know whats the deal with the UK scheme, but i do know the compensation fund where i live (Austria) is a complete joke, it exists only on paper. They got only token funding, so they couldnt really compensate anything, even if they wanted - which they don't, all these clowns ever do is explaining why they wouldn't pay. And not that there would be a shortage of failed retail investment vehicles round here..
     
  8. paulcai

    paulcai

    Hello Pippi, the following is what I copied from a broker's website:

    It is important that you understand that amongst the services provided by investorseurope is spot forex trading. This activity is outside the scope of MiFID and you would therefore not be considered to be dealing in ¡®financial instruments¡¯, as defined by MiFID, if you traded spot forex and would not be given any protection under same.

    SPOT FOREX AND MiFID
    Investors Europe is Authorised and Regulated by the Financial Services Commmission (www.fsc.gi) which is the FSA's equivalent in Gibraltar. Investors Europe is a Member of the Gibraltar Investors Compensation Scheme (www.gics.gi) which exists for the protection of client monies and client assets. These protections apply so long as the financial product being traded falls under MiFID legislation which, in fact, covers almost all tradable financial products including commodity and other derivatives such as freight, climate and carbon derivatives, but not Spot Forex. It is therefore important that you understand that amongst the financial instruments provided by investorseurope, as a MiFID regulated company is spot forex trading. This activity is outside the scope of MiFID and you would therefore not be considered to be dealing in financial instruments, as defined by MiFID, if you traded spot forex and would not be given the same protection afforded to MiFID instruments. In practical terms, this means that if you are trading spot forex with Investors Europe, your monies are only covered in transit to and from the spot forex trading platform. This is because Spot Forex has yet to be integrated into MiFID by European Law Makers.¡±
     
  9. Spot fx isn't regulated, so you're not covered where actual trades are concerned. The free cash in your account is covered by the FSCS (the EEA equivalent applies to EU entities, although the amounts covered are significantly smaller, last I checked).
     
  10. Oanda isn't providing any information about the coverage othetr than the mention on their website, the y decline to provide details and refer you to the FSA which is not a good sign. I think it's not what you would expect from a reputable company.

    I once called the FSA then the compensation scheme, apparently your funds are covered because it 's a financial institution like any other. However compensation is not automatic , you have to file a claim and each compensation I think is subject to review. So who knows, I think OANDA is just using this as a selling point, there is no guarantee you will get your funds back , and count on a lenghty procedure probably.
     
    #10     Dec 17, 2011