To make winning decisions, Forex traders need to be focused. They cannot be worrying about the safety of their money at their broker in the middle of trading.
Introducing brokers and white label providers also need the peace of mind that comes with dealing with a secure brokerage firm.
An IB that overlooks how safe a broker is by focusing primarily on their level of compensation runs the frightening risk of losing all their business, especially if the brokerage firm goes bankrupt or is involuntarily closed down by government regulators. Experiencing the shutdown of a Forex broker is not such a far-fetched event, as demonstrated by the number of high profile brokerage failures in the United States since the start of the century.
Here are some examples…REFCO, at one time the largest brokerage firm in the Chicago Mercantile Exchange, went under in 2005. MF Global, also known as Man Financial, went bankrupt in 2011. The recent fiasco with Iowa-based Peregrine Financial Group (PFGBest) led to its demise in 2012. From blatant fraud to bad billion-dollar bets with customer monies, these firms all failed despite being under the perceived “safety” of the NFA (National Futures Association)/CFTC (Commodity Futures Trading Commission) umbrella.
What was the valuable lesson that smart investors took home from these mishaps? Simple…Make sure that your broker carries an extra level of safety for a rainy day!
That is why we place a priority on the safety of your customers’ assets.
Initial Level of Protection – Account Segregation
Many customers of the US firm MF Global (see earlier paragraph) lost their funds because the broker failed to “segregate” or separate customer funds from the firm’s own money. That is why it is so important for introducing brokers to work with Forex brokerages that at least offer segregation of customer accounts. This is the first stage of protection that your traders and investors will enjoy when you become an IB through us. As a minimum level of safety, every brokerage firm should offer segregation of assets to their clients.
Additional Protection – Third Party Administration / Dual Signatory
At the institutional level, when an investment fund has the safety of their clients’ assets at heart, they employ a third party administrator to act as a dual signatory (second signer) on the accounts. That means that no deposit or withdrawal gets approved unless the fund manager receives the extra approval (signature) of the administrator. This extra level of protection had never been available at the Forex brokerage level until now. All your clients can now trade or invest in currencies without having to worry that their broker can pack up and disappear with their hard earned money.
We place a high importance on delivering peace of mind to all clients. The higher level of protection IB clients will enjoy will help introducing brokers open accounts much easier, allowing for greater profitability and a better springboard to succeed in the FX industry.
