In order for cash held with a Forex trading broker to be “safe” the broker needs to be based in a jurisdiction where the regulatory regime protects clients and actively ensures that the broker is in compliance with the rules that are in place.
Further more, deposits need to be guaranteed by the authorities as a measure of last resort in order for them to be considered as truly “safe”.
In the UK, the Financial Services Authority (the FSA) provides a strict regulatory regime that protects a trading broker’s clients whilst making the process of opening an account and depositing & withdrawing funds as easy as feasibly possible. The FSA’s regulation requires that – Forex brokers keep their clients funds in segregated accounts with FSA approved banks which the broker can never treat as their own assets.
- Participate in the Financial Services Compensation Scheme (FSCS) of last resort which protects deposit up to £50,000.
- Keep a full record of all financial transactions between the trader and the broker so that any disputes that arise can be settled fairly.
- Undergo an annual audit to ensure compliance.