BY Terry Thompson, CEO, FXPRIMUS
IN today’s ‘untrusted’ financial environment, it is my view that a brokerage firm has to work to set itself apart by putting in place rigid but necessary risk management and safety measures.
Regulated financial services firms have been waving the regulatory card post- Lehman Brothers, MF Global and World-Spreads downfall, highlighting their compliance credentials to woo in customers.
Many traders suffered extensive losses as a result of brokers like MF Global, CrownForex, AVS Carter and WorldSpreads filing for bankruptcy. On the morning of Monday October 31, 2011, MF Global filed the eighth largest US bankruptcy in history. The firm had a shortfall of $891,456,650of client money which should have been in segregated accounts. More recently, UK-based derivatives broker WorldSpreads filed for Bankruptcy; the CFO broker stated that it had only £16.6 million of client money, while it owed clients £29.7million. The finer details of the case also highlighted an alleged fraud within the company.
Plain and simple, there were insufficient checks and balances in place, and warnings and other “alarm bells” were ignored. In my view, there needs to be constant oversight and an independent party overseeing client funds, and unfortunately this was not the case with these brokers.
While regulators such as the FSA/MAS set out some guidelines in 2010 which all firms should follow – regardless of their jurisdiction, it remains the case that until there are appropriate, independent oversight measures enforced amongst all jurisdictions across the globe there will be an uncomfortable amount of “wiggle room” for firms that do not choose to follow adequate client fund protection protocols.
The reality is that it’s an expensive and tedious process to employ a 3rd party to account for each and every dollar, and I strongly believe that this is one of the key elements that separates the firms that are serious about their business and reputation from those that are not.
My firm, FXPRIMUS, offers retail traders a level of trade execution, service quality and fund safety that are normally reserved only for the largest investors. Serving traders in 205 countries across 6 continents FXPRIMUS combines an unmatched level of fund safety with regular independent audits of company financials, Straight Through Processing, top notch execution with tight spreads, prompt and responsive customer support, ISO 27001 certification in Information Security , ISO 9001:2008 certification in Quality Management and an industry-leading trader toolset that includes free access to powerful trader tools as well as personal coaching via FXPRIMUS Coach.
I believe that FXPRIMUS is the gold standard for the industry when it comes to safety of funds, and I would encourage all investors to perform due diligence when choosing a brokerage to place their hard earned capital.
At FXPRIMUS we pride ourselves on the outstanding levels of security, technology, liquidity, and trade execution we provide. With an industry reputation today as The Safest Place to Trade, FXPRIMUS is now also the first and only non-Swiss based Foreign Exchange brokerage firm to earn both ISO designations. We are also the first brokerage firm in the world to offer trust accounts to all customers, regardless of account size.
We hold the notion that maintaining sound fund safety protocols and treating customer funds like we would our own is of the utmost importance. This is one of our most important selling propositions and a very clear, key differentiator for us – as we feel it gives us a competitive advantage over a majority of our competition.
While fund safety is still a competitive advantage, the financial industry as a whole is hurt by the actions of firms that are not utilizing the same safety protocol. With that said, it is crucial that all firms start employing the same or similar methods of customer fund safety that we already rely on at FXPRIMUS.
Because clients must have the assurance that their funds are safe, a money manager must be able to stand by his broker’s reputation for safety of client funds. To provide the ultimate safeguard for both money managers and their investors, FXPRIMUS trading accounts are held on state-of-the art servers featuring the latest secure data encryption in a high-performance network ecosystem. The firm’s servers are actively monitored to protect against any potential threats and the firm utilizes redundant “backup” servers to protect against server downtime when the markets are open.
In addition to having independent oversight and secure server technology, annual audits are a “must” in this industry.
As ‘The Safest Place to Trade,’ FXPRIMUS conducts annual audits. While most brokerages are not obligated to undergo financial audits and do not go through the process, FXPRIMUS began implementing voluntary quarterly audits from the start of 2012 – another first from the firm, for the brokerage industry.
Undergoing audits is important in protecting the public from scams or corrupt business procedures. Being audited regularly ensures that brokerages are using fair policies prescribed by law. It is absolutely necessary to show both existing and prospective customers that FXPRIMUS is in complete compliance across all facets of its business. Knowing this, they can rest assured that their money is held in safe hands.
I find it astonishing that some jurisdictions don’t require audits, and even worse that some firms don’t undergo them even when they are required. There is no excuse for any firm to not file its necessary paperwork in accordance with the rules and regulations of its respective jurisdiction.
FXPRIMUS also maintains constant communication with all of its liquidity providers, counterparties and vendors. Our firm fully scrutinises each third party it engages, and continuously monitors them to ensure constant oversight with comprehensive implementation of stringent checks and balances.
Looking to the future, I think that as clients become more savvy they will expect more from their brokerage firm in terms of client fund control. This is not like the days of old where there were only a few options to choose from. The retail forex industry is now very competitive. The main distinction between brokers will be the safeguards they put in place to protect customer funds. The time has arrived when simply “trusting” a brokerage firm to do the right thing will not be enough to attract market share, and I believe FXPRIMUS is heading a movement that will only improve the industry as a whole.