Forex And CFD Firms Prioritize Client Safety With New Insurance Costs
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Retail traders have moved beyond just wanting high leverage and low spreads. They now want more safety for their money, industry experts stated. Standard rules do not seem enough anymore because FX and CFD clients expect more layers of security.
Reports noted that companies can now get these protections for about $30,000 a year, depending on how many clients they have.
Retail Traders Seek Enhanced Protection And Security
About 40 companies in Lloyd’s of London now offer private insurance for client funds. This change shows that the industry is focusing more on being responsible with money, according to industry insiders.
New insurance services for client funds are becoming popular in the FX and CFD sectors. In the last few months, companies like VT Markets, EC Markets, Hantec Markets, and ATFX have added these services.
Reports stated that special insurance called “Excess of Loss” (or EoL) helps protect clients if their broker goes bankrupt. This insurance gives extra confidence to traders with large amounts of money. Sources noted that Lloyd’s has given out more than thirty policies for companies in this area.
Lloyd’s said in a report for Finance Magnates that “each policy is made for the broker’s unique needs.” They explained that this way makes sure the coverage matches what each firm requires.
VT Markets noted that having extra insurance is an important part of keeping clients safe. They said that “regulatory funds give basic protection, but this insurance adds more safety, especially for clients with bigger accounts.”
Even though this is helpful, not every company in the industry offers extra insurance yet. Many brokers still only use regulatory protection plans like CySEC’s Investor Compensation Fund or the UK’s Financial Services Compensation Scheme (FSCS). These plans limit compensation to €20,000 and £85,000 per person, according to reports.
Retail Traders Aim For Comprehensive Coverage Against Losses
Niki Nikolaou from Contentworks Agency said, “CySEC’s Investor Compensation Fund has been around since 2002 and is needed for any CIF under the regulator.” He explained that the fund protects investors if one of its members fails. Nikolaou added that “what used to be seen as enough protection is now just the starting point.”
Nick Xydas, Group Marketing Director of EC Markets, stated that “investor protection funds usually have low limits.” He noted that EC Markets’ insurance can go up to $1 million for each claimant, giving much better safety.
Xydas added that “this extra protection means our clients are covered even if losses go beyond the regular fund limits.”
Recently, several companies began offering more insurance for client funds. In 2023, EC Markets added insurance with coverage of up to $1 million for each claimant. In August, ATFX offered similar Client Fund Insurance, also with coverage up to $1 million. In October, VT Markets joined in with the same coverage.
