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The problem arose if the broker misused
the deposited funds to either reinvest or otherwise
manipulated these deposits to enhance their own
standing.
There were also instances were the broker
became insolvent and many complications ensued as
to what was the clients money and what was the broker's
money.
With the advent of regulation most
broker now segregate their clients funds from the
brokerage funds.
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Deposits are normally held with
banks or other large financial institution that
are also regulated and bonded or insured. This protects
you money should anything happen to your broker.
The deposit taking institution is
normally aware that these deposits are client's
funds. Depending on regulation in the particular
country you live, each client may have their own
segregated account or for smaller depositors they
may be pooled. The point is that segregation of
funds is a safeguard. Ask your broker if your funds
are segregated and who actually has your money.
Just as with a bank you are entitled
to interest on the money you have on deposit. Some
broker may stipulate that interest is only payable
on accounts over a certain amount but the trend
today is that you will earn interest on any amount
you have that is not being used to cover your margin.
Your broker is probably not the most competitive
place to earn interest but that should not be the
point of having your money with him in the first
place. Payment on your account that is not being
used and segregation of funds all go to show the
reputability of the company you are dealing with.
In this section I will discuss briefly
the basic account statement. I have to keep this
basic, as there are as many flavors of account statements
as you can imagine.
Just about every broker has their
own way of presenting this. The most important thing
is to know where you stand at the end of each day
or week. Just because your broker is Internet based
and has all the bells and whistles does not mean
they are infallible.
Many of the actions taken before information
is imputed are still done by hand and if humans
are involved there will be a mistake at some point.
The responsibility lies with you. It is your money
so make sure that all the transactions are correct.
FX Some Company
New York
Statement for: Mr. Joe BloggsStatement
Date: 16th July 2002
Account No: 123456
Summary Of All Trades From: 15/07/02-17/07/02
| Ticket No |
Time |
Trade Date |
Value Date |
B/S |
Symbol |
Quantity |
Rate |
Debit |
Credit |
Balance |
| 123458 |
09:05 |
15/07/2002 |
17/07/02 |
B |
EUR/USD |
100,000 |
0.9850 |
|
|
$10,000 |
| 123459 |
13:01 |
15/07/2002 |
17/07/02 |
S |
EUR/USD |
100,000 |
0.9870 |
|
$200.00 |
$10,200 |
| 123460 |
14:05 |
16/07/2002 |
18/07/02 |
S |
USD/JPY |
100,000 |
116.85 |
|
|
$10,200 |
| Total Equity |
$10,200 |
| Margin Available |
$9,200 |
| Margin Requirements |
$1,000 |
| Current Position |
Short USD/JPY |
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Normally there is a ticket or docket
number to help identify the trade. You will nearly
always find the time and date of the trade. The
value date if the currency were to be delivered.
You should always see the direction of the trade,
buy or sell (Long or Short). The amount and rate
you bought or sold. Balance to let you know if you
made a profit or a loss.
You should also see any open positions
you may have and the margin requirements for that
position. |
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A lot of the more modern systems will
show your open position as though it has been closed
just to give you an up to the minute balance.
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