Futures Question

A

Aranha

When you open an account with a futures broker, where do you have to send your money and where does it stay?

I mean, what's to prevent that they won't take your money and run away to another country?

Introducing brokers that are "guaranteed" by a FCM....are they safe?

What is the safest and less safe way to open an account with: IB guaranteed by a FCM? With a FCM? Clearing member?


Sorry for my ignorance, But I can't find information about all this proceedures...

Regards

Raphael
 
They are supposed to keep your money in a segregated account, although there was a bankruptcy last year that called just how safe thse funds are into question. Basically, there is a possibility that if an FCM blows up, customer funds could be used to cover margin calls for other customers. Best advice is use a big clearing broker that is not likely to be killed by some rogue trader. Personally, I would be dubious of introducing brokers, although I ma sure there are many who are a fine and trustworthy. In any case you send your money directly to the clearing broker.
 
Introducing brokers don't handle your money. That is all held at the FCM. If an IB goes out of business, you could contact the clearing firm for instructions on how to get your money. The FCM is the one's you have to worry about most.
 
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