How safe are my funds with a (US) futures broker?

[J.P.]

I"m not calling them shady or legit. What I am saying, is that you're money is not protected. It is possible that they can go belly up, and if they do, you can lose all your funds.

I think the issue of losing all your funds has already been addressed.

I would personally go with a much larger real brokerage, like IB for example. There are a lot of choices out there, I think the main reason people use companies like AMP is because they have a low account minimum and higher leverage.

I must disagree. Many of us have large accounts and appreciate and utilize the availability of high leverage. That's why futures were invented; that's why we trade futures. We are not all pikers you know.

But again, if you don't have money, you really have no business trading futures.

This is true.

 

[Q3D]

I"m not calling them shady or legit. What I am saying, is that you're money is not protected. It is possible that they can go belly up, and if they do, you can lose all your funds.

I would personally go with a much larger real brokerage, like IB for example. There are a lot of choices out there, I think the main reason people use companies like AMP is because they have a low account minimum and higher leverage. But again, if you don't have money, you really have no business trading futures.

Are you saying that the money is not protected at all and would disappear or that it would take a long drawn-out process to get lost funds back if a smaller futures brokerage went bankrupt or defaulted on their debt?

 

[PRVT123]

in theory your funds are supposed to be seggregated from firm funds in the brokerage business model unlike banks which lends your money out. the insolvency is when brokers use your money to trade and the money becomees 'missing' or lost in the 'market' and margin calls must be filled. mostly brokerage firms if they lose money or insolvent they sell their clients to another broker and transfer the money. MF was fraud, the money was not segregrated and embezzled. that is the regulators fault. no reason for brokerage failure and clients money 'missing' if the money was segregated in seperate bank accounts at the bank of the broker.

 

[PRVT123]

the broker in theory cannot access money in your account it's like having a joint bank account with your broker. the broker can debit or credit your account with your permission for fees etc or money you owe them but cannot use your money to trade or invest.

 

[PRVT123]

the compliance officer at your broker is responsible for that unless the CEO or CFO tells him to ignore. it..clients accounts are 'suppose' to be monitored 24 hours and have controls...it needs the compliance officer i n the brokerage firm to authorize it. either the ceo or higher rank in the company tells someone to override controls

 

[EPrado]

AMP is just like the other futures brokers. You have no protection on your money. Why wouldn't you just use a real broker like IB? If you can't come up with 10K to open an account then you should not be trading futures.

IB is very limited when it comes to execution software. You basically have to use their software, which when I traded with them was nothing special. When it comes to futures a lot of guys like myself have been using TT (which is in my opinion the best execution software out there.....others are not even close) for a long time and want the ability to use TT. A firm like AMP offers it (hell....they even offer it based on volume, so if you don't trade a ton you don't have to pay the Pro license fee of $1200, if you do then you can just pay the $1200).

The software for me was a huge issue and got me to quickly leave IB. As far as IB being a "real" or "huge" firm, sure they are both. But that can work against a firm who has exposure in a lot of areas. IB does have exposure in the FX area , and when the whole Swiss Franc thing went down there were definitely some concerns with IB and some of the other firms out there that had FX exposure.

 

[tandh]

IB is very limited when it comes to execution software. You basically have to use their software, which when I traded with them was nothing special. When it comes to futures a lot of guys like myself have been using TT (which is in my opinion the best execution software out there.....others are not even close) for a long time and want the ability to use TT. A firm like AMP offers it (hell....they even offer it based on volume, so if you don't trade a ton you don't have to pay the Pro license fee of $1200, if you do then you can just pay the $1200).

The software for me was a huge issue and got me to quickly leave IB. As far as IB being a "real" or "huge" firm, sure they are both. But that can work against a firm who has exposure in a lot of areas. IB does have exposure in the FX area , and when the whole Swiss Franc thing went down there were definitely some concerns with IB and some of the other firms out there that had FX exposure.

What concern did IB have over the huge Swiss Franc drop?

You can use any software you like with IB.

All accounts at IB are insured in multiple ways. What insurance coverage do the futures brokers have?

 

[tandh]

Are you saying that the money is not protected at all and would disappear or that it would take a long drawn-out process to get lost funds back if a smaller futures brokerage went bankrupt or defaulted on their debt?

Yes. Look at MF Global, which was a much larger firm than AMP. You could simply lose all your money, simply because AMP went bankrupt. No insurance what so ever. Why take the extra risk? The answer is simple. Because you only have 500 bucks and no one else will take your account.

 

[tandh]

I think the issue of losing all your funds has already been addressed.

I must disagree. Many of us have large accounts and appreciate and utilize the availability of high leverage. That's why futures were invented; that's why we trade futures. We are not all pikers you know.

This is true.

High leverage of futures means needed roughly 5000 in your account for each contract traded. That is high enough. Being required to have only 500 for each contract is far too much leverage.

 

[Q3D]

Yes. Look at MF Global, which was a much larger firm than AMP. You could simply lose all your money, simply because AMP went bankrupt. No insurance what so ever. Why take the extra risk? The answer is simple. Because you only have 500 bucks and no one else will take your account.

http://dealbook.nytimes.com/2014/04/03/mf-global-customers-to-be-paid-back-in-full/?_r=0 It seems like MF Global customers got paid back after the bankruptcy was resolved.

But by late last year, Customers who traded overseas had received only 74 percent of what once sat in their accounts. MF Global customers who traded in the United States had collected 98 percent.