Almost all brokers are licensed by regulators. But some of them add to their advantages also membership in The Financial Commission, guaranteeing traders insurance in the amount of up to 20 thousand dollars. USA. True, what is the point of such insurance, if the broker is not going to go bankrupt or deceive the trader, a rhetorical question. In any case, what kind of organization is it, what functions it performs and how to work with it, it makes sense to sort it out in more detail.
The Financial Commission Overview
The Financial Commission is an independent organization and a compensation fund that simultaneously performs the role of a regulator (settlement of disputes between a broker and a trader) and the role of insurance against a broker’s bankruptcy.
The scope of The Financial Commission’s activities includes:
- trade disputes: incorrect quotes, failure to execute orders, illegal withdrawal of profits (cancellation of a lucrative transaction), etc .;
- non-trade disputes: refusal to pay profits, broker’s bankruptcy.
The compensation fund is filled at the expense of brokers’ membership fees (The Operating Commission costs 90% of the contributions, 10% goes to the compensation fund). Money is stored in separate bank accounts (on which, no information is available). Payment is made subject to the broker’s refusal to execute the Commission’s decision.
Amount of compensation:
- up to 5,000 dollars. US for a broker who is assigned by The Financial Commission on individual criteria to Group B;
- up to $ 20,000 USA for brokers classified in Group A.
In the event of a shortage of reserve funds for compensation, it is assumed that there will be a proportional even distribution of money among all applicants.
The minimum membership term of a broker in an organization is 1 year. The Dispute Resolution Committee consists of 19 independent experts. Consideration of the trader’s application begins if the broker did not respond to the complaint within 5 days (for comparison: regulators start considering applications if the broker does not respond within 1-2 weeks, or even a month). The decision of The Financial Commission can not be challenged by a broker in court in the absence of new information regarding the consideration of the claim.
If you believe the organization’s website, then in 2017, The Financial Commission received 764 claims from traders. The amount of satisfied claims amounted to 1 564 700 dollars. USA, which is almost 10 times more than in 2016. On average, each trader received a refund of about $ 2,000. The United States, but statistics are silent on how many applications were actually satisfied. In addition, given that The Financial Commission is the most popular SRO in Europe, a figure of less than 1000 complaints causes skepticism.
The order of treatment in The Financial Commission:
- A trader has the right to file a claim with the organization within 45 days from the moment the incident occurred. You must first contact the broker and only when the answer is not received within 5 days (14 days in some cases) or the broker does not like the trader’s response, an application is submitted to The Financial Commission.
- On the Commission’s website, the trader fills out an application: indicates contact details, the essence of the claim with corroborated evidence (similar to the filing of an application to the regulator). A description of the subjective vision of the situation by the trader is allowed.
- The trader justifies the amount of the claim, putting a detailed calculation.
In the event of a broker’s withdrawal (exclusion) from the organization, the claim will be satisfied only if the application is submitted to The Financial Commission before the broker’s membership is canceled.