Andrew Merry, managing director of Capital CFDs http://www.capitalcfds.com.au , said that the discovery that more than 30 per cent of providers had failed to comply with client money laws was a very real concern.
"After MF Global's collapse, it is disheartening to read that there are a large proportion of providers who are not complying with the most important procedure in running a company - the protection of client money," he said.
Andrew Merry, of Capital CFDs, is the spokesperson for the newly established Australian CFD Forum, along with other prominent Forex & CFD brokers in Australia like IG Markets, CMC Markets, GFT and City Index. All have a mandate to comply with a higher standard of client money protection along with 15 other Best Practice Standards, which each member is required to adhere to.
Merry said "the key standard which is causing discussion is that of client money. The forum advocates that client money should not be used for any operational purposes, including the hedging of client positions, but rather should be safeguarded in client money trust accounts. This is the safest investor protection model and therefore adopted as a best practice standard by the forum".
"The establishment of the CFD Forum represents the creation of an industry body which requires all members to comply with best practice standards," Andrew Merry said.
Local brokers questioning the Australian CFD Forum, including Matt Murphie from FP Markets and Andrew Budzinski from IC Markets, employ a DMA & ECN model, which uses client money when hedging positions in the underlying market.
Andrew Merry suggests "The CFD Forum’s purpose is to provide clarity to CFD traders, for traders to feel assured that they are dealing with providers that have the highest level of corporate governance and ones that adopt the best practice standards. Ultimately it has been created for the benefit of the client and to ensure investor protection.”
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