How does FP Markets process its traders’ orders?
- What you should know when trading CFD online
- How FP Markets provides Safe Trading Environment?
- FP Markets uses client money to hedge positions
- 100% Hedging and Market Manipulation
- What is FP Markets?
As a client of FP Markets, all your client monies are deposited into trust accounts with banks within Australia.
- hedge 100% of client positions;
- run no proprietary positions;
- are Australian owned and are regulated by the Australian Securities and Investment Commission (ASIC).
For the List and Conditions of Deposit and Withdrawal Methods for FP Markets’ live trading account, please visit the page here.
What you should know when trading CFD online
Over-the-counter CFDs, such as the CFDs provided by FP Markets, are not guaranteed by an exchange or clearing house.
It is therefore important that you consider your counterparty risk when selecting a CFD provider.
You should consider the risk that a CFD provider may not have the financial resources to pay you the amounts it owes you.
That is what, when selecting a CFD provider, you should ask:
- Are you regulated? (such as by ASIC)
- Are you 100% hedged and ensure that no proprietary positions are taken?
- Do you hold my funds in a trust account at an Australian bank?
How FP Markets provides Safe Trading Environment?
FP Markets believes your counterparty risk with FP Markets is low to moderate, as FP Markets is well capitalised, has no debt, does not run proprietary positions and has sophisticated risk management systems that have been tested during extreme market conditions.
FP Markets holds your funds in trust accounts with banks within Australia.
All CFDs orders issued to FP Markets’ clients are immediately backed by corresponding hedge contracts in the underlying market.
This model aligns FP Markets’ interests with their clients.
It also significantly reduces your counterparty risk with FP Markets.
For the Comparison of FP Markets Forex Trading Platforms, please visit the page here.
FP Markets uses client money to hedge positions
FP Markets uses client money to hedge positions, which means you have some counterparty risk with the hedging counterparty.
To facilitate hedging, FP Markets engages top tier institutions that are an integral part of financial markets.
These hedging positions need to be paid for.
In the past, hedging has been facilitated by withdrawing funds from the Client Money Trust Account (s981B Trust Account) to pay FP Markets.
A byproduct of this process is that clients become unsecured creditors for the net amount owing (if any) by FP Markets to them.
This was done to comply with current law.
The shortcomings of current regulatory requirements have recently been highlighted.
There is no protection or claim to the funds once they leave the trust account.
100% Hedging and Market Manipulation
All market participants (including FP Markets) have a legal obligation to ensure that the markets are fair, orderly and transparent.
As FP Markets hedges all clients trades 100% in the underlying market, FP Markets clients should be aware that some practices can constitute market manipulation.
Manipulating the market through creating a false or misleading market is conduct prohibited under the Corporations Act.
It is the Client’s responsibility to be aware of unacceptable market practices and the legal implications.
It is recommended that clients read through the guidelines set out by ASIC and the ASX to understand the rules and potential consequences of breaching such rules.
What is FP Markets?
FP Markets Pty Ltd is an Australian owned company.
FP Markets has been trading in Australia since 2005 and rapidly became a dominant player in the Direct Market Access (DMA) service.
The company strongly believes that such a transparent model is the fairest and provides best value for retail clients.
FP Markets is well-resourced, has thousands of clients and offers both the comfort of being an Australian business, yet still provides the benefits of well-resourced global infrastructure so that clients can take advantage of worldwide opportunities.
FP Markets has become one of the most awarded CFD providers in the industry over the years.