As a client with IG Markets, all of your funds are safely held in a separate trust account at a top-tier Australian bank. This goes above and beyond what is required by our regulator, ASIC.
Hedging, and why it is relevant to client money protection
We hedge client exposures in the underlying market (on a net basis, or directly through our DMA offering) but we only use our own funds to finance such hedging activity. Some other Australian CFD providers routinely use their clients’ money (as opposed to their own money) to hedge their risk from clients. While this practice is permitted under ASIC rules (provided it is properly disclosed to clients), we believe it exposes clients to counterparty risk from hedging counterparties and other clients. Some small CFD providers are a particular risk, as they heavily rely on client money to fund their hedging positions and do not carry large cash reserves as a buffer against large market moves.
In other jurisdictions, such as the UK, this practice is restricted, and IG Markets believes such restrictions should also apply to the Australian market.
This is why IG Markets uses its own money for hedging purposes, has large cash reserves and sophisticated risk management systems. As a result, counterparty risk with IG Markets is very low compared with some other Australian providers.
Before opening a CFD account, you should ask your provider the following questions. If they can’t answer “Yes” to all, then you're not getting the best possible client money protection.
| Questions to ask your CFD provider | IG Markets |
|---|---|
| Are you regulated by ASIC? | Yes |
| Do you only use your own funds (not my money) to hedge? | Yes |
| Do you hold all of my money in regulated trust accounts at top-tier Australian banks? | Yes |
| Do you also segregate my net unrealised profits in regulated trust accounts at top-tier Australian banks? | Yes |
Strength and Security
IG Markets Limited is owned by IG Group Holdings plc, a FTSE 250 company. As at November 2011, IG Group Holdings plc’s market capitalisation was AUD$2.5 billion. Dealing with a company that is part of a listed group affords you strength and security; you have wider access to financial details of the group and you have greater comfort that the group employs high levels of corporate governance. By dealing with IG Markets Limited, you benefit from the resources, global coverage and service of a multinational listed group with more than 130,000 clients worldwide.
Founded in Australia in 2002, IG Markets is Australia's original CFD provider and has collected a multitude of industry awards over the years. As a group, we have been providing retail customers with the ability to trade via derivatives since 1974.
IG Markets is not an investment bank, has no exposure to corporate or sovereign debt and does not initiate speculative positions in the market. Furthermore, the IG Group is debt free, has substantial liquidity and significant surplus regulatory capital reserves over its regulatory requirements. Visit our About Us page for more information about IG Markets and IG Group, or to discover more about how your money is safeguarded online, visit our Security page.