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As used in the Forex market the term ‘segregated account’ means a special type of account used by the broker to keep aside clients assets from its assets. There are several reasons why this separation of funds is important. The primary reason for this separation is to create a clear severance between the two groups of assets. When done, this ensures that money from either side is used for the correct purposes only. For instance, there happen cases when the broker is tempted to finance its firms operation using clients’ monies. If segregation is not allowed, this is very possible simply because it would be very hard to separate the monies. Benefits Of Segregated Accounts The ultimate benefit of using segregated account is clears as stated in the definition- to create a clear cut separation between the client and the broker’s money. First, this clear severance help limit changes of using either money for a wrong purpose. The ultimate benefits of this are to both the broker and the clients. Both the two parties enjoy outstanding accountability of their funds. There are cases when the Forex brokerage firm become insolvent and bankrupt. This can happen to any Forex broker and there is no exception. During insolvency, the broker is barred from using clients’ funds to pay off its creditors or finance its expenses because it is separated recognized as belonging to clients. The clients’ funds are henceforth tied up in litigation during these hard financial times for certain duration. Integrity in the Forex market is maintain by segregation if accounts. Every financial market heavily relies on integrity and values it very much. Just like any other financial markets, there are scammers and fraudsters in the Forex market who just out there to make ill-wealth. Segregation of account also helps maintain the security of the investor’s funds. There are lots of risks involved when dealing with Forex brokers. This including loosing even your entire investment. Maintaining a segregated account ensures that your funds are safe and not interfered with by your Forex broker. A Forex broker can cease to operate due to financial hardship and in such case the clients’ funds are not affected and remain intact. The client money held in a segregated account is protected and ring fenced from trade credits by the Forex broker. Another advantage of segregated account is that it allows easy and proper management of clients’ accounts. These include portability and flexibility of assets. Here, it very easy to tailor the clients’ portfolio to limit exposure to some sector of individual company or economy at large. Additionally, maintaining segregated account greatly help in tax management. An investment scheme has a primary goal of achieving high profitability but the secondary goal is achieving tax efficiency. Through segregated accounts, the company is able to achieve proper management of capital gain and losses. This help in determining the appropriate tax levels. Regulations Of Segregated Accounts Forex brokerage companies are required by law to impose by regulatory Forex bodes to maintain segregated account. The law requires that all funds deposited by the clients and his assets are kept in a segregated account. The segregated accounts are constantly monitored by the Forex regulatory body controlling the brokerage firm. This is done to avoid any likely future acts of criminal on the clients’ accounts. Conclusion Both the Forex brokers and the trader benefit from maintaining segregated account. Both the broker and the trader need to have clear accountability of their funds. It is therefore very important to check if the Forex broker you trust your money with uses segregated account for your funds or not. The best part is that Forex regulatory bodies enforce brokers to maintain segregated accounts. It is therefore rare to find Forex brokers that do not maintain segregated account if they are regulated. It's important to keep your funds safe in a segregated account. For that I would recommend a regulated broker which also acknowledged as "best broker Asia" with segregated account: Insta Forex review. Additionally, make sure you are already in good hands by reading how to choose an online broker.
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seggregated account, forex broker, currency trading, finance,
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