Negative Balance Protection
This protection is only available to retail customers and ensures that they cannot lose more money than they have invested.
In exceptionally volatile markets there is a risk that a close-out order is not able to be enacted. This would be because there is basically no trade at that price, as the market gaps, so this leaves clients at risk when, despite their and the broker's best efforts, their account goes into negative territory. What this protection does is ensure that the Broker is held responsible for any negative balances and the retail clients will not be accountable for any losses below zero on their account.
Financial Services Compensation Scheme (FSCS)
In the unlikely event of USG UK going insolvent, this scheme provides protection from the government for up to £85,000 of each client deposits.
It is a non-profit-making independent body which is financed by levies on authorised financial services firms. The scheme's rules are made by the FCA and are contained in their handbook.
The FSCS is the UK's statutory deposit insurance and investors’ compensation scheme for customers of authorised financial services firms. In simple terms this means that the FSCS can pay compensation to the customers of a firm if it is unable, or unlikely to be able, to pay claims against them.
The cover has been increased to GBP 85,000. This is the maximum amount that can be compensated to each individual client of each financial services firm. Please note though that the cover is for each individual not each account.
The purpose of the segregation of clients' funds from those of the company's, is to protect the client. As an FCA authorised and regulated firm the way in which we hold and deal with clients' money is governed by the FCA's rules, especially the Client Money Rules.
These rules require that clients' monies are held in a separate bank account to that of the company's money. The bank accounts that hold the client monies are established with FCA prescribed acknowledgment letters in which the Bank recognises that the funds are held in trust for the client and are separate from those of the company.
The reason for this is that in the, albeit, unlikely event of the company becoming insolvent then the monies held on trust for the clients will still be available to them.
We take our regulatory obligations under the FCA Client Assets (CASS) rules very seriously. All Client Money is held in segregated accounts with Tier 1 Banks, but if you require further information on this subject, please refer to our Client Money and Assets Policy available from our website.
In addition to our own internal Client Money processes and compliance oversight, external auditors conduct annual reviews which are also reported to the FCA. We are also obliged to submit comprehensive monthly Client Money and Assets Returns (CMAR) directly to our regulator as part of their supervision objectives. USG UK does not hold any proprietary trading risk exposure and executes client’s transactions through straight-through-processing. USG UK does not pass segregated client money to hedging counterparties, neither do we initiate speculative positions in the market.
You can see more about our Client Money Policy and Client Protections here.