A Reason to Know Your Broker’s Financial Strength
There’s an article in on the Financial Time’s site that is worth giving a read. It involves an online spread trading company who has been shut down by the U.K. authorities. The article is titled FSA forces Global Trader to shut up shop.
If you are not familiar with spread-betting, it’s an alternative way of playing the markets in which you are, as the name implies, betting rather than buying and selling through the traditional market structure. Since the U.S. generally frowns upon betting, especially online, this is not something available to American citizens, but overseas it’s quite popular because of favorable tax treatment. (Click here for information on the subject at Trade2Win).
The article serves to highlight exactly why it’s a good idea to have your assets spread out and/or clearly insured to avoid losing them due to something you have absolutely no control over at all.
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