A little over three years ago, one of the leading brokers in the international Forex scene declared bankruptcy for the famous Black Forex Thursday with the collapse of the Swiss Franc pairs.
The previous year I had opened an account with that same broker and shortly before its bankruptcy I withdrew the money to give another use.
However, in spite of this, I suppose that I remained as a customer of Alpari in their databases, because later, after the collapse of the broker, emails began to arrive with information about the situation of the settlement of the debt with the creditors, that is, the customers.
I never paid much attention to the process for lack of personal interest, obviously, but I always kept coming some other email about the situation.
The other day I received a new email in which it was said that it was supposedly the “Final Communication“.
In this case it was the delivery of the final report of the special administrators, which was carried out by KPMG.
Curiously, the global brand, based in Russia, was not too affected by the issue, as it continued to stand without any problem.
With that you realize that many of these “global” brokers are nothing but a kind of franchises that use the brand in different regions.
In this case Alpari UK only used the “Alpari” brand, as well as its know-how and trading facilities, but the capital of the companies, in other words, the owners, different.
Did Alpari’s customers recover the money after the bankruptcy of that broker?
Anyway, let’s see what finally happened with the clients, that is, us, the traders, and if we could recover money this time.
About a year ago, the result of the reimbursements was ready for the vast majority of customers, and things did not go as badly as we might think.
Let’s see, the total amount of debts with customers was 95.8 million dollars, of which 78.2 million were recovered, plus or minus 82% of the original funds.
The rest, those $ 17 million stayed on the road with the KPMG rates of 10.8 million and other legal fees of 2.3 million.
As we can see, the fees charged by the administrators are not a bit of turkey, which should teach us that the legal-financial sector is a very good payer in the London city, which is well known by all, obviously.
Removing those figures, the thing in the end was not so bad, because recovering the order of 80% of the funds you had in the broker is something that many would sign in case our brokers went bankrupt.
In this case it was the FSCS that distributed their compensations – up to 50,000 GBP – more quickly and efficiently, leaving the rest of the hands off the compensations taken from the “pool” of funds that could be rescued in the books, which was finally managed KPMG.
In this case we have to take into account that there were more than 12,000 accounts with the right to charge and that most of those that were “average” accounts, type one or a few thousand dollars were able to recover all or almost all of their money.
Interestingly, more problems had those large customers with figures above 50,000 pounds, which of course were not covered by the FSCS; In addition, according to the judge, accounts of less than USD51.50 were not entitled to compensation for funds withdrawn from the company and in that case they should go to the FSCS.
FSCS broker protection worked
Most of the clients that were left, which were transferred to the broker ETX Capital, ended up receiving, therefore, a significant amount of the funds they had in moments before the bankruptcy.
It is true that many of these clients have not been able to use these funds during these years and that this has caused them a loss, and that many have not recovered the full amount, but the return amount is an endorsement of the regulation of jurisdictions. Like the English, since the traders of the rest of the world we can see how the brokers of this country are, not only quite safe, but they have a quite large protective umbrella.
Therefore, with this case we can already say that as long as things continue that way, opening accounts with British brokers is one of the safest practices we could do when choosing a broker to operate; brokers that are regulated of course.
By the way, I have not heard of significant broker bankruptcies for some time.
So calm I think it presages that sooner or later we will see some new wave.
You just need to start having problems in the market or some special event and we will see some other reputable broker with problems.
On the other hand, remembering the Interdin case, I wonder how things will go for the affected Spanish clients. I’ll leave that for another time.
Greetings and good trading.