From financemagnates
Retail traders have moved well beyond the days of chasing only high leverage and low spreads. Standard regulatory protections no longer suffice as FX/CFD clients increasingly expect added layers of financial security. Now, firms can secure these safeguards, starting from $30,000 annually (depending on the number of clients). In fact, around 40 companies within Lloyd's of London now offer private insurance for client funds, reflecting a broader industry shift toward heightened financial accountability.
Additional insurance services for client funds are growing in popularity in the FX/CFD sector. Only in the past several months, they have been added to the offerings of VT Markets, EC Markets, Hantec Markets and ATFX.
Specialized “Excess of Loss” (or EoL) insurance aims to protect clients in case of broker insolvency, providing an additional layer of confidence for traders with larger balances. According to information obtained by Finance Magnates, Lloyd's has issued more than three dozen policies for FX/CFD-related firms.
“Each policy is tailored specifically to the broker's unique risk profile, client demographics and operational needs,” Lloyd’s commented for Finance Magnates. “Customization ensures that the coverage meets the precise requirements of each firm.”
VT Markets emphasizes that additional insurance is a key part of its approach to client safety. “While regulatory guarantee funds provide a baseline level of protection, this policy offers an extra layer of security, particularly for clients with higher account balances,” the broker commented.
Although this makes sense, additional client fund insurance is not yet a standard practice across the industry. Many brokers still rely solely on regulatory protection schemes like CySEC's Investor Compensation Fund or the UK's Financial Services Compensation Scheme (FSCS), which provide compensation limits of up to €20,000 and £85,000 per person, respectively.
