With the continuous development of the financial industry, the market continues to be flooded with numerous investment enterprises and platforms. Whether it is offline physical operations or online finance activities, any investment behavior is subject to certain risks.
Knowing how to avoid and anticipate risks are important, particularly when investors are looking to choose a financial institution. Blindly choosing a subpar platform may not provide you with basic capital security protection and may bring greater hidden dangers to your future investments and trading.
In general, fund security should not be ignored in investment transactions. A comprehensive segregation of funds policy is vital for both investors and financial service providers, not only to reduce risk but also to improve the efficiency of capital use.
What Is Segregation Of Funds?
The segregation of funds that we are concerned about two core meanings:
1. Separate management of funds between clients and companies: Financial service providers use formal bank custody services to store client funds and margins separately from the company’s operating funds in different bank accounts, that is, separate accounts. Client funds can only be used for the clients’ intended transactions and not for the financial institution’s needs.
2. Separate management of funds between each client: the funds between each client are managed separately, and a client’s funds can only be used for their own transactions, settlements, and other functions.
The original intent of the segregation of funds is to protect investors’ funds as well as ensuring that their assets are not misappropriated by the partner brokerage firms.
The Main Role Of Segregation Of Funds
First of all, the main role of the segregation of funds is to protect the safety of investors’ funds. It ensures that clients’ funds cannot be used for purposes other than their own transactions, let alone be used as operating funds of the partner brokerage firm. Segregating and managing clients’ funds in a bank account separately from the company’s is an efficient and transparent way to protect the safety of the investors’ funds.
Secondly, it reduces the risk of clients’ investment and avoids greater losses. All types of investments carry certain risks, and if a cooperative brokerage firm encounters investment losses or operational bankruptcy, capital segregation can recover and help to avoid significant losses to investors.
Thirdly, fund segregation can maintain the normal development of the market, as well as promote the industry to build a healthy business environment. Through the supervision of authoritative financial institutions and the management of funds by formal banks, it is conducive to the protection of personal assets. In addition, it can also maintain a long-term and sound cycle of corporate development.
In the past, peer-to-peer (P2P) network lending platforms were prevalent. However, many P2P lending platforms have experienced bubble bursts in recent years, which might lead to investors suffering heavy losses. The development of the industry has also been greatly affected by the resulting negative impact. One of the important factors for bubble burst is that the funds have not been effectively and reasonably regulated.
Some P2P platforms do not have intermediate accounts – all processes and procedures are completed by the platform itself. Investors’ borrowings are not directly remitted to the borrower’s account, but often to the platform account, or company and shareholder accounts first. There is also the fact that as long as the pool of funds reaches a certain amount, some unscrupulous operators might directly flee with the money, leaving many users with heavy losses.
Therefore, one can see the security of funds akin to the first domino falling. And when the most important card is drawn off, everything cascades downwards.
Effective Criteria for Segregation of Funds
Funds segregation is vital to protect the safety of investors’ property. By now, one might be curious: what are the criteria for measuring effective funds segregation for brokerage firms? There are several general assessment criteria for your reference, as detailed below.
First, formal and mature financial service providers will take the initiative to publicly state that they will segregate company funds from client funds for custody.
Case study 1: Doo Prime publicly states on its official website that it segregates client funds from the company’s operating funds in a cooperative bank. Meaning client assets are held and kept in custody, separated from the brokerage firm’s own funds, and assets are regularly accounted for, confirmed, and reconciled. Doo Prime is also subject to a strict audit system of international banks, where client funds are earmarked and protected at all times.
For more information, please see: https://www.dooprime.com/en/trading/funding
The second criteria to look for is a broker-dealer-partnered custodian bank with public access for clients and account information that is consistent with the bank’s information.
Case study 2: Doo Prime has established partnerships with many mainstream banks around the world, and client deposits are distributed in a number of top investment grade banks, including Signature Bank, and Bison Bank. Every client, through the official website of Doo Prime, can publicly check the aforementioned bank information. At the same time – when applying on the platform to deposit and withdraw funds – Doo Prime clients are also able to pay attention to the bank information for verification.
Simultaneously, the safety of client assets is subject to regular scrutiny and internal audits by regulators, and Doo Prime is required to maintain capital adequacy in accordance with strict regulatory requirements in order to be risk resistant and protect the interests of its clients.
The third criteria is possessing a professional regulatory license granted by international authoritative financial institutions, and strictly complying with regulatory regulations.
Case study 3: Doo Prime holds financial regulatory licenses in Seychelles, Mauritius and Vanuatu, and the legal entities of Doo Group have been strictly regulated by many of the world’s top financial regulators, including the United States Securities and Exchange Commission (US SEC) and Financial Industry Regulatory Authority (US FINRA), United Kingdom Financial Conduct Authority (UK FCA), the Australian Securities & Investments Commission (AU ASIC), the Hong Kong Insurance Authority (HK IA), the Hong Kong Customs and Excise Department (HK C&ED), the Hong Kong Companies Registry (HK CR), the Seychelles Financial Services Authority (SC FSA), Mauritius Financial Services Commission (MU FSC), and the Vanuatu Financial Services Commission (VU FSC).
This is because Doo Group understands that traders reside all around the globe. As such, Doo Group has entities operating in various global locations, including Dallas, London, Sydney, Singapore, Hong Kong, Dubai, Kuala Lumpur as well as other regions.
Protecting The Safety Of Investors’ Transactions
Doo Prime has always put the interests of its clients first and has cooperated with international banks to effectively protect the segregation of client funds and the safety of their properties. It holds several professional financial licenses and is strictly regulated by international authorities.
At the same time, Doo Prime has also purchased Professional Indemnity Insurance (PII) with a maximum liability limit of USD500,000 for all parties. The insurance company will indemnify any claims made against Doo Prime, providing clients with a safe and stable trading environment and services.
Fund security is the cornerstone of financial markets, and moreover, an important factor in promoting the healthy development of the industry. Doo Prime will rely on its innovative and constantly evolving technology to protect the safety of each client’s funds and property, strive for the upper reaches of the industry, promote healthy development, and create a new trend of an easy, convenient and safe investment.
| About Doo Prime
Doo Prime is an international pre
–eminent online broker under Doo Group, which strives to provide professional investors with global CFD trading products in Securities, Futures, Forex, Commodities, Stock Indices, and Funds. At present, Doo Prime is delivering the finest trading experience to more than 60,000+ professional clients, with an average monthly trading volume of USD51.223+ billion.
Doo Prime entities respectively hold the relevant financial regulatory licenses in Seychelles, Mauritius, and Vanuatu with operation centers in Dallas, Sydney, Singapore, Hong Kong, Dubai, Kuala Lumpur, and other regions.
With robust financial technology infrastructure, well-established partnerships, and an experienced technical team, Doo Prime boasts a safe and secure trading environment, competitive trading costs, as well as deposit and withdrawal methods that support 10 different currencies. Doo Prime also incorporates 24/7 multilingual customer service and extremely fast trade execution via multiple industry-leading trading terminals such as MT4, MT5, TradingView, and InTrade, covering over 10,000 trading products.
Doo Prime’s vision and mission are to become a financial technology-focused broker, streamlining international global financial products investment.
For more information about Doo Prime, please contact us at:
Europe : +44 11 3733 5199
Asia : +852 3704 4241
Asia – Singapore: +65 6011 1415
Asia – China : +86 400 8427 539
This article contains “forward-looking statements” and may be identified by the use of forward-looking terminology such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “hope”, “intend”, “may”, “might”, “plan”, “potential”, “predict”, “should”, or “will”, or other variations thereon or comparable terminology. However, the absence of such terminology does not mean that a statement is not forward-looking. In particular, statements about the expectations, beliefs, plans, objectives, assumptions, future events, or future performance of Doo Prime will be generally assumed as forward-looking statements.
Doo Prime has provided these forward-looking statements based on all current information available to Doo Prime and Doo Prime’s current expectations, assumptions, estimates, and projections. While Doo Prime believes these expectations, assumptions, estimations, and projections are reasonable, these forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond Doo Prime’s control. Such risks and uncertainties may cause results, performance, or achievements materially different from those expressed or implied by the forward-looking statements.
Doo Prime does not provide any representation or warranty on the reliability, accuracy, or completeness of such statements. Doo Prime is not obliged to provide or release any updates or revisions to any forward-looking statements.
Trading in financial instruments involves high risks due to the fluctuation in the value and prices of the underlying financial instruments. Due to the adverse and unpredictable market movements, large losses exceeding the investor’s initial investment could incur within a short period of time. The past performance of a financial instrument is not an indication of its future performance. Investments in certain services should be made on margin or leverage, where relatively small movements in trading prices may have a disproportionately large impact on the client’s investment and client should therefore be prepared to suffer significant losses when using such trading facilities.
Please make sure you read and fully understand the trading risks of the respective financial instrument before engaging in any transaction with Doo Prime’s trading platforms. You should seek independent professional advice if you do not understand any of the risks disclosed by us herein or any risk associated with the trade and investment of financial instruments. Please refer to Doo Prime’s Client Agreement and Risk Disclosure and Acknowledgement Notice to find out more.
This information is addressed to the general public solely for information purposes and should not be taken as investment advice, recommendation, offer, or solicitation to buy or sell any financial instrument. The information displayed herein has been prepared without any reference or consideration to any particular recipient’s investment objectives or financial situation. Any references to the past performance of a financial instrument, index, or a packaged investment product shall not be taken as a reliable indicator of its future performance. Doo Prime and its holding company, affiliates, subsidiaries, associated companies, partners and their respective employees, make no representation or warranties to the information displayed and shall not be liable for any direct, indirect, special or consequential loss or damages incurred a result of any inaccuracies or incompleteness of the information provided, and any direct or indirect trading risks, profit, or loss arising from any individual’s or client’s investment.