Protecting your money

We protect all our clients' funds, and we never use client money for hedging purposes.

Our client money protection

IG only uses its own funds for hedging
IG does not pass segregated client money through to hedging counterparties
All client money is held in segregated client bank accounts in approved, AA-rated top-tier banks
IG also segregates net unrealised profits, which is above and beyond ASIC requirements
IG is not an investment bank
IG does not initiate speculative positions in the market
IG has no exposure to corporate debt
IG is regulated by ASIC
IG is owned by IG Group Holdings plc – a FTSE 250 company listed on the LSE, with a market capitalisation of A$3.5 billion (May 2013)
IG was founded 39 years ago, and was the first Australian CFD provider, established in 2002

 

Where does IG hold my funds?

All money, including net-running, unrealised profits is held on behalf of clients in accounts with AA-rated top-tier banks.

Unlike some Australian CFD providers, we do not use client money for hedging purposes.

How does your provider use your money?

IG encourages you to trade with a safe and secure CFD provider. To understand how your money is protected, you should ask your broker these questions:

  • Do they use client money for hedging purposes?
  • Do they hold client money in an AA-rated ADI?
  • Do they segregate net unrealised profits?

If the answer to any of these questions is no, your money does not have the safest client money protection available, protection that IS offered by IG.

How does IG protect client funds?

IG is debt-free, with substantial liquidity and capital reserves significantly in excess of regulatory requirements.

  • IG also has a ‘Client Money Committee’ which ensures and reviews the adherence to regulations in all IG Group entities.
  • We have engaged PricewaterhouseCoopers LLP to conduct an independent review of our client money calculation procedures and segregation. By commissioning this report we have taken an additional step, over and above standard audit checks and our regulators’ requirements. The report is freely available to clients – please email us if you would like a copy.
  • Unlike other providers, we do not use your money to hedge in the underlying market.

IG lobbying for change

We believe in your right as a retail client to have your money fully protected – IG is lobbying government for a change to the client money rules and to remove the regulation that allows client money to be used for broker hedging purposes. This will provide all Australian clients with the client money protection they deserve. There is no other country in the world that allows licensed CFD/FX providers to use client money in this way.

What is hedging?

When you open a CFD position, some CFD providers may hedge that position in the underlying market.

For example, let's say you bought 1000 Westpac share CFDs. As the CFD provider sold the CFDs to you, it would have a corresponding short CFD position. If the price of Westpac shares went up, you would make a profit, while your provider would make a loss. To reduce this risk, some CFD providers may hedge client positions in the underlying market. In this case, if the provider did hedge, it would buy 1000 Westpac shares.

Now the CFD provider would hold two positions – a short position on 1000 share CFDs, and a long position on 1000 shares. If the share price rose, the provider would make a loss on the short position, but this would be offset by a profit on the long position. Likewise, if the share price fell, the provider would make a loss on the long position which would be offset by a profit on the short position.

Some Australian CFD providers use their clients’ money to hedge their risk from clients. While this practice is permitted under ASIC rules, we believe it exposes clients to counterparty risk from hedging counterparties and other clients.

IG has and always will hedge client exposures with our own funds in the underlying market (on a net basis, or directly through our direct market access offering).

Regulation

IG Markets is regulated by ASIC and is a holder of Australian Financial Services Licence 220440. IG Group companies are regulated by the local regulators in each country of operation.

As the longest established CFD provider in Australia and a global leader, IG Markets' staff typically have a wealth of experience in the industry, and are trained to exacting standards on an ongoing basis.

What happens if IG goes into liquidation?

As all deposits lodged with us are held on trust for you in a regulated trust account, in such circumstances those deposits would attract all the legal protections afforded to trust money.

Net unrealised running profits are also held in trust by us (in excess of our regulatory requirements) and would normally be similarly protected for your benefit as beneficial owner. Please see our PDS for further information.

Being a smart consumer

Choosing the right CFD provider is the first step in managing your trading risk.

Our PDS, Counterparty Credit Management and Hedging Policy and Financial Statements are available for you to download. It is also recommended you read our Regulatory Benchmark Disclosure, designed by ASIC to help you understand the risks associated with CFDs, assess your potential benefits and decide whether investment in CFDs are suitable for you.

ASIC has also produced a guide on its MoneySmart website, which can help you assess the risks of CFDs.

Related information

Our charges

Margin

Why IG?