The Financial Commission, the leading self-regulatory association dedicated to ensuring sound practices across the financial services industry, has substantially increased the maximum amount assured under its Compensation Fund.
The decision, which takes effect on April 9, will benefit clients of the Commission’s contributing members, which include international online brokerages that participate in global foreign exchange (Forex ), derivatives and cryptocurrency markets.
Specifically, the Compensation Fund will increase its maximum coverage amount to 20,000 euro ($24,500) per client of an A-Category Member. For the claims sought by clients of a B-Category Member, the maximum amount recoverable by a claimant was hiked to 5,000 euro ($6,119). This represents an increase of over 20 percent in US dollar terms.
The release noted that the FinaCom paid more than $1.5 million to beneficiaries in 2017. This is compared to the $157,326 awarded to broker member clients in 2016, a nearly tenfold rise on a year-over-year basis.
The Compensation Fund primarily exists as an insurance policy to protect members’ clients. The fund’s assets are financed through allocating 10 percent of the monthly membership fees and are held in a separate bank account. Traders of a company with the membership are eligible for compensation only if a member broker refuses to adhere to a judgment from the Financial Commission.
Supported by the Dispute Resolution Committee (DRC), which is comprised of recognized industry professionals, the Financial Commission is an external dispute resolution organization with the aim of resolving trader-broker conflicts. The FinaCom’s system helps facilitate a more streamlined and easy resolution process than other alternatives offered via typical regulatory channels such as arbitration or local courts.
In addition to providing dispute resolution and certification services to the participants of the traditional financial markets, Financial Commission recently extended its coverage to the crypto community and Blockchain startups seeking to launch initial coin offerings (ICOs).
