Safeguarding – the legal details

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Written by Currencies
Updated 10 months ago

Safeguarding is an FCA-regulated process which protects the money you hold with Currencies Direct.

Put simply, it means that we must keep your money separate from ours, so that if we went out of business, you’d have a way to get back most (if not all) of your money.

As with many financial regulations and systems, it’s a bit more complicated than that.

So, here are the details in case you’d like to delve a little deeper.

Safeguarding – the legal details

“Currencies Direct is authorised by the Financial Conduct Authority as an Electronic Money Institution (“EMI”). As an authorised firm, we are required to safeguard client monies by holding those monies in a segregated client account, separate from our own business accounts. These accounts are designated as client accounts and protected in the event of our insolvency or the insolvency of the banks we use to hold the client funds.

Safeguarding is the obligation to identify and keep client monies segregated and protected from all other funds that the business may hold, moving the funds to a safeguarding account if they are still held by the firm the day after receipt. The obligation commences as soon as funds are identified as client monies (and stops when funds are remitted to the clients’ recipient). For an electronic money institution, relevant funds are deemed as follows: Funds received by the firm when e-money is issued – i.e. where funds are visible in a client’s wallet.

The funds are no longer deemed relevant once the firm has remitted them to the recipient and can reasonably assume that the funds have reached the recipient's bank account.

Funds that are not deemed relevant include the following:

Deposits for forward contracts, until they are released into the client’s wallet following the forward contract being settled.

Margin calls on forward contracts until they are released into the client’s wallet following the forward contract being settled.

Unclaimed or unknown funds – where funds come in with no client reference, and despite reasonable efforts we cannot allocate them to a client wallet

Where client funds are subject to safeguarding, that means that client monies benefit from the arrangements put into place to protect these funds in the event of an insolvency event of the firm. Client funds are held in segregated accounts, and moved to safeguarded accounts if the monies are still with the firm the day after receipt. Both accounts are designated as client accounts.”

Safeguarding: the FCA guide

https://www.fca.org.uk/firms/emi-payment-institutions-safeguarding-requirements

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