Hello all,
I have a corporate client who opened an account with the Seychelles branch of a Dubai-based, reputable commodities broker. Established and worldwide renowned firm, but an enviable financial position. They have been testing them out with $3M on account for about a year now and are ready and willing to go 3-4 times that size.
However, they have requested (me) to arrange an insurance policy for them guaranteeing the amount they deposit in case of the broker's insolvency. I have tried to explain that as STP/DMA broker (direct market execution, no market-making risk), they don't have any operational risk, and that by law, their account is kept fully segregated from the broker's own cash. But they are not taking it, and demand that I arrange the aforementioned insurance policy for them. The banking facility (which acts as custodian of funds as well) is located in the UK, where the broker has an omnibus account with the clients' sub-accounts lodged there as well.
The client is willing to pay all underwriting costs and the annual premium that the broker requires. I tried Lloyd's of London Dubai, but since it is the Seychelles arm we're talking about, they could not do the underwriting for this. They have done similar things for UAE brokers, I was told. To be clear, the client wants to have its deposit secured, in case of a broker failure. If they lose money in the market, so be it, they are obviously fine with the risk they are taking.
I'm asking @Martin Everson @Sols @JohnnyDoe and whoever familiar and expert in financialmarkets for help. This is a first for me. My intuition tells me I should speak with either a Seychelles insurance broker who would be willing to underwrite a $10M deposit guarantee, or with the UK, where the bank is located.
Please do let me know if you may be of assistance in the matter.
Thanks.
NVO
NB: If this thread is in the wrong forum, please move it to the appropriate one.
I have a corporate client who opened an account with the Seychelles branch of a Dubai-based, reputable commodities broker. Established and worldwide renowned firm, but an enviable financial position. They have been testing them out with $3M on account for about a year now and are ready and willing to go 3-4 times that size.
However, they have requested (me) to arrange an insurance policy for them guaranteeing the amount they deposit in case of the broker's insolvency. I have tried to explain that as STP/DMA broker (direct market execution, no market-making risk), they don't have any operational risk, and that by law, their account is kept fully segregated from the broker's own cash. But they are not taking it, and demand that I arrange the aforementioned insurance policy for them. The banking facility (which acts as custodian of funds as well) is located in the UK, where the broker has an omnibus account with the clients' sub-accounts lodged there as well.
The client is willing to pay all underwriting costs and the annual premium that the broker requires. I tried Lloyd's of London Dubai, but since it is the Seychelles arm we're talking about, they could not do the underwriting for this. They have done similar things for UAE brokers, I was told. To be clear, the client wants to have its deposit secured, in case of a broker failure. If they lose money in the market, so be it, they are obviously fine with the risk they are taking.
I'm asking @Martin Everson @Sols @JohnnyDoe and whoever familiar and expert in financialmarkets for help. This is a first for me. My intuition tells me I should speak with either a Seychelles insurance broker who would be willing to underwrite a $10M deposit guarantee, or with the UK, where the bank is located.
Please do let me know if you may be of assistance in the matter.
Thanks.
NVO
NB: If this thread is in the wrong forum, please move it to the appropriate one.
