If you want to trade using a lot of money, you should open up a specific account with this money at a local bank or with a local broker. If you decide to trade CFDs up to 20,000 pounds, then it’s perfectly fine to use a foreign CFD broker. Make sure that the following points are in order.
Verify the financial watchdog
A lot of brokers have their headquarters in Cyprus, because it is a tax haven. This doesn’t mean that the broker doesn’t have a license with a financial watchdog. Take Plus500, for example; their headquarters can be found in Cyprus and in London. Although the London office isn’t very big, the broker does have an official registration with the Financial Conduct Authority of England.
If a broker is registered with a foreign watchdog, it’s important that you check up on the rules and requirements of this watchdog. Up to what amount is your money safely stored at the broker? In the rare case that a broker goes out of business, you would like your money back right?
Harbouring client’s money
Luckily most brokers do a lot of things to harbour their client’s money safely. Plus500 has a separate account for its traders’ funds; the company doesn’t trade with this money itself. If Plus500UK goes out of business, the Financial Services Compensation Scheme (FSCS) will cover up to £50,000 per customer. This means you can safely trade using Plus500.
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