Segregated Client Funds / Secure Business Model / ICS
The Safety of Client Funds is the Top Priority in Financial Services
We at Amenda believe that the most important element in providing financial services is safety and that the value of a service’s high level of convenience comes to life when the safety of client funds can be confirmed.
Amenda is equipped with an organizational structure, in which trusted external bodies provide protection of client funds on various levels. Traders can feel safe trading under Amenda's robust framework of fund protection, which our competitors do not offer.
Negative balance protection
Negative balance protection aims at protecting retail clients in exceptional circumstances where there is a price change in the underlying that is sufficiently large and sudden to prevent the broker from closing out the position as required by the margin stop-out protection, such that the client has a negative account value. In other words, large market events can cause gapping, preventing the automatic margin stop-out protection from being effective. The purpose of negative balance protection is to ensure that an investor's maximum losses at Amenda, including all related costs, are limited to the amount of total funds across the investor's trading account. This should include any funds yet to be paid into that account due to net profits from the closure of open positions associated with that account. An investor should not incur any additional liability connected with his/her trading. All ESMA-regulated brokers of leveraged products are required to provide negative balance protection to retail investors on a per-account basis. Please note, however, that negative balance protection is not available to professional investors.
How it works
Let's say you are a retail client with EUR 10,000 deposited in your trading account. Amenda's stop-out level for retail clients is 50%. This means, your position should be closed out automatically once your equity reaches EUR 5,000. As the market approaches the stop-out level, it undergoes immense volatility, creating gaps in the prices and a lack of liquidity to fill orders. While your automatic stop-out is triggered, you find your balance below zero by the time it is executed. In such an event, you qualify for negative balance protection, and your negative balance is offset to zero, leaving you with no liability beyond the amount you deposited.
Secure Business Model
Amenda adopts a 100% agency model; therefore, Amenda's finances are in no way affected by the profits or losses generated by client trades.
By adopting a 100% agency model Amenda also provides legal guarantee to a certain extent. This is because Amenda's license issued by the FCMC (Fianancial and Capital Market Commission), which conducts financial supervision, authorizes Amenda to operate only on an agency model.
Whether Amenda is operating within the boundaries of its license is not only subject to the FCMC's supervision, but it is also monitored by a law firm, a supervisory committee, an internal auditor, and an external auditing firm.
Market Maker (MM) brokers generally take a loss when client trades generate profits. This is because the revenue model adopted by MM brokers is dependent on the profits and losses of client funds.
For example, when a client holds a buy (sell) position, the MM broker will hold a sell (buy) position. In other words, Market Maker brokers take a loss when profits are generated from client transactions, while they profit when their clients take a loss. The financial condition of MM brokers can deteriorate quickly when clients unilaterally generate profits from a rapid change in the market.
Amenda is a broker that uses a 100% agency model (STP/DMA/ECN/NDD), and since all client orders are relayed to the cover destination, Amenda would never hold a position opposite to that of the client. Furthermore, Amenda's finances are never exacerbated by profits generated from client transactions in the event of rapid change in the market.
Segregated Client Funds
Amenda segregates funds in compliance with the strict regulations of the Republic of Latvia as well as the legislative acts of the EU. Amenda has entered into agreement with financial institutions indicating that client funds deposited into the account for accepting client margins belong to clients in accordance with the financial regulation of Latvia. As a result, in the unlikely event that Amenda incurs financial liability over the course of its operation, client margins are not affected in any way (client margins are legally protected).
Moreover, the margins deposited and withdrawn as well as account balances are constantly monitored by a financial administrator.
The financial administrator is also obligated to report the margins and financial status of Amenda on a monthly basis to the FCMC (Financial and Capital Market Commission), which monitors financial activities. At least once a year, an external auditor inspects whether the measures taken by Amenda are sufficient to ensure that client margins are legally protected and submits to the FCMC a report in writing regarding the inspection.
As such, client margins are managed under a carefully structured framework.
Investor Compensation Scheme (ICS)
Although it would be in the rare instance that Amenda may require it, considering the two aforementioned factors (business model and segregation of funds), clients are also protected by the Investor Compensation Scheme (ICS) for up to EUR 20,000 of their margins by Latvian law. In accordance with the Investor Protection Law and Investor Compensation Schemes Directive (Directive 97/9/EC), compensation at 90% of the irrevocably lost value of financial instruments or of losses incurred by the non- performance of investment services is guaranteed for an investor, but not more than EUR 20,000 for each client. Further information is available on the official web page of the FCMC.
Rihards StrengaCHAIRMAN OF CREDIT UNION ASSOCIATION OF LATVIA WWW.KAA.LV
There are many factors that impact the safety of my funds when making a deposit, from fund protection schemes and regulations to the monitoring system in place and the quality of the management team, but with Amenda, I would say that their management takes the safety of client assets seriously. In addition, they utilize a 100% agency model, so it is worth noting in my evaluation that they alleviate management risks while eliminating conflict of interest with clients. If trading forex with a peace of mind is what you're looking for as an investor, then Amenda is the forex broker for you.
Jānis Urtāns LEGAL PROFESSIONAL AT A MAJOR FINANCIAL INSTITUTION
Since I'm a legal expert who works at a major bank in Europe, I examined Amenda from the perspectives of regulation and safety. I can say that Amenda has all the licenses and permissions from the authorities of Latvia, EU, and EEA states and their forex services are safe and highly reliable. It is also worth noting that they comply with all the regulations to maintain these conditions. Amenda is definitely one of the viable choices if fund protection is essential to you.
Kristaps Gintauts AML SPECIALIST AT BALTIC INTERNATIONAL BANK www.bib.eu
I currently work as a compliance professional with Baltic International Bank, and I feel that Amenda offers impressively well-structured services along with asset protection of customers that is amazingly well thought out. I also trade forex personally and find that many brokers offer spreads that only appear tight and fees that only appear low to attract investors. In fact, many of these brokers intentionally widen spreads during volatile markets and manipulate executions to provide a trading environment that works against investors, but few investors catch on to this reality. Amenda is well received among expert traders because they managed to minimize trading costs by implementing a business structure that avoids conflict of interest even in areas that are often overlooked.
Igors Petrovs Banking professional
I have held COO and director positions at banks and investment funds of financial institutions, so I can easily assess the framework of business practices and services of financial institutions. When it comes to Amenda, I can see that they have an extremely disciplined compliance policy in place and that they have well established relationships with other financial institutions. These are aspects that are often neglected when evaluating forex brokers, but they're extremely critical characteristics for clients to examine, because they affect the safety of client assets held. Even the highest of service quality could have very little merit without the consistent provision of safety. Amenda's high safety standards for assets held is remarkable, considering the fact that it's also achieved some of the world's lowest trading costs as well as some of the most favorable trading conditions.