Daniel K Cooper#77

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What are investor compensation schemes in forex regulation?

Compensation schemes reimburse clients if a regulated broker becomes insolvent. For example, the UK’s FSCS covers up to £85,000 per client, while CySEC’s ICF covers up to €20,000. Benefits: protection of retail funds and confidence in regulated environments. Risks: schemes have limits, so large accounts may not be fully protected. Institutions rarely rely on such schemes but value the credibility they add. Retail traders should always check if their broker participates in compensation funds. These mechanisms highlight a critical point: regulation not only monitors brokers but also creates safety nets for investors when things go wrong.