Lord Prime's website says you will not owe money to your broker. Clause 4.14 says you must pay the company within 2 business days if you owe more than your balance.
Negative balance protection is a limit that stops you owing more than you put in. Without it, one fast market move can leave you owing the broker money on top of your deposit.
Why this matters
A gap or a fast market can take your account below zero. The page that sold you the account says that cannot happen. The contract gives you 2 business days to find the money.
Exhibit 1Every flagged clause gets its own number so you can point at this one. The number does not change, so a link to it keeps working.CriticalHow much this clause can cost you, in our reading. Critical can take your money or your profit. Warning can delay or limit it. Notice is simply worth knowing before you sign.Harder than usualHow ordinary this wording looks next to the contracts we read. This is our reading of the clause, not a count of other brokers.2 working daysThe figure this clause puts a number on, taken from the broker's own words.
If the Client has to pay the Company an amount exceeding the balance of his account, such amount must be paid within 2 (two) business days from the date of occurrence of the Client's obligation.
Firms licensed by the FCA, and firms following ESMA rules, must give retail CFD clients negative balance protection, so a client cannot lose more than the money in the account. This contract advertises that protection and then sets out how the company collects a negative balance.
LORD PRIME is not licensed by these regulators, so this is a comparison of practice, not a finding of any breach.
- Same clause as Exhibit 2Both findings come from the same clause in the document.Clause 4.15 is both the reason the promise fails and the route to another person's money.