A. Limited Power of Attorney
Limited Power of Attorney (LPOA) is a legally binding agreement for the trader to place trades in the client’s account. LPOA does not transfer any kind of ownership of the account in any way. Client can abort the LPOA at any moment without any restrictions, requirements, or explanations.
The trader does not have access to the clients’ money and cannot transfer, deposit, or withdraw their funds except for the fees specified on the LPOA. The accounts are set up directly with the brokerage which clears all transactions and handles all transfers, deposits, and withdrawals. It is necessary for the client to sign a Limited Power of Attorney (LPOA) to authorize the brokerage to allow the trader to direct the trading of his account.
B. Tracking Performance in the Managed Account
All accounts held at FCMs have total transparency. Clients have 24/7 access to their accounts through read only access to their accounts either through an online report viewer or the trading platform. They can view the account, including balance, equity, closed positions, pending orders, open positions, net profits, and losses in a real time, but they will not be able to place any trades.
C. Safety of Funds
The Brokerage Firm in which funds are held is regulated by NFA (National Futures Association), CFTC (Commodity Futures Trading Commission) in USA, FSA (Financial Services Authority) in UK, FINMA (Federal Financial Market Supervisory Authority) in Switzerland, BAFIN (The Federal Financial Supervisory Authority) in Germany, or CYSEC(Cyprus Securities & Exchange Commission). The regulations set forth by these agencies are designed to help ensure the safety of the clients’ deposits. Brokerage firms are required to meet strict financial standards, including capital adequacy requirements. They are required to submit financial reports to the Regulator on a regular basis to show that they have more than enough funds to meet their liabilities in time. These standards are enforced by the Regulator, which has the right to fine firms and/or terminate a firm's regulatory status if there is a violation.
For more information about the regulations and rules have been issued by the above regulatory bodies, check the below websites: