A review of managed forex accounts around the world
Foreign Exchange (ForEx) or foreign currency trading is no longer available only to the big banks and worldwide financial institutions, it is easily accessible to me, the retail client. But certainly at this early stage I am in no position to start whacking trades into the market myself, I would not know where to start.
Even if I decide I might like to learn more and perhaps do a training course to educate myself in the future, I do not have the time to embark on that journey right now. So, here I am having a look at what to expect of managed forex accounts around the world, not just here in the UK.
I figure if all the companies, in different countries are telling me to look for the same thing, and telling me what to expect from them, then I will know when I have found what I am looking for in the UK.
I have narrowed down my search to the UK, Spain, Australia, New Zealand, Dubai and Singapore. I have already established that each country has their own variation on our FCA (Financial Conduct Authority) and I have read enough to have made a clear decision on that note. I think I would be a bit silly not to go with a company who is working within clear and regulated guidelines.
I found a list easily enough of all the regulating bodies around the world. It is called the International Organisation of Securities Commissions or IOSCO.
Any trained broker can undertake financial activities, but to undertake regulated financial activities, the broker must be authorised by the appropriate governing body in that country.
It is important to know who the governing body is providing these guidelines and safety nets. Some countries have a dedicated government department who is responsible only for currency and stock market trading activity. Other countries have a government department who is responsible for all financial services including banking and insurances.
Currency markets are traded 24 hours, from Monday morning to Saturday morning. It is interesting to note that even though the New Zealand market opens first followed by Australia, according to the world clock, followed by Asia, Europe, UK and the USA, most brokers consider the London and Frankfurt market open and close as the most important trading activity. So even though the Aussies for example have an Australian based account manager, the rest of the world is watching what we do first.
Which brings me to the UNITED KINGDOM
The financial regulatory body in the United Kingdom is called the Financial Conduct Authority (FCA). It operates independently of the UK government, and is financed by charging fees to members of the financial services industry. ie. Charging fees to those who wish to offer a regulated service to their clients.
The United Kingdom will be going through a huge transition of course as Brexit comes into force so there will inevitably be fluctuations up and down according to this decision and that announcement. I think that is where the forex managed fund comes into its own.
These traders have their finger on the pulse of the latest developments and hear the buzz as it happens. This is the case whether the trader is part of a regulated organization or not. However, with an FCA regulated trading company, they are accountable to trading within certain guidelines.
The Aussies per capital seem to be up there with the best of them when it comes to trading and online access. They have a huge appetite for trading the financial markets. It seems if I want to trade in Australia, I can use a broker offering advanced charts and guaranteed stops.
IG for example are Australia’s No 1 retail forex provider and have been trading since 1974. I discovered plenty of trading platforms and regulated brokers out there if I wanted to trade my own account. There is a myriad of information and companies to choose from. But what about managed FX? Seems they like to go it alone!
Consumers using the Australian financial services industry are protected by ASIC, the Australian Securities and Investments Commission.
Not to confuse New Zealand with Australia, but it is surprising to see how many New Zealand companies have their head office in Sydney! Agriculture, especially dairy farming, and mining and fishing play an important role in their economy.
A third of New Zealand’s population live in Aukland, and Christchurch is the second biggest city. So they have their own stock market, and the NZD to pair with other currencies. Again I can find lots of currency trading platforms but as with the Aussies, it is all subsidiaries of the international companies offering them.
New Zealand’s government agency responsible for regulating financial services and securities exchanges, financial advisors and brokers is the FMA, the Financial Markets Authority.
United Arab Emirates used to rely on oil for revenue. They could see the writing on the wall, that they were going to need another source of income, and they have transformed themselves into one of the world’s largest airline hubs, enticing foreign visitors to their wealthy shores, offering guests luxurious accommodation and world class shopping experiences.
Dubai is a nation of wealthy residents and it seems only natural that they would be heavily involved in currencytrading. Since the downturn in the real estate markets in Dubai and around the world, the number of forex brokers has increased.
The federal Securities and Commodities Authority covers the wider United Arab Emirates. But the special economic zone of the Dubai International Finance Centre (DIFC) is regulated by the DFSA, Dubai Financial Service Authority. I am beginning to see a pattern of international standards regulating this industry.
Spain, in contrast to Dubai is a nation having economic challenges and their youth are looking for alternative ways to make an income. Can they afford to take the risk of trading for themselves?
There is a large population of ex pats living in Spain but I can only imagine with their pensions being from the United Kingdom that they would already have their fund management in place with a UK based fund manager.
Like the UK, Australia and New Zealand, I found the Spanish brokers offer a high standard of education in trading as well as managed funds.
The Spanish Securities Market Commission, ‘Comision Nacional del Mercado de Valores’, known as CNMV is the independent government agency regulating the financial securities of Spain.
Singapore used to be a wealthy nation however, subdued domestic demand and contracted manufacturing is causing tightening of financial conditions. House prices have been falling in Singapore for the last 3 years due to the large stock of unsold houses.
As with Dubai, with the downturn in real estate markets, we look to the financial markets to turn a profit. With my search in Singapore, again a plethora of forex platforms, but more information this time on managed forex accounts, although not always easy to find if they are based and regulated in Singapore.
Singapore financial markets are regulated by the Monetary Authority of Singapore (MAS)
The currency market is international and currency pairs can be traded in so many regulated countries around the world, traders in Dubai for example are not limited to brokers in the UAE. Trading takes place on an Electronic Communications Network (ECN) using MT4 software, a platform for analysing and managing trades.
Whilst researching them around the world, it seems having a high standard of protection and account securities is paramount. Are they, for example, FCA regulated and compliant?
My money should be in an account in my own name. Can I have instant access to my money? I should sign a Limited Power of Attorney (LPOA) to allow the traders to place trades on my account.
They permit an expert trader to trade my account for a fixed share of the profits. I think feeling comfortable with the company I have spoken to makes all the difference to me, knowing that I can access their trading history and read some reviews from actual clients who also have invested with them.
There is a wealth of information at my fingertips regarding them in the United Kingdom. Maybe I didn’t have to research all those other countries after all! Nice to know though, that we are at the cutting edge of technology and it is a huge and regulated industry that I can access right now.