| Selecting the right business foreign exchange broker |
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| Written by Adam Solomon at TORfx | |
| Wednesday, 10 March 2010 15:33 | |
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TorFX's Top Tips for selecting a foreign exchange broker: 1) Make sure you are dealing with a well established company with a five year track record. Check the company's annual report and accounts. They should be able to provide this on request. 2) Are they regulated by HM Revenue & Customs? Ask for their MLR number. You can verify this with HMRC. 3) Are they members of trade associations such as the UK Money Transmitters Association? 4) Don't be afraid to ask questions to satisfy yourself that you are dealing with a reputable company. For example, how many employees do they have? (you are much safer dealing with a larger, professional organisation rather than a small company or start up) Do they give information about their directors and company officers on their website? 5) Only deal with brokers who operate segregated client accounts. They should be able to provide a letter from their bankers confirming this. 6) Is your broker transparent about what the exchange rates they offer. For example, are they willing to offer you a fixed spread from the interbank rate? Larger FX brokers will probably have access to the interbank rate (the rate at which banks trade large blocks of currency with each other), and should be willing to guarantee to add a fixed margin to that rate whatever the market is doing. That helps you to know you will always be getting a good deal whenever you trade. 7) Is your broker FSA regulated, or in the process of applying to become authorised? (all money transmitters are now required to be authorised by the FSA as of November 1st 2009, but established companies have until April 2011 to become authorised). 8) Does your broker offer market analysis specific to the currency you are interested in? 9) If you ring around to compare exchange rates, make sure you are being quoted a "live trading rate" and not the "interbank rate". Some brokers will quote the interbank rate in order to persuade you to register, only to then explain that the actual exchange rate you can achieve will not be quite that good. 10) Sign up for email updates to get a feel for how proactive your broker is, and how impartial the advice. 
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| Last Updated ( Wednesday, 24 March 2010 11:06 ) |