American brokers refer to brokers who attract customers in the United States, including local FXCM America and Jiasheng America, as well as American branches of overseas brokers ALPARI. The following small series brings you the difference between American and British brokers. I hope you like it!
The difference between American and British brokers
A British broker refers to a broker who solicits customers in Britain. Not only local CMC, but also British branches in other countries, such as FXCM UK. The latter category is "foreign companies" in Britain. They are all bound by the British regulator FSA.
Different levels of capital security
Open an account with an American broker, and deposit the money in another account opened by a foreign exchange broker in a bank, which is separate from the account operated by the American broker himself.
According to GAPP (Generally Accepted Accounting Principles) in the United States, a customer is a creditor of a foreign exchange company when he deposits money into a "customer fund account" in its name. In addition to the profit and loss of the transaction, how much money is owed to the customer by the foreign exchange company in the customer's account will be paid back one day.
To put it simply, if American securities firms go bankrupt unfortunately, traders, as creditors, may not be able to get back the principal in full!
The situation of British brokers is more complicated. There are two kinds of brokers in Britain. One is a broker authorized by the Financial Services Authority (FSA) to hold clients' funds. Customer accounts are protected by the FSA compensation plan by opening accounts through authorized British brokers. Once the broker goes bankrupt, you can get protection of up to 50 thousand pounds. This is also the best type of capital security.
It is worth noting that another kind of British brokers, who are not authorized by FSA and hold FSA passports, can develop British clients, but their funds are not protected by FSA compensation plan. Some overseas brokers have set up branches in Britain, but they are vague about FSA's compensation plan.
In fact, traders need to ask this question very carefully-is opening an account protected by FSA compensation plan?
The leverage ratio is different.
Leverage also plays a powerful role in foreign exchange transactions. As long as a few hundred dollars, you can mobilize tens of thousands of dollars through "leverage". Levers also have different "multiples". The highest leverage ratio in the United States is 50 1, and the leverage ratio in Britain is mostly 200 1 and 100/. What kind of leverage you choose depends on your trading preferences.
American platforms can't lock orders.
Lock orders refer to the long and short positions of the same currency pair in the same account of traders. China readers also refer to "locking orders" as "hedging". The United States prohibits lock orders, and Britain is not subject to this restriction.
The variety of transactions is different, and the UK is more extensive.
The United States prohibits the trading of contracts for differences (CFD), which accounts for half of the trading platforms, so the trading varieties of American platforms are relatively small, usually limited to dozens of currency pairs and precious metals.
The transparency of financial disclosure is different.
CFTC, the regulator, will disclose the assets of US foreign exchange brokers every month. In addition, it will also disclose the number of active accounts, customer profit-loss ratio and order execution speed of American brokers.
British brokers are secretive about this.
Different regulatory mechanisms
The United States implements a dual regulatory mechanism.
Commodity Futures Trading Commission (CFTC) is a U.S. government department and a heavyweight regulator. CFTC is very active in the supervision of foreign exchange deposits and has maintained good interaction with the industry for a long time. The company and CFTC have fixed windows and contacts, and the policy implementation is also very efficient.
The National Future Association (NFA) is a non-profit industry self-regulatory organization in the United States. 199 1 year recorded about 150000 futures practitioners and about 10000 commission companies in the United States at that time, and all the data were made public for public or investors to inquire. By 1998, all the data have been digitized, and a system called background ownership status information center, commonly known as BASIC, has been established to facilitate the public to search for information on NFA websites. All members' basic information, the company's shareholder structure, the record of licenses, the cases complained about and the final judgment of cases, as long as they are NFA members, have a membership number, which can be easily found by the investing public on the website. In recent years, all regular foreign exchange companies have also been included in this system.
For accepting customers' complaints and complaints, NFA can also make its own judgment according to the seriousness of the case, or make a settlement for both parties in private. This is undoubtedly a great progress in financial supervision, which shows that NFA not only leads the development of the industry and collects membership fees, but also plays a role in standing on the side of investors and cracking down on unscrupulous financial institutions.
Britain is a unified mixed supervision.
Whether we are in the securities industry, trust industry, insurance industry or retail foreign exchange industry, as long as they belong to the financial field, they are all under the supervision of the Financial Services Authority (FSA).
British regulators are particularly concerned about unfair trade, and the government has set up an educational website to teach customers how to save themselves and protect themselves when they are treated unfairly.
Do you know how institutions play foreign exchange?
Parents-Central Bank
The exchange rate is the core of the whole foreign exchange market, and everyone is concerned about the rise and fall of the exchange rate. Since the exchange rate is mentioned, the first thing to mention is the central banks. As the issuer and manager of money, the value of money is determined by the credit of the central bank and the government, and the central bank can be said to be a well-deserved "parent".
primary objective
Different from other institutions, the purpose of the central bank's participation in the foreign exchange market is not to speculate and make profits, but to maintain exchange rate stability and rationally adjust international reserves. By adjusting the supply and demand of funds in the foreign exchange market, the exchange rate will be maintained at a certain level or limited to a certain level. When a currency is seriously undervalued or overvalued, the central bank will intervene in the exchange rate.
Participation mode
The central bank participates in the foreign exchange market mainly in the following ways:
1) As the main body of the foreign exchange market, the central bank participates in foreign exchange transactions, thus affecting the trend of foreign exchange rates;
2) Adjust the domestic interest rate by opening the market business and adjusting the rediscount rate and reserve ratio, thus affecting the foreign exchange rate;
3) Guide foreign exchange through the foreign exchange settlement and sale system and window.
Sub-commercial bank
Commercial banks are the closest financial institutions to the central bank. The policies issued by the central bank directly affect commercial banks, which follow the footsteps of the central bank. Commercial banks are also the hub between enterprises and the central bank. The central bank provides enterprises with various tools to prevent foreign exchange derivatives through commercial banks to help enterprises avoid exchange rate risks.
primary objective
Commercial banks are the direct participants in the whole foreign exchange market and the main undertakers of all kinds of transactions and risks. The trade fairs of commercial banks determine the fluctuations of various currencies on that day, and the credit relationship of commercial banks determines the total amount of various currencies circulating in a period of time. Citibank, HSBC, Deutsche Bank and other world-famous commercial banks can even set the price of foreign exchange market because of their huge amount of funds. For commercial banks, the foreign exchange market is not only an important battlefield for speculative profits, but also a huge risk.
main business
Foreign exchange business is one of the important businesses of commercial banks. In terms of foreign exchange business, the business scope of commercial banks in various countries will be limited by relevant domestic laws and regulations, and their main businesses will be different.
Common foreign exchange businesses of domestic commercial banks include: foreign exchange deposit, foreign exchange loan, foreign exchange remittance, international settlement, credit investigation, consultation, witness business and foreign exchange settlement and sale business (including spot, forward and option foreign exchange transactions). In addition to routine business, international commercial banks will also carry out arbitrage and arbitrage, as well as speculation and other businesses.
Risks faced
The risks that commercial banks need to face can be mainly divided into three types. The first is the risk of foreign exchange transactions, that is, the risk brought by exchange rate changes when banks conduct foreign exchange transactions, including valet transactions and proprietary transactions; Second, foreign exchange credit risk, that is, the risk brought to the bank by the default of the parties in foreign exchange transactions; The third is liquidation risk, which refers to the risk caused by inconsistent delivery time in different countries or other accidents during liquidation.
Adopted son-non-bank financial institution
In addition to banks, many non-bank financial institutions also hold a large amount of funds, and they are also one of the important "players" in the foreign exchange market. For example, large hedge fund companies such as Quantum Fund, Morgan Stanley and Goldman Sachs can manage hundreds of millions of funds. At present, China still has great restrictions on financial institutions' participation in the foreign exchange market. With the gradual liberalization of the financial market, the foreign exchange business that domestic non-bank financial institutions can participate in will gradually increase.
primary objective
Non-bank financial institutions usually raise funds through pension funds, personal investment and other channels. They try their best to pursue the maximum return of the funds they manage through the amplification of leverage, and foreign exchange trading is also one of the important ways for them to obtain profits.
Speculative mode
Non-bank financial institutions mainly trade with banks in various countries, and flexibly use foreign exchange trading tools provided by banks to make long or short bets on a certain currency in order to achieve the purpose of speculation. For example, Quantum Fund and Tiger Fund make huge profits by raising the expectation of depreciation in foreign exchange in the long run. Of course, there are considerable risks in their approach. Let's take Quantum Fund as an example. They failed in shorting the Hong Kong dollar.
Adopted son-multinational enterprise
The exchange rate rises and falls. Obviously, this is a serious business, but multinational companies will also be affected. If you are not careful, you can't lose money. Although they are adopted sons, their parents are good parents, and the interests of multinational companies are still concerned by their families. Therefore, the central bank and commercial banks have introduced various tools to avoid the exchange rate risks that enterprises may face and let major enterprises do business with peace of mind.
primary objective
Generally speaking, although exchange rate risk is not necessarily harmful or beneficial to multinational enterprises, enterprises do not rely on judging exchange rate changes to make profits, but hope to avoid exchange rate risk as much as possible.
The main risks faced by enterprises
The main foreign exchange risks faced by enterprises include trading risks, accounting risks and economic risks.
Transaction risk refers to the possibility of loss or profit caused by exchange rate changes between foreign currency and local currency in the transaction of pricing and collection in foreign currency; Accounting risk refers to the possibility of book losses caused by exchange rate changes when the functional currency (usually the currency of the country where the overseas branch is located) is converted into the functional currency (usually the currency of the country where the head office is located) during the accounting treatment of assets and liabilities. Economic risk refers to a potential loss caused by unexpected exchange rate changes affecting the future production and sales quantity, price and cost of enterprises.
Avoid risks through financial transactions
Among the foreign exchange risks faced by enterprises, transaction risk is the most common. In addition to choosing favorable pricing currencies, enterprises mainly avoid related risks through foreign exchange transactions, which can be used for spot foreign exchange transactions, forward foreign exchange transactions, swap foreign exchange transactions, foreign exchange options, foreign exchange futures, interest rate swaps and so on. These are all risk avoidance tools provided by commercial banks for enterprises.
How to play foreign exchange margin trading?
In China's foreign exchange speculation circle, Tiehui is famous for its high donation scheme. The highest donation ratio is 1: 1, that is, customer contribution (recharge)1000 USD and Tiehui donation1000 USD. However, unexpectedly, after the implementation of the donation plan for a period of time, investors encountered "unable to withdraw cash" on the Tiehui platform. Some investors estimate that the amount involved may reach tens of millions of dollars.
As for the reason why he can't "make money", Tiehui and investors hold their own words. Tiehui said that this is a restriction on investors who use the gift system to maliciously arbitrage; Investors, on the other hand, believe that Tiehui executives delay the transfer of assets with the intention of taking investors' money.
At present, investors have formed a rights protection group and want to go to Cyprus, where Tiehui headquarters is located, to negotiate face to face with Tiehui. However, such transnational rights protection is not just a difficult word.
Is the golden storm a decision mistake?
According to Tiehui's official introduction, Tiehui's English name is IronFX, and it is a global online trading broker mainly engaged in foreign exchange, contracts for differences, American/British stocks, commodity futures and precious metals. Its headquarters is in Cyprus.
Miss Zhang (anonymous) is an investor of Tiehui. She told the reporter of China Business News that from 20 14 1 1, a large number of clients' funds could not be transferred out and withdrawn.
"The funds related to me are $65,438 +0.235. Company executives and salesmen began to shirk their responsibilities under various excuses. After more than two months, the company still didn't give a clear answer and began to shirk its responsibility, saying that the customer's funds had nothing to do with their company. Previously, when a large number of customers from all over the country gathered in their office in Shanghai, Oriental Financial Building B603, they found that the earlier Tiehui office had completely changed. " Miss Zhang said.
It is understood that the core of this storm is the Shanghai office, and most investors who can't make money mainly open accounts in Shanghai. In addition, Tiehui's offices in Beijing, Shenyang and Shenzhen have also been run by investors.
"At the beginning of this month, I also received a group of investors here. Now the outside world is saying that the Shanghai office will be closed, as will Beijing, Shenyang and Shenzhen, but I can tell you very responsibly that we are all working normally and we will not run away. " A person in charge of Shenzhen Tiehui Office said in an interview with this newspaper. Our reporter also learned that the Shenzhen office is indeed working normally at present.
The core of this storm is Tiehui's donation plan.
"Our gift to customers is to let them absorb losses and not withdraw cash. However, some domestic customers use the design loopholes of Tiehui to set up gifts by arbitrage. In this way, the platform is definitely untenable, and it is also Tiehui's determination to make money. " An insider of Tiehui revealed.
According to sources, in June last year, 5438+065438+ 10, Marcos, CEO of Tiehui Group, came to China's office and made it clear that he would stop the arbitrage account. At that time, he also prepared a sum of money to deal with the problem of customer withdrawal. "But now it seems that this money is not enough to reserve, and Marcos himself may not know much about the actual situation in China." He said.
Risk-free arbitrage hedges the iron exchange.
So, how do investors arbitrage?
Arbitrage can be divided into two ways: one is inward rush and the other is outward rush. The so-called inward rush is to open two AB accounts on the same platform and conduct a foreign exchange margin transaction with the same amount and opposite direction. When one transaction loses all, and the other just gains 65,438+000%, leave immediately. At this point, as long as there is a gift in the short trading account that can absorb part of the loss and the loss is less than the profit, the gift can be indirectly "set".
It's a little complicated to rush out. If an investor takes $65,438+0,000 to open a Tiehui account, plus a gift, the account is * * * 2,000 dollars, and then he invests $2,000 in other platforms, which is equivalent to the customer's cost of $3,000. Two accounts make a foreign exchange margin transaction with the same amount but opposite direction. One account explodes and the other account gains 1.
If Tiehui platform is profitable, after deducting the donation of $65,438+$0,000, there is still $3,000, which will break even. If the external account is profitable, there will be $4,000, and Tiehui account will explode with a net profit of $65,438+0,000.
However, this creates a problem. If the Tiehui account is profitable, it will not make money. Therefore, investors will try not to go to Tiehui account to make money. An improved method is that under the Tiehui account, the transaction amount is greater than the external account, which will solve this problem. In the later period, the external impact has also evolved into a more complicated three-way game.
Tiehui was defeated in this almost risk-free arbitrage scheme.
"I have collected the information of eight _ _ investors and am currently applying for visas. I will personally go to Cyprus to communicate with lawyers and see how to fight the next lawsuit. " Investor Mr. Li (anonymous) told this newspaper that he was ready for a protracted war. As Tiehui's headquarters is in Cyprus, he can only play in Cyprus to get his money back.
However, Mr. Li also felt the difficulty of transnational rights protection. "The overseas lawyers we hired will charge the investigation fee before the case has started, and there will be other fees afterwards. Therefore, our overseas rights protection investors must achieve a high degree of consistency. It is best to hope to settle with Tiehui out of court and get back your own funds. " He said.
According to overseas media reports, customers in China have formally sued Tiehui in Limassol District Court, and Limassol District Court has received about165438+122 October * * about 160 lawsuits against Tiehui.
At the same time, some investors who can't afford overseas litigation choose to report to the local public security departments in Beijing, Shenyang, Shenzhen and Shanghai where Tiehui China office is located. According to a copy of the investor's report obtained by this newspaper, the reason for the report is illegal business operation and illegal fund-raising.
Should the gray area be released?
In fact, although these foreign exchange trading platforms are formal institutions in the world, they have not completely liberalized foreign exchange trading in China, so they have always been in a gray area. There are two kinds of foreign exchange transactions. One is personal firm foreign exchange transactions, that is, transactions between freely convertible foreign exchange that cannot be overdrawn. All the major commercial banks in China have started this business, such as China Bank's "Foreign Exchange Treasure".
One is foreign exchange margin (foreign exchange deposit) trading, which has the nature of leveraged trading, so that the actual contract amount of foreign exchange trading exceeds the transaction margin amount actually invested by investors.
For example, when the leverage ratio of margin trading is 50 times, investors expect the euro to rise, and they actually invest $654.38+$00,000 as a deposit, so they can buy the euro with a contract value of $500,000. When the exchange rate of the euro against the US dollar rose by 2%, investors made a profit of US$ 6,543.8+0,000, and the yield was 654.38+0.00% based on the actual investment. However, when the exchange rate of the euro against the US dollar falls by 2%, investors will lose $654.38 +0.00 million, and all the actually invested principal will be lost.
The leverage ratio of overseas banks to start this business is generally around 10, while the leverage ratio of companies specializing in margin financing and securities lending business is generally 50 times, 100 times or even higher. Even in developed international markets, foreign exchange margin trading is generally regarded as a highly speculative and risky product.
Over the years, many foreign exchange brokers have opened representative offices and other offices in China in the name of investment consulting companies to attract customers. Although domestic regulators have been warning and rectifying foreign exchange margin trading, investors are still in turmoil. At the same time, disputes about foreign exchange margin trading have also been staged in courts all over China.
Zeng Jie, a lawyer of Chongqing Yuanye Law Firm, said in an interview with this newspaper that online foreign exchange speculation mainly constitutes the crime of illegal business operation. This kind of cases were more in 2008 ~ 20 10, but decreased in recent years, mainly because of the crackdown by the state.
He said that foreign exchange margin trading, as a global financial investment method, has a huge daily trading volume in the international financial market. It was very popular in China in the early 1990s. Due to the lack of supervision, imperfect risk control mechanism, market chaos and high risk of foreign exchange margin trading, the State Administration of Foreign Exchange and other departments jointly banned financial institutions from engaging in foreign exchange margin trading for three times in 1994, 1997 and 2008.
It is understood that from 2006 to 2008, Minsheng Bank, Bank of Communications and Bank of China tried foreign exchange margin trading on a small scale. In 2008, China Banking Regulatory Commission (CBRC) stopped, because CBRC found that although banks are profitable because of this business, the proportion of investors engaged in foreign exchange margin trading is very high, and at present 80% or even 90% of investors are in a state of loss. This situation of high losses and low profits for participants has been similar to "gambling".
"Although there have been voices in China calling for the liberalization of foreign exchange margin trading, I think this piece should be restricted for the protection of investors." Zeng Jie said.
However, an industry insider who has been involved in foreign exchange platforms for many years does not agree with this statement. He believes that instead of letting investors move forward in a gray area, it is better to liberalize this field and standardize the foreign exchange margin trading platform so that it has laws to follow.
"In fact, at present, more than 99% of domestic foreign exchange trading platforms are gambling, and the platform is definitely making money. More than 95% of the platforms are making money. But why are investors willing to speculate in foreign exchange? It's like buying a lottery ticket. Everyone knows that there are few chances to win the lottery, but there are still a large number of people buying it every day, and they are all fighting for the probability. " He said.
"But there are exceptions. Everyone in the circle knows that Wenzhou people have experience in speculating foreign exchange. Many Wenzhou people have made money, so we don't accept Wenzhou people's business. " He said.