Friday, June 01, 2007
BSP Warning on Foreign Currency Trading
With a strong peso and a very robust stock market. There are many companies popping up who are claiming to be engaged in foreign currency trading or forex. Recently, the Bangko Sentral ng Pilipinas (BSP) has issued a warning to the public against the various kinds of schemes, which involves foreign currency transactions. Any offers made by some individuals or companies to engage in forex trading and to commit funds should be treated with extreme care and caution.
The BSP has issued the following precautions, which you should consider when placing your hard earned money with any foreign currency trading company.
1.) Stay away from opportunities that sound too good to be true - When it sounds too good to be true, it usually is. Get rich quick schemes fall into this category.
2.) Avoid any company that guarantees large profits or those that promise little or no financial risk – Be careful of companies who are suspicious in nature when they guarantee high profits and boast high performance but at almost zero risk involved. There is no such thing as zero risk investment. Even time deposits in established banks like BPI or Metrobank are not entirely without risk, although risks are very low to almost nil but the risk is still there. Companies that downplays risk or state that written disclosures are the norm imposed by the government are out to steal your money.
3.) Don’t trade on margin unless you understand what it means – Certain foreign exchange transactions can make you responsible for losses that greatly exceed any amount you deposited. Don’t trade on margin unless you fully understand what you are getting into and be prepared to accept losses that exceed the margin amounts you paid. Consult with reputable investment advisors, financial planners or consultants.
4.) Be cautious of sending or transferring cash in the internet, by mail or otherwise – Be especially vigilant to the dangers of trading online; its very easy to transfer or wire funds online but its almost impossible to get a refund. Be wary of companies who offer online forex trading but do not provide information about their company, e.g. office address or other information identifying their nationality, contact numbers and other relevant data on their website.
5.) Don’t deal with anyone who wont give you their background – Try to conduct a background check of the persons running or promoting the company. Do not rely on the representations or promises of the company’s employees.
6.) Always keep or retain a copy of the contracts/agreements and other document/s or any receipt/s issued by these foreign currency companies
– This is especially useful in an event involving legal action. A printout of the page of the website alone may not always be acceptable or sufficient as evidence of the transaction.
7.) Contact the regulatory agencies – Please bear in mind that the mere issuance by the SEC of a certificate of incorporation to a corporation does not include a permit or license to engage in activities which require a secondary license.
For more information, please contact the following government agencies.
Securities and Exchange Commission (SEC)
Tel No: 721-50-58
Bangko Sentral ng Pilipinas
Tel Nos: 524-70-11 local 3017. 523-25-82