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They are also considering making an offer to forward Kostas Papanikolau.</html> | They are also considering making an offer to forward Kostas Papanikolau.</html> | ||
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| + | == Broker Safety and Soundness- Cyprus Was a Forex Wakeup Call == | ||
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| + | <html>How safe are your funds with your current broker? How often do you ask yourself this question during the year? Our investment horizons have expanded greatly over the previous decade. Investing in foreign markets does not have the stigma that it once had. Dabbling in currencies, commodities and the futures market may have also gained appeal. The Internet has been the great enabler,[http://wikipedia.fsw.leidenuniv.nl:8080/IclonWiki/index.php?title=Gebruiker:KevinLee516#Definition_of_Earnings_Per_Share Definition of Earnings Per Share], but specialization has made it more difficult to find a one-stop-shop for covering all of our investment needs. As a result, brokers have proliferated across the globe, but do they all follow “best practices”? | ||
| + | Each of us may have as many as three or more brokers that provide us access to the vehicles we want and with a trading platform that suits our individual tastes. Each of us has invested many hours of “due diligence” up front to stave off the possibility of broker fraud and to ensure that our hard-earned capital is safe at all times. In this era of globalization,[http://orient.pe.kr/wiki/%EC%82%AC%EC%9A%A9%EC%9E%90:KevinLee559#A_Rare_Anomaly_in_the_Gold_Market-_Adding_Insult_to_Injury_0 A Rare Anomaly in the Gold Market- Adding Insult to Injury 0], moving funds overseas and buying over another exchange can be done with ease,[http://www.sharonleeltd.co.uk/member/131357 Senate transportation plan heads to house], but are we certain that counterparty risk has been mitigated by efficient regulatory oversight? Are foreign banks a safe depository for our account balances? | ||
| + | The forex trading community received a shock a few months back when the financial crisis in Cyprus burst forth on the scene in all of its horrific glory. The safety of forex account balances was suddenly called into question on this tiny island nation of 1.2 million people. Cyprus had been a member of the EU since May of 2004, but its two largest banks, the Bank of Cyprus and the Laiki Bank were in financial disarray. Each had invested far too heavily in Greek bonds and had the financial losses to show for it. Without bailout funds, both banks’ depositors stood to lose everything. | ||
| + | Government officials had marketed Cyprus as an ideal financial center,[http://bbs.gpr.cn/home.php?mod=space&uid=99920 ], due to its location,[http://norn-rpg.altenbach-it.net/wiki/index.php?title=Benutzer:KevinLee915#Understanding_the_Federal_Reserve_0 Understanding the Federal Reserve 0], low tax structure, and lax regulatory environment that valued flexibility over stringent compliance. To date, 80 forex brokerage firms have set up shop on the island, employing thousands of local inhabitants and accounting for more than 60% of the registrations for financial operating entities in the locale. Plans now call for a re-structuring of the Bank of Cyprus, but the Laiki Bank will be closed. Regulators have frozen account balances and will seize roughly 40% of the funds on balances over 100,000 Euros. | ||
| + | Forex traders have lost a lot of sleep lately. Major firms on the island typically have client balances segregated offshore with Tier-1 banks, far from local jurisdiction and seizure. Local operating funds might suffer, but not the “Mother Lode”. For smaller and newer entrants, such may not be the case. They are desperately seeking additional capital to stay alive and restore order, but some will undoubtedly fail. The reputation of the forex industry has taken a broadside hit, but major firms are rushing to repair the damage. | ||
| + | You do not have to trade currencies to understand the import of this situation. Sovereign risk or whatever name you wish to attach to it is real. Our modern world may seem more connected electronically than ever before, but connectivity has little to do with the causes of financial distress. In the case of Cyprus, the damage was done by poor investment decisions and had nothing to do with currencies. | ||
| + | Investing in foreign equities has expanded over the past decade, and, after recent pullbacks, investment managers are beginning to tout this sector once again. Time to call your broker about his investment protection procedures. | ||
| + | About the author: Tom Cleveland has been involved in investments and economics since 1980 and has particularly branched into researching and writing about investment broker information since 2009. Mr. Cleveland's notable work on forex brokers is his forex brokers 2013 review located at .</html> | ||
