These days Forex trading is attended by both market and non-market risks. Most of them come from those shady transactions made by some offshore brokers and dealing centers. Why do most offshore brokers like playing dirty tricks on their clients? Let’s find it out. HY Markets, a licensed and respected Forex broker, will help us to do that…
Offshore – Deadly Trap For Traders?
In order to have a comprehensive idea about the shady business of the so-called offshore brokers and dealing centers, Let’s first recollect what an offshore company is. An offshore company is a company registered in an offshore zone within an independent country or region, where it can enjoy tax privileges. Some offshore zones exempt foreign companies from taxes.
Nevertheless, non-residents should observe certain rules. In particular, offshore companies cannot conduct business within the country of the offshore zone. Moreover, the owner of the company cannot be a resident of the offshore zone. There are some 50 countries with offshore zones. The most popular countries are the UK, Cyprus and the Bahamas.
According an HY Markets representative, the major difference between offshore and licensed brokers is that the former do not guarantee the safety of your funds. Moreover, they mainly feed off beginners by allowing them to open micro accounts. Big-scale licensed brokers want their clients to trade big. They are interested in successful, professional traders who make substantial profits on a regular basis, thus giving them (the brokers) an opportunity to make money on fees, spreads and commissions by providing high-quality services and access to real interbank liquidity. They are not interested in playing against their clients.
Whom to trust?
According to Eugene Olkhovsky, ’s leading expert in financial markets from Canada, most offshore brokers are more willing to cheat because they are not regulated by any major financial or taxation authorities. They get lots of money as their clients deposit substantial funds. Later, some of them just disappear while others keep playing dirty tricks on their clients.
According to Vera Lazurenko, a representative of the Russian office of HY Markets , the company conducted a survey to find out that Russian traders choose the following kinds of brokers:
1. Reliable and trusted brokers (most respondents).
2. Licensed brokers (licenses must be given by world-class financial regulators such as NFA, FSA, CFTC).
3. Those brokers that have many years of experience and offer high-quality service.
4. Those brokers that can offer low spreads, high liquidity and no requotes.
5. Western brokers only
6. Brokers that can offer the option of instant deposit/withdrawal of funds through a variety of online payment systems (including Webmoney).
Does HY Markets correspond to all the mentioned criteria? Vera Lazurenko says it does. HY Markets is a client-oriented broker regulated and licensed by FSA (UK) and SFC (Hong Kong ). It has offices around the globe and provides high-quality services and access to all capital markets. More importantly, HY Markets guarantees the security of your funds. With HY Markets, you can trade via MetaTrader 4 or HY Webtrader, not to mention trading platforms for mobile devices (Android, iOS and Blackberry.)
Licensed Brokers VS Offshore Brokers
As we have just mentioned, the major difference between offshore and licensed brokers is that the former (most of them) cannot guarantee the security of your funds. Moreover, a licensed, regulated broker is unlikely to start enticing new clients by endless promos like some shady trading contests with big cash prices, 100% deposit bonuses etc. Reliable brokers are client-oriented. They are focused on creating a perfect trading environment for their clients so that these traders could make money and let the brokers do it as well. This is a win-win approach.
Let’s have a look at some interesting facts:
Firstly, offshore companies are tempted by tax rebates, which make their profits even bigger. So why they cannot offer their clients much better services and trading conditions? At the same time, licensed brokers (even without being registered in offshore zones) can and do allow their clients to make stable profits.
Secondly, if there is some kind of a conflict between the broker and the client, the conflict is resolved in the country where the broker is registered in. That is why very few (if any) traders have a chance to win the legal process as for most of them it would be much easier to let it go than to fly , for example, to Cyprus or Bahamas, to hire a world-class lawyer and to start the legal process against the broker without a 100% chance of winning. Offshore brokers take this factor into account as well. That is why they know that in most cases they can escape punishment.
Thirdly, most offshore brokers do not provide any info about whether they have any licenses or whether their activities are regulated by a major financial watchdog. Licensed brokers, on the contrary, are always open to their clients and do provide any kind of info about licenses, guarantees, trading conditions (without any pitfalls) in order to be as much transparent as possible.
And finally, if an offshore broker does have a license, it may well be given by a party, which doesn’t have anything in common with financial regulators and is interested in cooperating with the very broker.
Strange as it may seem, but such big-scale companies as Refco (USA) and even Sovereign Financial Group (Switzerland) had major problems because of manipulating clients’ funds.
HY Markets: Advantages Are Obvious
As we can see, licensed brokers value their image and clients. HY Markets is one of them. It is one of the world’s leading brokers in capital markets, whether it is Forex, stocks, commodities or other assets.
Many traders around the globe, including the US and EU, see HY Markets as one of the most reliable brokers in the industry, which offer high-quality services.
So, if you are looking for a new broker, HY Markets well may become a perfect alternative!
Market Leader and would appreciate if you could participate in a survey. Please, visit the Academy’s forum for traders and investors and answer the following question:
Which brokers do you trust more, offshore or licensed ones?
