| James Kon |
BRUNEIANS looking for making a windfall through forex or gold trading are warned against associating with such schemes as these are nothing but scams.
There are no licensed foreign currency and gold trading firms in Brunei, Autoriti Monetari Brunei Darussalam (AMBD) said.
The financial regulator also advised members of the public not to deal with illegal financial service providers and should not reveal or disclose personal financial details to them.
The advice comes following inquiries made by the Weekend Bulletin over ongoing promotions in social media to entice people to start currency trading or take forex trading lessons online.
The AMBD statement also said that there is no law in Brunei Darussalam which states that a person cannot engage in forex and gold trading. Everyone has the right to invest in any product or with any company.
If a person engages in forex and/or gold trading using his own money for his own personal interest, he may not be required to hold any licence under the Securities Markets Order (SMO), 2013. However, any losses incurred would be at his/her own risk. AMBD takes no responsibility for any action made by the user for carrying out forex trading made under the user’s personal interest, especially if the user uses an unlicensed trading platform to do so.
Members of the public who participate in illegal financial activities could also be charged under the law for abetting the operators of such illegal activities, the statement explained.
If a person who is involved in forex and/or gold trading takes money from the general public, which includes close relatives or friends, it will be considered as a regulated activity under the SMO and requires a licence. More details on regulated activities and licence requirements can be found on the link http://ambd.gov.bn/SiteAssets/Download/SMO2013.pdf.
Meanwhile, a person who wishes to teach forex/gold trading for money, will need to seek permission/clarification from the Ministry of Education. The materials dispensed during the classes may also be considered as investment advice which requires a licence under the SMO, the financial regulator said.
According to AMBD, companies incorporated in Brunei Darussalam or incorporated outside but targeting Bruneians, that act as a market operator (eg. securities exchange, clearing house, trading facilities) without the appropriate licence contravenes Section 52 of the Securities Markets Order, 2013, and is guilty of an offence and liable, on conviction, to a fine not exceeding $10,000,000, imprisonment for a term of up to 10 years, or both.
Foreign exchange fraud is any trading scheme used to defraud traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market. Some scams can be compelling or seem to be very legitimate. They take advantage of traders seeking the magic answer to winning in the currency or gold trading markets.
According to market experts, foreign exchange market is at best a zero-sum game, meaning that whatever one trader gains, another loses. However, brokerage commissions and other transaction costs are subtracted from the results of all traders, making foreign exchange a negative-sum game.
AMBD explained that investment is putting in your time, effort and assets or money to get the expected returns or rewards. The public can invest money in financial products to get a profitable return. However, it is not without its risks.
There are different kinds of investment products offered by institutions in Brunei Darussalam. Forex and gold trading are among these investments. The term forex is usually associated with trading in the foreign exchange market by investors and speculators.
Forex traders will analyse and speculate the changes in the currency. For example, if the Malaysian ringgit (MYR) is expected to weaken in value relative to the US dollar (USD), a forex trader in this situation will sell MYR and purchase USD.
When the MYR strengthens, there will be more purchasing power to buy USD. The trader can now buy back more MYR than they had to begin with, thus making a profit.
Forex trading, like any form of trading, is not without risk. Moreover, trading in the forex market generally carries above-average risk than other investments, the AMBD statement said.
Meanwhile, trading of gold can be in the form of physical gold or gold as underlying asset, which means the traders do not purchase physical gold from the market, instead, they purchase the certificates or rights to the gold.
Such trade depends on the market price of gold to make profit. When the price of the gold increases, the owner of the gold can sell to get profit and vice versa. The profitability from this kind of trade depends on the movement of prices. Moreover, investment products that are gold-related might incorporate pyramid schemes within the company’s structure to further attract the public to invest, the statement added.
On the risks of forex and gold trading, AMBD highlighted that the public must be aware that they are prone to be the victims of fraudulent activities especially when these are done on online platforms.
With online trading, the process and procedures are invisible which means people do not know who actually handles the money invested.
Thus, the platform providers could tweak the dummy trading facilities so that you may be profitable during the practice sessions, but when you decided to invest your money into real trading facilities, it may be difficult to be profitable as in the practice sessions.
More importantly, sufficient financial skills are necessary to trade successfully. Many see the success stories and become keen to join the bandwagon, believing that it is an easy and fast way to get rich.
While success stories are plenty, there are far more losses and failures that are not documented. Successful traders are usually those with the adequate financial knowledge and technical skills. Without such knowledge, they are at risk of losing all their savings.
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