ASIC warns of FX risk
The Australian Securities and Investments Commission (ASIC) has warned consumers to understand the risks of foreign exchange trading before investing.
The warning comes after liquidators were appointed to Sydney-based foreign exchange company GTL TradeUp Pty Ltd. ASIC is investigating the collapse of the issuer of over-the-counter derivatives.
Liquidators Steven Kugel and Anthony Warner of CRS Warner Kugel were appointed for GTL TradeUp.
ASIC has seen an increasing number of people establishing businesses that endorse this kind of investment strategy.
It banned Robert Lloyd Wilson from providing financial services and warned the public against dealing with him for his promotion of a program that showed ‘when to get in and when to get out' of trades. This includes FX trades among others.
Wilson, also known as ‘Aussie Rob', was a director of Aussie Rob Financial Services, Lifestyle Trader Pty Ltd and Lifestyle Services Pty Ltd. The companies marketed and sold share trading software.
Wilson was investigated for his misleading and deceptive conduct in the marketing of the software.
"We will not hesitate to take action when we see people or businesses and their dodgy practices preying on innocent investors who may know little about these risky investments," ASIC Commissioner Greg Tanzer said.
Foreign exchange trading poses risks to investors as it involves buying and selling foreign currencies to make a profit. It is done through ‘margin trading', where a tiny property or asset deposit worth a percentage of the total trade's value is required as collateral to trade.
Investors can trade with borrowed money but they have to account for all losses, which may exceed their initial investment.
"Forex trading is complex and risky. Even the most skilled and experienced forex traders have difficulty predicting movements in currencies. Trading in international currencies requires a huge amount of knowledge, research and monitoring," Tanzer said.
"Unless you fully understand what investment you are making and the risks involved with that investment, don't do it."
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Staff Writer
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