How to choose a partner?

To work efficiently in the financial markets, it is important to choose not only a proper strategy but also a reliable partner. The partner’s reliability is determined by to its readiness to fulfill its financial and counterparty obligations. In the following article you can find some initial points which should be taken into consideration when choosing a partner.

Year of Foundation and Dynamics of Development

The long-term activity in the market usually serves as a sign of the company’s financial stability, well-established business process, developed risk management system and the professional skills of the staff. The positive development dynamics (offers of new services, opening of branches) also points to the partner’s serious approach to the business. However, the young age of the company does not imply that the provided services are not professional. As a matter of fact, a great number of prominent companies have been established exactly in the recent five years.

Registration Country and Regulation

The country where a partner is registered in, have also a great importance. The fact is that the legislative authorities of all developed countries strictly regulate the partner’s activity, forbidding them to carry out any illegal operations with their clients’ assets. Besides, in these countries it is always possible to apply to the partners’s regulator directly in case of any disputes. Companies registered in the offshore countries are not under such a rigid control of the government which makes their reliability rather doubtful.

Safety of clients' funds

You need to check how a partner protects its clients’ funds in case of unforeseen events, particularly in case of bankruptcy when a partner is unable to fulfill its financial obligations to the clients.

One of the easiest ways to limit the risk is the segregation of bank accounts. It means that the clients’ and the company’s funds are kept in a bank on different accounts so that the partner can’t use its clients’ assets in its operating activities.

Besides, serious companies have different schemes of risk insurance. For instance, in Cyprus there is established the Investor Compensation Fund controlled by CySEC (Cyprus Securities and Exchange Commission). In case any Cypriot investment company turns bankrupt, its clients will receive compensation from this Fund in the amount of up to EUR 20,000.

In Great Britain there exists a similar Financial Services Compensation Scheme with compensations up to GBP 85,000.

In the USA clients of investment companies are not obliged to insure their funds. However, a lot of respectable USA investment companies cooperate with large insurance companies so that their clients can insure their funds against risks there at a certain charge.

Legal registration

It is recommended to pay a special attention to the following points when studying the partner`s contract:

1. The contracting party. Some companies may have several legal entities, some of which are registered in a developed country, regulated and provided with all necessary licenses and others are located on the territory of an offshore country. The former generally serve to promote the company`s services while the latter act as contracting party in agreements. All this makes the reliability of the company rather doubtful, so before signing the contract check what legal entity is indicated as the contracting party.

2. Recipient of funds. The replenishment of all accounts should be carried out via a bank account of the company which is the party to the concluded contract. Otherwise, if the funds are transferred to a third party, it is not clear who have the responsibility to transfer the earned funds to your account.

3. Subject of the contract. If other services different from main company services (for example, consulting) are specified as the subject of the contract, you may face problems with the withdrawal of your funds in disputable situations.

That’s why we advise you to read carefully the company agreement before opening the investment account and depositing your funds. If you have any doubts, feel free to contact us for a free consultation on any issues.

Business reputation

If a comapny is involved in serious conflicts, legal proceedings, or caught in fraud, these facts become quickly known on the Internet. However, this information should be carefully checked. Even at independent and well-moderated forums dark PR methods are widely used. As known by experience about 70% of such kind of messages are written by the company’s representatives and are aimed to tarnishing their competitor’s reputation. That’s why only official sources of information should be trusted.

Basic operations conditions

Recently the strong competition has stimulated mass access to the financial markets: the sums of the initial deposit, spreads and minimal transaction amounts have been reduced. However, careful attention should be paid to the companies which offer investment services with the initial deposit of 1 dollar. Many of these companies intend to get as many clients as possible and do not care much about the quality of their service.

Basic trading conditions are: minimal sum of the deposit, spreads and commission fees, number of financial instruments, minimal amount traded (lot), leverage, stop out and margin call levels.

Besides, a lot of comapnies offer many assets so you need to pay more attention in choosing the right products and services that fits your needs.

Quality of the service

The efficiency of a company can be also judged by the quality of the provided technical support. If you are consulted professionally and respectfully and the questions are answered at once, the comapny is client-oriented and you will feel comfortable working with it. Diplomacy in settling the disputes is also an important sign of the high-quality service.

The client support should be provided 24/7, and the news and analytics should be up-to-date.

If you have examined all the mentioned features and still have questions or doubts, feel free to contact us at office@fxrebate.eu and we can gladly discuss with you on any issue.