Bank of Mauritius warns against investing online over Forex Trading Platforms
It is extremely important for the public to ensure that the online forex trading platform is duly registered, licensed or authorized by relevant authorities in the country from where it operates by double checking its authorization. (Image: Orange)
Following a communiqué released on June 7, 2014 by the Bank of Mauritius advising the public to exercise caution when dealing with Foreign Exchange (Forex) Trading Platforms, it has recently been noted by the central bank that such web-based forex trading platforms are advertising through widely accessed local online newspapers and inviting the public to trade on their platforms over the internet.
These online advertisements tend to be very persuasive, thus, members of the public are advised to be cautious of the use of the terms ‘safe’, ‘secure’, ‘guaranteed’ and ‘protected’, as every investment entails some level of risk which is reflected in the expected rate of return.
The Bank of Mauritius (BOM) also wishes to draw the attention that these web-based forex trading platforms do not require BOM’s approval to carry out operations from outside the jurisdiction of Mauritius.
Therefore, it is extremely important for members of the public to ensure that the online forex trading platform is duly registered, licensed or authorized by the relevant authorities in the country from where it operates by double checking its authorization.
This can be done by checking the websites of national regulators, to ensure that the forex trading platform is not making a false claim, before embarking on any transaction with it.
For instance, the public at large is advised not to rely solely on information provided by the company on its website.
Furthermore, people who intend to do business with individuals or entities, which are not licensed by the Bank or the Financial Services Commission, are cautioned that they do so at their own risk, as in certain cases the forex trading platforms may require potential customers to provide personal details including credit card numbers.
The general public is advised to be cautious when providing credit card numbers, as in the event of any unauthorized transaction, it might be very difficult for them to recover their money.
They should also assess the counterparty risks before using such platforms and seek independent professional advice before engaging into trading activities on such web-based foreign exchange trading platforms.
Finally, the communiqué ended on the note that it is advisable for members of the public not to invest in products they do not understand and not to be lured by advertisements promising high rates of return.