How to Choose a FOREX Provider

Middle East Money SummitDubaiOctober 2008

Betsy WatersdbFX Global DirectorDeutsche Bank

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What is FOREX ?

FOREX or FX or Foreign Exchange trading is buying one currency and selling another currency with the intention of making a financial gain or return

How can you invest in Forex

Indirect Investing in Forex

Local equities in companies with international business

Non local equities

Bonds

Direct Investing in Forex

Non Local Bank Accounts

Exchange Traded Funds (ETF)

FX online margin Trading

Self Directed Traders

Managed Accounts

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How Big is the FX Market

The Global FX Market has over 3 Trillion USD in volume daily

0

500

1000

1500

2000

2500

3000

3500

1989 1992 1995 1998 2001 2004 2007

Source: Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity, 2007

Total Turnover

FX is a growing

asset class

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US EquityMarket

US BondMarket

GlobalFOREX Market

24 / 5.5

FX Compared to Other Markets

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The Three Most Popular Trading Strategies in FX

CARRY VALUATIONMOMENTUM

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What are the steps to take to choose an Forex provider

We will develop a step by step guide

How to decide who to trade with

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Questions to ask yourself

How much are you investing ?

What is your trading style ?

What level of risk or leverage are you comfortable

with ?

What are the different regulatory environments and

how does that effect you ?

A look at the terms regarding how the Forex provider

manage their currency risk

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What is your trading style ?

Questions Considerations

How much are you investing ? What % of your investable assets

How much are you depositing? Interest paid on balances

Credit rating of your counterparty

How do you make your trading

decisions ?

Fundamental: What is the research offering, Macro ?

Technical : Charting capabilities

Can you trade from charts

Can you track open positions from the charts

What is the time frame of your trades ? Minutes, Hours, Days, Months

Do you open trades from the trade

platform or by leaving orders?

Order Functionality

Do you link orders to open trades ? Order Functionality of orders linked to positions

How comfortable are you with risk ? Leverage desired

www.babypip.com Tools – Forex Broker Guide

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Leverage and what it means to you

Forex Brokers routinely offer leverage as high as 200 to 1.

Define your risk tolerance

Use leverage to match your risk tolerance

Currently the Forex market can move 1% in one day

How much leverage are you comfortable with ?

Value of account

1,000,000 1,000,000 1,000,000

Leverage1 to 110 to 1100 to 1

Position size1,000,000

10,000,000 100,000,000

% Value of account with 1%

market move1%

10%100%

$ Value of poistion with 1%

market move990,000

9,900,000 99,000,000

$ Value of account with 1%

market move990,000 900,000

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Regulatory Environments

Not all Forex Providers are regulated

Not all regulators have the same rules

Web site

USA NFA – National Futures

Association

http://www.nfa.futures.org

www.cftc.gov

UK FSA - Financial Services

Authority

http://www.fsa.gov.uk/

Europe MIFID guideline Listed on FSA site

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UK Regulatory Environment

FSA – Financial Services Authority

Conduct of Business Rules (COB)

MiFID – New COB rules– dbFX

– is a Non deliverable, daily cash settled,

– Contract for Difference (CFD)– CFD is a regulated investment so MiFID applies to dbFX.

MiFID: Markets In Financial Instruments Directive

Financial Promotions

Classification

Appropriateness and Suitability Test

Best Execution

Complaints Handling

Inducements

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Treating Clients Fairly (TCF)

TCF is an initiative from the FSA which aims to deliver six improved

outcomes for retail consumers.

– Corporate Culture

– Identified Consumer Group

– Clear Information

– Advise is Suitable

– Products that Perform

– Unreasonable post –sale barriers

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US Regulatory Environment

CFTC - Commodity Futures Trading Commission (a US Government Regulator)

NFA - National Futures Association (a Self-Regulatory Organization)

Registration

– Firms conducting Off-Exchange FX can register as "Futures Commission

Merchants" ("FCMs") since 2001

SRO Status

– NFA designates FCMs engaged in OTC FX as "Forex Dealer Members"

Capital Requirements –

– FDMs currently required to have US $5M, going to $20M

Brokers/Trading Advisers

Safety of Client Funds

Required Disclosures

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Dealing with a Forex Provider

Terms you may encounter:

– Broker: no dealing desk

– Broker: dealing desk

– Bank

Let’s take the mystery out of these terms and look at what they really mean

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What does “no dealing desk” mean

Bank Liquidity Provider

Trader Forex Broker

1. Finds the best price2. Request a Trade

1. Determines best price2. Adds Markup to Price3. Send Price to client

Trade Accept Message

Price Display

Request a TradeAccepts the Trade

Trade Accept Message

1. Trade is booked2. Collateral account

debit or credited

Price from Bank B

Price from Bank C

Price from Bank A

Decides to make a

trade

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What does “dealing desk” mean

Price from Bank B

Price from Bank C

Price from Bank A

1. Determines best price2. Adds Markup to Price3. Send Price to client

Price Display

Request a Trade

Dealing Desk will 1. Accepts the client trade2. Decided to offset the

trade or not with a bank3. Offset trades with banks

Trade Accept Message 1. Trade is booked2. Collateral account

debit or credited

Request a Trade from a bank

Accepts the Trade

Bank Liquidity Provider Trader Forex Provider

Decides to make a

trade

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What does dealing with a Bank mean

Price from Bank Price Display

Request a Trade

Bank will 1. Accepts the client trade2. Manage the currency

Risk

Trade Accept Message1. Trade is booked2. Collateral account

debit or credited

Bank Trader

Decides to make a

trade

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Now you have a short list of providers

Before you start trading

Open a demo

Use a demo from the broker you will trade with

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Now you have a process to choose a Forex Provider

You have the questions to ask yourself about

– Your investment levels

– Your trading style

– Your risk tolerance

You understand the different regulatory environments and

how they affect you

We have taken the mystery out of the words used regarding

how the providers manage their currency risk.

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Deutsche Bank FX

Deutsche Bank is recognized as the world leader in FX

Trading

– Market share is over 20% of the global market,

Deutsch Bank is the #1 FX Bank voted by Euromoney

Magazine for the last four years

– Constant innovation to provide the best market

information and market access to our clients

– Award winning market research in FX and Global

Markets

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dbFX for Your Online FX Trading

What do you get ?

Funds deposited with Deutsche Bank

Trading directly with Deutsche Bank

Access to Deutsche Bank Research

24 hour sales and support via phone, email or instant messenger

Leverage of up to 1% or 100 times

Easy to use Trading Platform

– Real time charts

– Trade from charts

– Risk Management tools

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How to get started

Go to www.dbfxarabic.com

Sign up for a demo and PRACTICE

Applications are on-line or from our sales team

Accounts are funded with cash

Fund with as little as $5,000 USD or or the equivalent in GBP,

EUR or JPY.