Many reputable leveraged forex companies exist in Hong Kong, but investors should look before they sign up and trade leveraged forex, the Securities & Futures Commission says.

Since the introduction of the Securities & Futures Ordinance in April 2003, eight people and one company have been prosecuted for unlicensed leveraged forex related offences.

The Securities & Futures Commission's latest monthly Dr Wise column says investors should always use licensed forex companies before signing up and trading leveraged forex, and say 'no' to invitations to trade via affiliate offshore companies.

Often such offshore affiliates are unlicensed by both the commission and their countries, and there is no recourse in Hong Kong or in the home countries if one disputes trades.

Never trade in partnership

Regarding account executives, investors are reminded not to give anyone authority to trade via their leveraged forex accounts or to trade in partnership with anyone. If authorisation has to be given to a third party, it should only be for closing out open positions and seeking an indemnity from the third party to ensure they adhere to directions. Investors should notify their forex companies of the arrangement.

Dr Wise reminds investors that leveraged forex trading is not intended for financially unsophisticated investors. Those who are confident enough to trade leveraged forex on their own should keep a personal record of trades and verify them against daily or monthly statements. If there are any discrepancies, investors should bring them to the attention of the company.

Investors, if not satisfied with a licensed leveraged forex dealer, can lodge a written complaint with the company and report to the commission or even seek arbitration.

For details about arbitration, call 2525 2381 or email adr@hkiac.org.