The Peril of Trading with Unlicensed Online Investment Firms

Investing overseas has never been easier, thanks to our borderless online world, but the costs can be crippling if you leave the protection of Singapore laws and gullibly venture into foreign fields.

- Tan Ooi Boon

As tempting as it is to try your hand on the global stage, if you value your money, it is better to be conservative for one important reason: If things go belly up, how are you going to get your money back if you don't even know where to look for those responsible for your losses?

Even if you have the money to engage lawyers, it is an arduous and costly process to file claims overseas, and that's provided you can even find the right party to sue.

So it makes sense to heed the advice of the Monetary Authority of Singapore (MAS) and the police, who warn people not to deal with unlicensed online trading platforms that are outside Singapore because their operations cannot be easily verified.

When you trade on online platforms, you may have to use your credit or debit cards to pay for transactions, but disclosing such data to unverified parties can be catastrophic if they misuse it.

The caution from both agencies came on June 6, when they announced a proactive decision to block the websites of two unlicensed trading platforms, Octa and XM, after investigations showed they had conducted activities that run foul of the Securities and Futures Act.

Police had information that the services offered by Octa and XM often included extending loans to investors so they could make bigger bets on foreign exchange, commodities, indexes, and equities.

It was also found that both platforms had been marketing their services to customers in Singapore without official approval.

Companies that want to deal in capital markets products such as securities and leveraged foreign exchange trading must first obtain MAS licences.

THE OFFENDERS

The Octa platform is operated by Octa Markets and Uni Fin Invest, purportedly incorporated in Comoros in East Africa and Mauritius.

XM Global, which is purportedly incorporated in Belize, operates the XM platform.