Hebron Fin Investments, a company that trades foreign currencies online, has debunked claims by the central bank that it is operating illegally, saying the Foreign Exchange Act does not cover online forex trading.
The Bank of Ghana, last week, issued a statement ordering Hebron Financial Investment Limited (HFIL) to close down its operations for engaging in unauthorised online foreign exchange trading business contrary to section 3(1) of the Foreign Exchange Act, 2006 (Act 723).
The act stipulates that “a person shall not engage in the business of dealing in foreign exchange without a licence issued under this Act.”
“Bank of Ghana has conducted investigations into the operations of HFIL and has concluded that the said company is not authorised to engage in any form of foreign exchange business,” the statement said.
Chief Executive Officer of Hebron Investments, Joel Eshun, told the B&FT, however, that the company is not doing anything illegal and has been operating for half a decade without any challenge.
“We are not doing anything illegal and the defamatory statement they [Bank of Ghana] have made must be corrected. We want the Ghanaian public to know our stand on the situation and educate the public on what forex trading really is and let the regulators stand up and begin to regulate the industry in which we are,” he said.
The company, he added, is not contravening the law because it does not take clients’ money but just trades on their behalf.
Brokers, he said, receive the monies and deposit same with international intermediaries like Bank of America, Morgan Stanley, Citibank, Barclays, HSBC, Deutsche Bank and Goldman Sach, on behalf of clients.
“We do online forex trading and we have a school where we teach people who want to be undertaking forex trading. But for people who are not doing so well, we trade on their behalf.
This means that the client and brokerage firm transfer the power of attorney to us for us to trade on their behalf. We do not hold clients’ funds, neither do we have the power to transfer their funds,” he added.
Forex trading has been part of every economy and well-regulated but online forex trading, a relatively new phenomenon, is regulated in developed economies but hardly regulated in developing ones.
Some countries regulate online forex brokers through governmental and independent supervisory bodies, like the National Futures Association and the Commodity Futures Trading Commission in the US, the Australian Securities and Investments Commission in Australia and the Financial Conduct Authority in the UK.
According to the Bank for International Settlements, the preliminary global results from the 2016 Triennial Central Bank Survey of Foreign Exchange and OTC Derivatives Markets Activity show that trading in foreign exchange markets averaged US$5.1trillion per day in April 2016, although it is silent on the share of online trading.
To Mr. Eshun, Hebron’s job is to analyse various economies, currencies, commodities and stocks across the globe and monitor how central banks are setting interest rates and what decisions regulators and government executives are taking and based on these pieces of information Hebron places low-risk trades on behalf of clients.
“What we do has nothing to do with the cedi or how the cedi and dollar inter-relate. I am looking at the Fortune 100 companies, S&P 500, and Dow Jones and analysing industries that are efficient and can process information quickly,” he said.
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