Transcript

Foreign exchange may be the world’s largest and most liquid market, but it also seems to be the one most plagued by corporate scandal and criminal prosecution. Mario Singh, founder and CEO of Fullerton Markets, explains why he thinks this is the case, and the lengths Fullerton has gone to in order to protect its own clients’ funds.

Mrassociates: Mario, why is the forex industry so susceptible to scandal?

Mario Singh: Well Paul, you hit the nail right on the head; I mean precisely the reason is essentially because of its size.

The forex market today trades essentially over $5trn in one day. And because it is the world’s largest money market, that’s part of the reason why there are so many scams that come into the financial sector.

That sounds I know a little bit negative, Paul, but – one of the key things that I find has been very good industry-wide has been something called the FX Working Group. Which is essentially a committee that is born out of the BIS – the Bank of International Settlements. And they have a code of conduct that basically says, these are some of the industry’s best practices.

So with that, I do hope as an industry practitioner as well, that we will be seeing lesser and lesser of such forex scandals and scams throughout the world.

Mrassociates: Fullerton Markets has really committed to fund safety and transparency; tell me about your Fullerton Shield.

Mario Singh: So the Fullerton Shield is basically our triple-level fund safety programme.

Level one is that we have a segregation of bank accounts between the corporate fund and the client fund. So that there’s a clear segregation, that means the directors of the company will not be able to put their hands into the coffers, and to start pilfering off client funds.

Level two Paul is what I term as a third party fund administrator. Once we segregate the funds out, we then appoint a third party custodian that actually helps in the administration of withdrawals and deposits of the client funds.

And if that is still not enough Paul, we have the third level – now this is unparalleled fund safety. So the third level, we actually have an insurance policy that is taken on the custodian, in two areas. Number one, what we term as professional indemnity – in the event that some of the employees or directors of the custodian were to encourage in wrongful or criminal acts – and number two, we took the policy on cyber-crime.

Mrassociates: How does this commitment set you apart in what is really a ruthlessly competitive market?

Mario Singh: I would zero that in on basically one word. It’s what I would term as a proactive stance. Now this is what I mean – and don’t get me wrong, I feel regulation is a good thing. But having said that, I do find that regulation can be a little bit reactive – reactive meaning to say, it’s only when problems happen that the regulators step in. And by and large, at that moment, the client funds have already disappeared.

So by taking a proactive stance in ensuring that on day one, the client funds are not even sitting in the brokerage firm, we have raised that benchmark.

Mrassociates: What do you see as the future for this conversation in the industry? Do you see your competitors, or even the regulators, adopting a more proactive stance?

Mario Singh: Well I would love to see that, quite honestly. I think at this moment there needs to be a balance from the regulatory perspective, on how they would massage that one-two step between a reactive stance and a proactive stance.

So I would dare say that we are one of those that’s actually leading the industry, by taking such a bold, proactive stance, in ensuring that client funds are segregated on day one itself.

Mrassociates: Mario, thank you very much.

Mario Singh: Thank you Paul for having me.