In response to the MAS public consultation seeking views on CFDs and leveraged forex trading, I wrote a letter to the Straits Times which was published today.
My original title was “Proper education to consumers on CFD and forex” but ST have amended it to “Beware of seminar loophole in protecting investors”. The rest of the letter remains unchanged.
It is heartening to read that MAS is planning to make changes to certain complex financial products in order to enhance the protection for retail investors. (“MAS plans changes to CFD and forex rules” ; 29 May 2012)
While the increased regulation of financial institutions is a good step, it should be done in conjunction with better consumer education.
MAS should ensure that only competent and properly qualified people are allowed to conduct seminars on such topics, especially when a large public audience is involved.
The biggest irony today is that people who provide advice on insurance and investment to individuals on a one-one-one basis are governed under regulations such as the Financial Advisers Act (FAR), yet those who conduct seminars on forex and CFD trading to hundreds of people at any one time can be a person without the proper knowledge.
This discrepancy must be fixed as an incompetent trainer who impacts the wrong knowledge to thousands of people can cause great financial damage to their families.