It's hardly talked about but, one often-overlooked pain point haunts the corridors of a Financial Controller's mind: the fear of appearing uninformed or, worse, foolish.
It's the concern that stems from entrusting your FX broker to act with unwavering integrity and deliver fair pricing consistently.
The scenario is all too familiar...
Financial controllers receive countless approaches from currency payment companies promising "better rates" and touting the benefits of their services. "Let us help you manage your FX requirement," they say. "What you need is a hedging policy," they insist.
On the surface, these proposals may sound appealing, but underneath lies a different reality. Many of these offerings are but smoke and mirrors, designed to allow FX brokers to maximize the spread they extract from unsuspecting clients.
Very few FX brokers are willing to commit in writing to a fixed FX spread that will remain constant. Why the hesitation? It boils down to their desire to retain control and capitalise on market movements. They may employ tactics like working limit orders and letting the market surge far beyond the client's desired price. Yes, you eventually get your price, but at what cost? 1%, 2%, or perhaps even a staggering 3% in some cases.
Agreeing to a fixed spread would force them to relinquish the additional gains they siphon from you when market conditions swing in their favour.
Worse still is hiding the spread on forward contracts.
Billed as protection, forward contracts allow you to fix the price now for one or two years (or more) ahead. A protective measure for sure, but financial decision-makers should always be made aware of the ‘forward points’ – read more in our article on forward pricing.
When forward points are in the favour of the deal direction, they are often not mentioned by the broker, who instead chooses to "keep" them for themselves, citing the protection of the secure price to enable the proverbial ‘wool being pulled over the eyes’.
So, what does a financial controller truly need?
It's not just about hedging policies, faster payments, or the assistance of a plucky relationship manager/dealer in managing FX flows. What they crave, what they demand, is a rock-solid assurance – the peace of mind that they won't be left exposed and red-faced for trusting a broker who didn't provide a fair price.
Imagine working with an FX company that commits in writing to a fixed spread, perhaps at a comfortable 0.5% or a rate that aligns with your needs. If a broker is unwilling to make this commitment, it's time to scrutinize their integrity and seek out one that will.
In the world of finance, there's a constant give-and-take, a delicate balance of service offerings. But, as a financial controller, you deserve nothing less than the certainty that your financial interests are protected, your trust is well-placed, and your broker operates with transparency and fairness at its core. After all, in the pursuit of financial excellence, there is no room for smoke and mirrors.
Don’t be left looking like a fool when you find out what’s really been happening!
How can we help you?
At Oku Markets, we're proud to do business with integrity and provide transparent, consistent, and fair prices at all times. You can trust us to work with you, not against you!
Contact us at [email protected] or 0203 838 0250 to discuss your needs!
