Opening an account with a currency provider

Opening an account with a currency provider

As an importer/exporter you will normally have exposure to fluctuating currency markets. You will probably use your bank for your purchases because it’s ‘easier’ or because it’s more convenient. Even though you know deep down that you could probably get a better rate of exchange if you used the services of a dedicated currency provider you just can’t bring yourself to go through the hassle of opening an account elsewhere. The paperwork and the multiple questions just seem to be a tad long winded and so you stick with what you know!

It may surprise you to know that opening a corporate account with a currency provider is really quite straightforward and, once your account is opened , you will make some serious savings!

What information is required & why?

When you contact a currency provider you will be required to complete a registration form. This will either be electronically via the company website or by downloading the form and completing it manually.

You will need to provide the following information;

Registered company name

Trading name ( if different )

Company registration number

Date of incorporation

Registered address

Trading address ( if different from registered address )

Nature of your business

You will also be asked to provide a copy of your company’s certificate of incorporation together with information about who owns the business and also details of any shareholders who hold a stake of 25% or more of the company.

From the currency providers perspective they have to ensure that they fully understand what it is that their clients do, known as KYC or Know Your Client,and so you will be asked a few more questions and these will be along the lines of;

what purpose you will be exchanging funds

source of funds

currency to be bought/sold

what amount are you exchanging

how often will you be making transactions

destination of funds – beneficiary

relationship to beneficiary

This may seem like a lot of hassle but in actual fact it is relatively quick and easy to open a corporate account. The reason for all the questions is simply in order that the currency provider can correctly identify who you are and what you do. It protects the broker from being used illicitly and should also give you , the customer, peace of mind that you are dealing with a professional organisation and one which takes great care to ensure that new clients are vetted accordingly.

Benefits of using a currency provider?

Your account is now opened and now the benefits will be very apparent.

You will generally receive the following;

Daily market updates, regular technical charts and……. extremely competitive exchange rates! You could find yourself saving up to 2 % on some purchases and to put that into perspective a 2% saving on a £150,000.00 transaction would amount to £3000.00!

You can also discuss various strategies with your broker which may be of benefit such as whether to use a Limit order or to fix a Forward price. You will find that you will receive a much more personalised service and one which suits your requirements.

Fast and efficient transfers

As well as the savings you will make you may be pleasantly surprised at how quick and efficient currency transfers and payments can be made. At OmnisFX, for example, payments are regularly made on a same day basis and in some cases within an hour of any trade being booked! This does depend on how quickly your own bank makes the initial transfer to your brokers bank account.

If you already have funds on account with your broker you will find that on completion of your currency transaction that your funds are sent immediately!

Many banks and also some large institutions, have two payment runs per day and therefore same day transfers will not always be possible so check with your chosen currency provider.

So, to sum up , yes, it may seem a tad tedious filling out an application form and collating all the required paperwork etc in order to open your account. But you will receive a much better service and will make savings immediately.

Topics: Export Planning, Payments, and Purchasing
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