ANALYSIS OF RISK INVOLVED IN PPOP CONTRACTS
Finalizing PPOP contracts with clients can be a stressful process because of problem encountered along the way.
FROM THE CLIENT’S SIDE
The applicant client will not be able to meet directly with the trader in this business. The main reason why there’s a broker-intermediary chain is because the people in the trading groups have no time or interest in meeting all the people who are just fishing for information, and/or who fail to qualify because they don’t have enough money, or have useless bank instruments.
If you’re a qualifying client, truly connected intermediaries / brokers should be able to place you in contact with a performing trading group. Don’t attempt to find a trader on your own: Most so-called traders in the financial world are not involved in this kind of trading and are not educated to their existence. Those few traders who are keep a low profile and would never talk with a client who hasn’t been cleared. In fact, they cannot until the client passes the international KYC (Know Your Customer) compliance. When it comes to cases of non-performance, the problem is usually on the client side. The client doesn’t qualify for a variety of reasons; he doesn’t have enough money, the bank is too small or is located in the wrong country, he cannot move his funds, etc.
Some of the most common reasons why clients are never able to enter this kind of trading are:
1. They don’t have enough money or workable assets
2. They don’t have the money in an acceptable bank
3. They don’t have full control of the money (or of the bank instruments)
4. They don’t have a good explanation of the origin of the money
5. They do not follow the required procedure
6. They do not collaborate enough with the Trading Group
7. They delay the delivery of documents or send fake or non-confirmed documents
8. Their identity cannot be confirmed
9. They are blacklisted or under investigation.
Remember that the trading group does not have to give any explanation why the client doesn’t pass through the clearance.
Clients who have the least amount of money are always placed last in the queue. A client with €100M will get more attention than a client with €10M. Clients who have assets other than cash or AU bullion in a bank vault will also always be placed last in the queue, if they are accepted at all. Assets other than cash or gold bullion must be monetized to provide cash for the trading account. It is difficult for any client to ensure that he meets the right people; those few intermediaries and brokers who know the process and who are working with a performing trading group. The best he can do is to educate himself and not be lured by those who claim that their program will give the highest yield. He must also be patient, and trust the legitimate intermediary or broker. There is no way that the client will directly meet with the trade group before he has been cleared.
FROM THE BROKER’S AND INTERMEDIARY’S SIDE
There is a common misuse of such terms as brokers, intermediaries, and facilitators. The fact is, these are not official terms in banking or finance, but such terms are used within trading groups and in their communication between each other. Although a broker or an intermediary can claim that they are in direct contact with a person carrying that title, it is not a guarantee of anything. Any person can fraudulently call himself a trader, or a commitment holder, or whatever. And since such positions cannot be verified (at the first stage), such titles can be meaningless as seen from the clients’ point of view.
There is almost always a chain of trading group, a broker and intermediary and client. This is for two reasons:
Firstly, trading groups, brokers, and intermediaries are not allowed to solicit; the Client must start by asking for information.
Secondly, this protects all parties involved with the trading group. Brokers may work through several intermediaries, and vice-verse intermediaries. A chain of more than one or two intermediaries connected directly between the two Principals, in general, is not acceptable to some program providers. A good broker should also screen the potential clients, filtering the most promising applicants and at the same time collecting from them the proper documentation. In this way, the trading group receives workable documentation from the broker.
The most common risks or problems that a broker, an intermediary or a facilitator can meet with in this business are:
– They may need to investigate dozens of clients before finding a qualified applicant:
– They may discover the assets of client to be unworkable after weeks or months of processing.
– They may have difficulty qualifying themselves with new clients because they cannot show any past performance or past contracts due to strict laws and a Non Dis closer Policy. The relationship with the client is just a matter of trust at an early stage.
– There could be several levels involved for the intermediaries. The closest one to the trading group (sometimes called also facilitator) is the most important person. This person should have a direct contact with the trading group. Any other broker beneath the facilitator has a lower value in the hierarchy. The
broker and/or the intermediary can have problems showing the client his level in the hierarchy at an early stage.
