A free and open forum for and by Calabria property owners.
View unanswered posts | View active topics Register | Login

All times are UTC [ DST ]




Post new topic Reply to topic  [ 53 posts ]  Go to page Previous  1, 2
Author Message
 Post subject: Re: Exchange
PostPosted: November 6th, 2010, 9:36 pm 
Offline

Joined: August 1st, 2010, 7:41 pm
Posts: 30
David – I’m reluctant to comment actually, but I’m a sucker for landing myself in it

In theory it sounds a great idea – and already you can tell where I’m going with this.

So, theory is, you avoid the commission or spread of the broker – well not entirely true because they do charge a commission which they say - is priced into the exchange rate, and varies by currency [pair] – and I’ve no idea how they do that.

The first thing that struck me was the claim on their home page that “currently you will get 1.1487 EUR to GBP” but a bank will offer 1.1187 – I guess this is “real-time”, it does seem to reflect the midday mid-market price on Friday, but banks were offering close to, or in excess of 1.13 at that time and the brokers in the region of 1.136. Reason is the markets from Thursday were long on GBP/EUR – they forecast a stronger pound – which, indeed, it did closing on Friday at 1.15 plus. So whatever bank they were getting their quote from then they need to shop around.

Fundamentally, to use this service you will need to “set your price”. How are you going to do that? It might work if a currency pair are trading flat – like USD/YEN for the past couple of weeks, but in the volatile market of the EUR in the past few weeks? For example, say last Thursday you decided to buy euros – the day before it had a high of 1.15 and now when you looked it was at 1.135, do you assume it will plunge further (maybe back to 1.12) – it certainly might look like that, therefore you might be happy to “grab” 1.135 and ask for that before it falls further. However, if you had called a decent broker he would have told you that that was most likely the bottom and the rate was priced to improve during the Friday session. A broker absolutely knows this – he will have his own long position on his own account, and he knows what all the other traders are doing. Getting the price wrong would negate any gains in “saved” commission or spread.

I’m also not sure how they match you to a counterparty – if you wanted to buy €3000 for pounds at a rate you ask for, do you need a counterparty who exactly wants to sell €3000 and is happy with that ask? Seems an unlikely scenario – what if someone wants to sell just €2000, would that be a partial trade? Seems a lot of hassle, even a nightmare. That is why the brokers and banks trade on their own account – they are market makers – they will sell you your euros, taking your pounds, into their own account – because, at sometime in the future they will have a client wanting to do the reverse. In the meantime they will build a position in the currencies and will set the buy and sell price depending on that position (what the demand is for a particular currency). That is how the market works, but that is not how this exchange site is able to work.

Finally I would always be wary of depositing funds into [albeit, claimed, segregated client accounts]. If it is a pooled client account (and it almost certainly is) then it is still regarded as a single account by compensation rules should anything go wrong – and limited to compensation of £100k per account. I’d also want to know what the bank is they are using – it might be a “big” bank in excess of $100bn market cap (so that is one of about 8 banks world-wide – 3 of which are Chinese, 3 US (and unlikely to be one of those), one UK based – HSBC, and one Spanish), you would want it to be HSBC I’m thinking.

So, summary – a smart idea – but is it really worth the hassle?


Top
 Profile  
Reply with quote  
 Post subject: Re: Exchange
PostPosted: November 7th, 2010, 12:36 am 
Offline
User avatar

Joined: June 25th, 2008, 6:39 pm
Posts: 1171
Location: Carmarthen, south west Wales / Santa Maria di Ricadi, Capo Vaticano
Tim,
Thanks for your comments.
david


Top
 Profile  
Reply with quote  
 Post subject: Re: Exchange
PostPosted: November 13th, 2011, 11:34 pm 
Offline

Joined: October 30th, 2009, 5:51 pm
Posts: 184
Location: Berkshire/Marina di Caulonia
Has anyone actually used currency fair, the online peer to peer exchange and if so were there any problems.


Top
 Profile  
Reply with quote  
Display posts from previous:  Sort by  
Post new topic Reply to topic  [ 53 posts ]  Go to page Previous  1, 2

All times are UTC [ DST ]


Who is online

Users browsing this forum: No registered users and 2 guests


You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot post attachments in this forum

Search for:
Jump to:  
Powered by phpBB® Forum Software © phpBB Group