Foreign Exchange for SMEs – Why Use a Specialist FX Broker?

Billions of pounds are exchanged on a daily basis by businesses importing and exporting goods and materials. Whether it is paying a supplier in the Far East or receiving a payment from a customer in mainland Europe, it is more than likely that one currency will need to be exchanged into another to complete the transaction.

Many businesses still use their bank for these transactions and may not be aware that the exchange rate they are getting is likely to be poor and this is often on top of a fee charged per transfer.

Better rates of exchange

There is another option – by using a Specialist Foreign Exchange Broker such as TorFX SMEs can access the kind of wholesale rates that the banks only tend to offer their larger corporate clients and with no transfer fees on amounts over £5000.

Optimised transactions, reduced risk and a range of trading options

Not only can brokers provide better rates of exchange but their expertise in the markets tends to be an attractive advantage. Choosing the right time to exchange is vital as this can result in massive savings and minimise risk against market fluctuations.

For example, a company ordering a container load of stock from the far-east and paying in USD is likely to be invoiced for them immediately, but may not have to pay the full amount until they are delivered a few months later. In that time, the exchange rate could have dramatically taken a turn for the worse, exposing the company to potentially dangerous losses.

TorFX can offer a range of trading options to optimise transactions and limit exposure and risk;

  • Forward Contracts – Allow the exchange rate to be fixed for a future trade, based on the current spot rate. This allows clients to take advantage of favourable exchange rates up to 2 years in advance of needing the currency, offering protection against any fluctuations in the market over that period of time. A 10% deposit is required at the time of agreeing the forward contract.

  • Limit Orders – An order to buy currency at a pre-determined level better than the current market rate. The currency is purchased automatically when the target level is achieved.

  • Forward Limit Orders – Another option is to combine the two contract types. A limit can be put into the market and if the desired rate is achieved, we will then ask for the deposit amount to be paid to fix the forward to a specified future date.

  • Stop-loss Orders – An order to buy currency if the rate hits a pre-determined low. This can offer protection against dramatic rate falls.

  • Limit & Stop-loss Benefits – Many clients choose to use a limit and stop-loss order together, protecting against risk and guaranteeing that the exchange rate will be within a certain range. The markets are constantly moving, so our dealers constantly monitor orders, keeping clients informed. Orders can be adjusted or cancelled at any time prior to being fulfilled.

Choosing a broker

Selecting the right broker is also essential, both getting the right expertise and ensuring that your funds are secure. Always check that your broker is FSA authorised and regulated rather than just being FSA registered.  This ensures that all client funds are held in segregated accounts and are safeguarded should the company cease trading for any reason.

Difference between Registered and Authorised;

Registered with the FSA as a "small payment institution".  Being registered places very little requirements on a firm.  For example, a registered firm is not required to operate segregated client accounts, nor are they required to hold a defined level of capital ("capital adequacy").  Directors and owners are not subject to the FSA "fit and proper" test.

Authorised by the FSA which is very different.  Authorised firms are subject to a far higher level of regulatory scrutiny than firms that are simply registered.  Authorised firms like TorFX are required to segregate client money, maintain a strictly defined level of capital at all times, and all owners, directors and senior managers are subject to the fit and proper test.  TorFX comply fully with all of these requirements.

About TorFX

Over the past 7 years TorFX have gained a reputation for excellent rates and tailored customer care. This has been recognised by being awarded Best European Currency Broker 2010 – a prestigious award voted for by readers of Overseas Living Magazine. TorFX is fully regulated and authorised by the FSA, is an Approved Trade Support Partner of UK Trade & Investment (UKTI) and a member of the UK Money Transmitters Association and the Association of International Property Professionals.

All registered clients are appointed a personal Account Manager who can be contacted directly. They take the time to understand their client’s requirements, advise on trading options and monitor the markets – ensuring their clients get the most money for their money.

The above article was contributed by Will Hewitson of leading currency broker TorFX. If you would like to speak to Will you can contact him direct on +44 (0)1736 335270 or email

Alternatively request a free currency quote and additional information here Please quote ‘’’’ with your enquiry.

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