Trading equities overseas is riskier

I REFER to the report "Quiet S'pore market sends retail investors' funds overseas" (BT, April 21).

Trading equities in overseas markets is riskier than trading equities in the local market because the trading and settlement rules are vastly different from local ones. There is also the foreign exchange risk. Hence, initially, overseas equities were segregated as specified investment products or SIPs. Even now, clients who want to trade in overseas markets have to sign a risk warning statement or RWS. Local clients also may find it difficult to readily access information and reports about overseas equities.

Broking houses are very prudent and do not outdo themselves in taking more risk than necessary. Thus, most Internet trading platforms have the facility for remisiers to modulate the credit line of clients with a lower percentage for overseas markets. This protects the clients as well as the remisiers.