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Old 03-11-2019, 12:44 PM   #2
DukeCS33
Senior Member
 
Join Date: Jul 2018
Posts: 1,541
Even reputable private banks do this kind of thing to their clients.

Debt securities, mainly bonds, are not traded on electronic markets. You take what the bank quote you and it's not easy to check the market price out there because there is no electronic markets for the investor to check bid/ask price.

THis just tell us we can't trust the bankers and if they think they can screw the clients and get away with it, they will. Even the most reputable ones like UBS do it.

https://www.businesstimes.com.sg/ban...s-in-singapore

A report from Reuters said that UBS is working with relevant authorities to address inappropriate spreads it may have charged wealthy clients whose money was booked in Hong Kong and Singapore in debt securities transactions.
I do not think the MAS can do anything about this. What is the benchmark for reasonable charges vs over charging via spreads? It is always a case of willing buyer, willing seller. If the private banking customer finds that the price is not right, he or she can walk away and not transact. By transacting, you would have already agreed that the price is fair enough. I think it is more likely a case where the client lost money on his investment and decided to sue or complain about the bank. This happens all the time in many jurisdictions.

And Banks make money by charging either via direct fees or spreads. So one needs to understand this. The fund that a bank sells - they will tell you that they have an upfront commission from 0.5% to 2%. Some retail may accept this but an institutional fund would not. So what is fair or reasonable?
Most structured derivatives have embedded spreads that are not transparent at all. And there is no way to regulate this unless everything gets listed on an e platform and the margins be made transparent. But if this is done, no banks will want to package such instruments... its a lot of work for too little profits.
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