FXTM Obtains License in Mauritius
Retail Forex broker ForexTime Limited (FXTM), which also provides trading services related to contracts for differences (CFDs), announced last week that it had received a license from the Financial Service Commission (FSC) of Mauritius, an island country in East Africa. Besides, the Cyprus-based company has previously obtained a license from the UK Financial Conduct Authority, the Cyprus Securities and Exchange Commission (CySEC), and the South African Financial Sector Conduct Authority.
In Europe, many Forex and binary options brokers have suffered lower trading volumes after the European Securities and Markets Authority (ESMA) decided to tighten regulation related to binary options and CFD trading. Besides the new changes, the markets have demonstrated low volatility in the last few months, which put even more pressure on the brokerage services, which have shown a poor performance compared to the previous years.
FXTM, which is led by Alpari co-founder and owner Andrey Dashin, wants to expand outside the EU to attract more foreign clients. In 2018, many CFD, Forex and binary options platform operators applied for licenses outside the EU, such as the Bahamas or South Africa, to offer high leverage to their customers.
More and more brokers show increased interest in Mauritius as a regulatory jurisdiction for their businesses. The main reasons that make the island a good option are its capable financial regulator and the decent access to banking services, which are in line with the brokers’ needs.
FXTM said in a statement:
Mauritius is fast becoming an internationally recognised financial supervisor with a strong legal framework, providing protection to the public in non-banking financial products.
The company added:
International customers will now have the opportunity to receive services through Mauritius. Clients will continue to enjoy the same great service they have come to expect from FXTM.
ESMA Renews CFD Restrictions Again
FXTM’s decision is understandable, given that the ESMA doesn’t seem to ease its control over CFDs. On Wednesday, March 27, the regulator decided to renew the leverage limits and the restrictions related to marketing, distribution, and sale of CFDs to retail traders for another three-month period, which starts on May 1, 2019. The regulator explained:
ESMA has carefully considered the need to extend the intervention measures currently in effect. ESMA considers that a significant investor protection concern related to the offer of CFDs to retail clients continues to exist.
Some local brokers, like the UK FCA, German BaFin or the French Autorité des Marchés Financiers (AMF), are planning to adopt the ESMA measures permanently. Also, the mentioned regulators want to implement additional rules to limit the CFD and binary options markets.
Recently, the French AMF revealed its intention to impose a permanent ban on binary options products and limit the marketing of CFDs. The regulator wants to impose trading conditions established by the ESMA, including leverage capped at 1:30, 50% stop out, and negative balance protection.
Besides, the AMF wants to ban CFD brokers from calling potential clients to investing in their instruments and require firms to warn on potential risks.
Despite Everything, Some Brokers Choose to Come to Europe
While many European brokers are looking for ways to expand outside the EU, more and more Australian brokers are applying for licenses in Europe in an effort to reach EU clients. Recently, FP Markets expressed its intention to get a license from the CySEC.
FP Markets already prepared a domain name with the .eu ending. The company says that it is not providing its services in the EU at the moment, but plans to do so in the near future.
In 2018, ICMarkets, one of the largest Australian CFD brokers, also obtained the license to operate in the EU. However, the company hasn’t officially launched its European business yet, though it had also registered the .eu domain name.
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