Have you been naughty or nice as a forex broker?
Not even forex legends at the caliber of Martin Schwartz or Larry Williams will have much success in their currency trading if the broker that they’re using is inclined to unscrupulous conduct. This past holiday season, we decided to take a look at which brokerages have been naughty or nice. Did your brokerage find a nice prim gift from Santa sitting under their Christmas tree this past year?
In January 2016, Banc de Binary agreed to pay a higher settlement amount of a whopping €350,000, rather than pay up a smaller fine without any confidentiality restraints for their breaches of the Cyprus Securities and Exchange Commission Law of 2009. As to what they actually did wrong we’re not able to tell you as very little has been disclosed, which undoubtedly has something to do with the higher than normal fine. Little wonder that come January 2017, Banc de Binary closed its doors and bid farewell to all their existing clients.
In February 2016 CommexFX got landed a fine for €100,000 by CySEC, albeit for violations committed in March and April of 2015. The transgressions against the regulatory body’s trading laws included “Dealing on own account” where there was no authorization to buy and sell financial instruments on client orders. To date, CommexFX’s licence is still suspended as CYSEC alleges that the broker continued to breach laws regarding operational requirements and ensuring that client’s funds were safeguarded.
Amongst others that CySEC has issued penalties include an administrative fine of €10,000 against CIF Spot Option Exchange and €5,000 against BDSwiss Holdings. Both issued on the same day of March 2016, they both failed to comply at all times with Section 28(1) of the Investment Services Activities and Regulated Markets Law of 2007, which seeks to ensure continuity and regularity of a broker’s performance in investment services and Section 36(1), for failing to act in accordance with their client’s best interests.
Many have been shaking their heads disapprovingly at the European trading brand, Hot Forex, who operates under the parent company of HF Markets. CySEC lists a series of breaches that includes not communicating accurate information to clients, not taking reasonable measures to manage risk, not maintaining adequate records and not acting on the best interests of their clients amongst others. For the seriousness of their breaches they were issued with a €105,000 bill. However, the fallout from the hefty penalty is that HotForex is no longer owned by HF Markets (Europe) Ltd, but now operates under St. Vincent & the Grenadine which is subject to even less regulatory oversight. Our advice? Stay away.
The Nice Guys
In contrast, hitting the headlines for being nice and having demonstrated their smarts, are companies that have been identified by Forex Awards. Based on a number of categories, Forex Awards received several nominations from their subscribers of brokerages who have demonstrated best practice within various categories.
The most generalized category of ‘Best Forex Brokerage’ includes indicators such as bonuses on deposits, customer support and response time, profit withdrawal speed, PAMM services, order execution speed, variety of payment methods and the ability to use toll free calls. The brokerages that received nominations for this top ranking category included FXPro, OctaFX, Vantage FX, FXTM, INGOT Brokers and Swissquote Bank.
Another important category includes Best ECN/STP Broker which refers to a brokerage’s ability to provide an optimal Electronic Communication Network and Straight-Through-Processing. The advantageous of these methods is that it enables a trader to get access to the big market with liquidity. Brokerages that provided this service included FX Pro, OctaFX and USGFX who were all able to provide their traders with lower spreads and commissions along with easy access to the market.
To avoid the dark side of Forex and binary options trading, it is always worthwhile to take the time and diligence necessary to operate not just legally, but by providing your clients with the industry’s best practice.
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