The Cyprus Securities and Exchange Commission (CySEC) announced today that it has reached a settlement and fine with Key Way Investments Ltd. The company currently maintains a Cyprus Investment Firm (CIF) registration and thus must abide by the regulator’s decision.

The regulator indicated in their notice that the enforcement action stems from “possible violations of The Investment Services and Activities and Regulated Markets Law of 2017(“the Law”). More specifically, the onsite inspection taking place in June 2019 for which the settlement was reached, involved assessing the Company’s compliance.”

As indicated by Finance Magnates, the fine “was for non-compliance with Article 5(1) of the Law, regarding the requirement for CIF authorization and Article 22(1), which concerns certain authorization conditions and organizational requirements with which a CIF is required to comply. CySEC has further explained that the financial penalty was also imposed for non-compliance with other articles that cover multiple regulatory requirements, including conflicts of interest, the information provided to clients, and certified persons.”

The company is expected to correct any issues related to the enforcement action, but clients of the company should be aware of the lapses identified by the regulator in order to ensure their future dealings with the company and personal funds are not at risk.

In the motion filed with the New York Southern Court, attorneys of plaintiffs in a class-action lawsuit against Global Brokerage, Inc., formerly known as FXCM Inc. indicated that some 35 more investors can be eligible to join the lawsuit going forward.

The lawsuit filed several years ago focuses on FXCM’s relationship with Effex Capital and accuses the former US online broker giant of securities fraud and by falsely representing its purported agency-trading model with Effex Capital.

The motion filed in court suggests a total of 83 companies who held FXCM Notes during the period of alleged misconduct. Of those, 35 firms have been identified as being eligible according to the plaintiff’s counsel, including a variety of trusts and insurance companies.

The information was gathered using Bloomberg data and the plaintiffs indicated that “there is reason to believe the true number of class members may be greater because the Bloomberg data are not comprehensive… thus, the Bloomberg data provide a floor, not a ceiling, for the number of potential FXCM Notes subclass members.”

As such, the already long legal battle may expand for an unforeseeable amount of time and present further issues to Global Brokerage, Inc.

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US-based online brokerage Interactive Brokers has published its 3Q 2020 financial results, indicating some good short term results that indicate momentum in trading following the summer lull and Covid-19 impacts.

The broker reported net revenues were $548 million and income before income taxes was $334 million this quarter, compared to net revenues of $466 million and income before income taxes of $281 million for the same period in 2019, according to the financial statements. Adjusted net revenues were $518 million and adjusted income before income taxes was $304 million this quarter, compared to adjusted net revenues of $525 million and adjusted income before income taxes of $340 million for the same period in 2019. The year-over-year difference in adjusted net revenues represents a small drop of just -1.3%. Profit wise the brokerage saw a 10% decrease in metrics year over year.

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Canadian-based online brokerage OANDA Corporation continues to battle New Jersey-based GAIN Capital Group over patent infringement allegations brought by OANDA several months ago. According to media reports, OANDA has filed a motion to dismiss claims made by GAIN Capital in its attempt to file a stay order to the proceedings.

OANDA filed the lawsuit earlier this year alleging violations of its patented technologies, specifically, US Patent Nos. 7,146,336 (“the ’366 patent”) and 8,392,311 (“the ’311 patent”). The original claim stated, “defendants have infringed one or more claims of the ʼ336 Patent by making, using, selling, offering for sale, or selling products and/or services that meet each of the limitations of one or more claims of the ʼ336 Patent.”

For its part, GAIN indicated in its proposed stay order that OANDA had some seven years to file its grievances since that is when the last Asserted Patent was issued to the company. Furthermore, GAIN indicated its strong belief that the products or services in question will ultimately be found to be unpatentable as a result of any actual trial proceedings.

It remains to be seen if OANDA Corporation actually does have a valid claim in this case, as the services which allegedly violated the patents are unique to operations of Forex online brokers, who oftentimes use the same or similar third parties in the execution of such services, making them common among the industry’s major brokers.

The European Securities and Markets Authority (ESMA) has surprised industry participants in its latest publication questioning the need for best execution practices (including RTS 27 and 28 reporting) considering the current disruptions with Coronavirus around the world. The regulator previously gave companies a break by providing an extension of deadlines for submitting the best execution data.

Now ESMA is considering scrapping the reporting requirements altogether saying in its publication that “reports are rarely read by investors, evidenced by very low numbers of downloads from their website. It is, therefore, assumed that investors cannot or do not make any meaningful comparisons between firms on the basis of this data.”

The regulator indicated that in their mind the suspension of RTS reporting requirements will not “lead to a decrease of consumer protection since investors currently do not read the reports at all.”

Considering any possible stoppage to reporting requirements, which will only be considered at some point in 2021 by the European Commission, traders will still have the opportunity to review their execution prices and compare them with the broader market using services like VerifyMyTrade and Tradefora.

UK based CMC Markets posted a trading update indicating solid performance for the first half of fiscal 2021 (current 2020) ending September 31st. The company indicated it has generated approximately £200 million in revenue from the CFD trading business, which is a strong improvement from £85 million generated in the same period last year.

The broker also indicated that “stockbroking net revenue is expected to increase to approximately £26 million for H1 2021 (H1 2020: £14 million), mainly as a result of the continued growth across the business, reflecting the strengthening of the ANZ Bank white label partnership, as well as more volatile markets leading to increased client trading activity.”

While operating costs are due to increase to approximately £80 million, the company’s forward guidance suggests that the full-year figures will end up to be at the top of the range of current consensus with operating income of £329.9 million, ranging from £321.0 million to £348.7 million.

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The latest figures from the Commodity Futures Trading Commission (CFTC) for Futures commission merchants (FCMs) and retail foreign exchange dealers (RFEDs) highlight a drop in retail deposits from clients in August of 2020. Of the five prominent brokers accounting for most of the market share in retail FX trading in the United States, only two reported a slight increase in deposits.

The decline witnessed in the last month of summer comes as more and more traders are flocking back to opportunities in the US equities markets, fueled by little to no trading fees and commissions offered by the popular US equities brokers, such as Robinhood and Charles Shwab. Nonetheless, relative newcomer, IG US was able to post a slight increase of $191,026 in deposits, while TD Ameritrade grew by $385,751 or 1% of their total deposits.

GAIN Capital, Interactive Brokers, and OANDA all experienced drops in deposits of -1%, -9%, and -2% respectively in August 2020. The change in monthly deposit totals did not affect the current market share of brokers, with GAIN Capital still nudging out OANDA for the top spot with 38% of all client deposits at US RFEDs.

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Approved broker member AxiTrader has completed a rebranding process to reflect on its global expansion and multi-asset trade offer. The broker has also announced in a press release that it has launched a new funding program called Axi Select, which provides “talented retail traders with an equal opportunity to become full-time professional traders.” In addition, the company has announced a sponsorship with the Manchester City football club in the United Kingdom.

The Axi Select program is at the core of Axi’s offering and one of the significant components in the new brand’s message of ‘trading your edge,’ according to the press release. The broker indicated that it had allocated over $10 million to traders who have entered the program. Under this unique program, Axi provides retail traders with the necessary tools – including an Artificial Intelligence-backed performance analysis platform called PsyQuation – plus the funding to get them on the path to professional trading. In this way, the company is helping traders “realize their ambitions.”

Rajesh Yohannan, CEO at Axi, said: “We have introduced a lot of innovation over the past few years – a more robust platform and a wider range of products for our clients around the world. This rebrand to Axi reflects our continuing efforts to deliver the trading edge for every trader.”

The deal with Manchester City is the company’s first partnership with a sports team. It will help the company create a global awareness for its new tagline ‘Trade your edge’ through high-profile placements within the Etihad Stadium, on the City website, and also through activations with customers and fans online and at events with a range of exclusive offers and promotions.

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The United States Commodity Futures Trading Commission (CFTC) has fined US regulated online brokerage GAIN Capital for violations related to the supervising of customer accounts introduced by a referring party to the company.

According to the CFTC notice: “from at least February 1, 2014 to August 31, 2016, Gain failed to diligently supervise accounts by not following its policy regarding trade move requests and having inadequate policies and procedures for reviewing customer accounts. The accounts were introduced by Foremost Trading LLC and traded by the company’s principal, Mark Miller.”

The regulator indicated that the enforcement action is related to a prior CFTC enforcement action for fraud and other violations by the introducing broker. The regulator indicated that the fine and order issued are due to the fact that “Gain missed red flags—Foremost’s suspicious trade move requests and Miller’s trading of both the proprietary and the injured customer’s accounts in the same markets—and did not appropriately surveil these accounts.”

The regulator added that while Gain had a general policy that it would review activity in customer accounts for irregularities or concerns, the policy was inadequate because it did not define what reviews involved and, prior to 2016, did not include follow-on policies or procedures for doing such reviews.

This is an unfortunate turn of developments for the company which was recently acquired by INTL FCStone to form the new brand StoneX.

Hong Kong’s financial regulator, the Securities and Futures Commission (SFC) has launched a Chinese language Facebook page in order to, among other things, warn investors and traders about new sophisticated online schemes targeting equities trading.

The regulator provided examples of financial fraud that is increasingly taking place online and on social media, including websites and apps like Facebook, Instagram, WeChat, Whatsapp, Telegram, and others. The SFC particularly noted so-called “ramp and dump” scams, where victims are encouraged to trade a particular equity product in order to either increase or decrease its market value.

Such scams are often publicized by impersonators of popular market analysts, commentators, and even celebrities and the SFC indicated that some 20% of all market manipulation cases that it deals with today have to do with such fraudulent schemes.

We have previously published a guide on how to avoid scams online and once again encourage traders of all experience levels to be vigilant when approached online or on social media with offers to trade or invest funds.

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As exclusively reported by Finance Magnates, the UK FCA registered and regulated broker TIO Markets has had a mishap with Italy’s CONSOB regulator, which is known to completely block access to unlicensed online brokerages in the country. Its latest round of blacklisting and blocking actions, the Italian regulator also included UK licensed TIO Markets.

Among the other companies blocked are Terratech Ltd (www.eufxindex.com), GFX FINANCE GMBH (www.gfxroyal.com), Luxor Asset Management Trust (www.luxoramt.com), Bstox24 (bstox24.com and client.bstox24.com), and Crypterium Financial Services (crypteriumfs.com).

Finance Magnates was able to get a hold of TIO Markets representatives for comment, who stated that the broker provides services to Italian residents via its UK entity, which is entitled to passport rules within the EU. Needless to say, the broker also maintains an offshore entity in Saint Vincent and Grenadines and this may have been the issue.

The broker indicated that it is abiding by the decision of the regulator at this point, telling Finance Feeds that “we have therefore taken the affirmative actions of removing the Italian language from the company websites in order to deter any Italian clients from joining the incorrect entity.”

Remember to always Check Your Broker before making a decision to trade!

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ICM Capital, a UK registered FX and CFD broker has reported its financial metrics for full-year 2019 with some disappointing results, according to Finance Magnates. The broker reported revenues of £2.56 million for 2019 from the previous year’s £7.2 million. This represents a decline of 64% year over year.

Despite the broker reporting a gross profit of £1.73 million from the businesses and another £3.02 million in income from ‘other’ sources, the company ended up in a net loss of £383,404 due to the hefty administrative expenses of £5.25 million. However, the administrative costs went down from 2019 when £7.19 million was reported.

The broker attributed the poor financial performance to ESMA restrictions which were implemented in 2018: “[the] set of restrictions on contract for differences (CFDs) offering in March 2018.” The broker further indicated that “as a result, the Company’s retail business was negatively impacted. The ESMA restrictions have been confirmed as permanent and retail businesses remain lower as a result.”

As a result of this, Finance Magnates reported ICM Capital is now shifting its focus more towards onboarding institutional clients. Additionally, the company revealed that it will launch new products this year to provide share dealing services.

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Certified education provider, BigBrainBank.org has announced the launch of new trading signals using AI-powered analytics and algorithmic trend monitoring. Its goal is to build a global ecosystem that focuses on financial literacy with an education platform that supports the capital markets, financial corporations, and retail investors.

Known as “TheBrain,” the software is Asia’s first AI-powered financial advisor. The algorithmic system in BigBrainBank.org offers users an excellent user interface and seamless navigation to extract important metrics in trend analysis and identify trade ideas with higher success rates and risk management measures in place.

BigBrainBank also offers a learning platform that includes a professional and lucrative pathway for those who desire to establish careers in the currency marketplace while honing practical and applicable know-how. The education system is embedded within a blended learning methodology that combines offline and online learning with the flexibility of global learning mobility for international students and subscribers.

The popular UK registered CFD broker and technology provider Plus500 has published a trading update today ahead of its annual general meeting (AGM) indicating continued momentum into the second half of 2020. The company indicated it is “making excellent progress across all key commercial and financial performance metrics. This performance has been primarily driven by the strength and differentiation of the Company’s proprietary technology.”

Revenue, in particular Customer Income, has remained strong in H2 2020 to date, supported by further growth in the Company’s Active Customer base. The Company has also on-boarded a high level of new customers so far in the second half, driven by continued investment in its marketing technology, rapid response to market events, and attractiveness of the Group’s market-leading mobile and tablet offers.

Plus500 is confident that “While market conditions remain uncertain, macroeconomic and sector-specific newsflow continues to provide significant trading opportunities for customers.” The broker will publish its results for Q3 2020, for the period ended 30 September 2020, on 27 October 2020.

As we indicated previously, it is important for brokers to take advantage of technology, marketing, and customer engagement to extract valuable revenue from the thousands of new traders that joined the markets earlier this year at the height of Covid-19 impacts. Plus500, at least as indicated in the trading update, looks to be doing just that.

It seems like many European FX brokers are interested in mainstream sports these days. Financial Commission approved broker members are no strangers to sponsorship opportunities, with SamTrade FX becoming the latest trusted broker to sponsor a UK football club.

The company announced that it has become the official forex and online trading partner of English football club Wolverhampton Wanderers FC, popularly known as Wolves, for the upcoming 2020-21 season. According to the deal, Samtrade FX’s branding and logo will be featured on the club’s press conference backdrop, LED boards, and also on the club’s official app.

In August SamTrade FX also announced plans to sponsor Cardiff City Football Club in a two-year partnership that runs from the current 2020/2021 season. Cardiff City competes in the Championship, the second tier of the English football league system.

The agreement marks the first foray into sports sponsorship for Samtrade FX, which announced in July that it had secured licenses from the UK’s FCA and Australia’s ASIC.

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