Offshore regulators – organizations designed to defend the interests of traders and protect the market from fraud by brokers. But how well they cope with this task is a rhetorical question.

Help:

  • IFSC – International Financial Regulators Commission (Belize). One of the most favorite jurisdictions “kitchens”, because in fact it is only a formal organization. Surprisingly, Alpari has this license;
  • CySEC – Cyprus Securities and Exchange Commission. Offshore regulator with hints on European principles of supervision (operates according to the European MiFID directive). It is also popular with large brokers, such as Alpha Forex.

Offshore Regulators: The Most Significant Scandals on Exchange Markets

IFSC

The company “Pantheon Finance” (specialization – PAMM-accounts in Russia and the former Soviet Union) in January 2015 actually stopped financial payments to traders, after which complaints fell to the regulator. In theory, the IFSC should have immediately begun an investigation, but … In May 2015, the broker closed all its offices and the site, that is, it would be physically impossible to become a client of the company and only in October (!!!) of 2015 on the website the regulator received a warning that the broker is classified as unreliable.

The compensation of losses to traders (as it should be in theory) is not in question. Partly an excuse for IFSC could be the fact that offshore regulators do not have full access to the licensee’s financial information, but ignoring complaints from clients cannot be explained.

CySEC

The opposite situation in CySEC and IronFX (the broker, who worked in both Europe and Russia, had more than 70 offices in different countries of the world). In February 2015, the company began to delay payments (but not stopping them completely). The reaction from the regulator followed only in August-September of the same year – CySEC began to investigate the situation. Alas, it is to investigate, and not help deceived traders! And in April 2016, the official position followed from the offshore regulator:

  • CySEC does not have enough authority to compensate funds for traders, since a compensation fund (17 million euros) can be activated in the event of a license withdrawal (and no one withdraws it, since partial payments continue) or broker’s bankruptcy (which is also excluded);
  • IronFX must pay a fine of 335 thousand euros.

Despite disputes and unfulfilled obligations in Europe, IronFX is returning under 3 new brands to China, where in February 2015 it was already accused of fraud. Offshore regulators do not react to this fact.

Summary. How much you can trust offshore regulators, you decide. But, as practice shows, the presence of a regulator’s broker’s license doesn’t play any role. And if you still think that organizations such as FСА (Great Britain) or CFTS (USA) will be able to defend the interests of the trader, but, alas, we will disappoint you. Read about the biggest failures of world-class financial regulators and how to properly file a complaint with the regulator in the next articles of the FxCash blog!

Leave a Reply

Your email address will not be published. Required fields are marked *