How setting up a Bermuda subsidiary was good for FXCM

Maria Nikolova

Setting up unregulated subsidiary FXCM Markets may turn out to be one of the smartest moves for FXCM.

When in April 2013, media sources reported that retail Forex major FXCM had set up an unregulated business based in Bermuda, the move raised eyebrows. Why would a company present in such jurisdictions like the United States, Australia and the European Union (led by the UK business of FXCM – Forex Capital Markets Limited), opt for such a peculiar sort of expansion? The answer provided back then was simple – the broker was seeking to target more markets, offering trading perks like leverage of up to 400:1.

Back in the days, the lack of regulation was the obvious disadvantage of FXCM Markets, whereas the solid reputation of FXCM was a serious advantage.

The current situation has changed dramatically and the revamped (and much bearer) website fxcm.com mentions FXCM Markets and the fact that it is unregulated right after noting the existence of FXCM UK and FXCM Australia. Furthermore, those visitors of the website who want to “Join FXCM Traders around the world” but are from destinations like the United States or Singapore, are currently redirected to FXCM Markets website.

Let’s make this clear – FXCM Markets does not service US clients. Any attempt by a US resident to open an account, be it live or practice, via FXCM Markets will be unsuccessful.

This is in line with US regulations. Under the Commodity Exchange Act (CEA) and US CFTC regulations, since October 18, 2010, an entity that solicits or accepts orders from US customers in connection with forex transactions must register with the CFTC and comply with rules and regulations, including (inter alia) minimum capital requirements and record-keeping. Putting it bluntly, even an overseas company that wishes to target US residents should have the necessary registration with US regulators.

The CFTC has already demonstrated how it can punish violators of this rule. For instance, in February 2013, the CFTC filed a complaint in Court against Halifax Investment Services of Sydney, Australia for soliciting and accepting FX orders from US customers without registering with the CFTC as required.

Obviously, FXCM Markets is not offering any account opening to US customers. It is simply providing information about its services.

FXCM Markets Disclaimer

What matters here is how the tables have turned. Now it is FXCM tarnished reputation due to US regulatory actions that is the disadvantage of FXCM Markets. The lack of regulation has now become the most serious advantage of this business.

FXCM Markets is not affected by US regulatory measures that have prompted the US market exit of Forex Capital Markets LLC. In addition, should regulators in other jurisdictions follow suit and also punish the broker, FXCM Markets should remain unaffected. And that could mean the difference between an end of a business and its survival.

Read this next

Retail FX

Banxso announces 8.7% interest rate on deposits in South Africa

“With Banxso, they can enjoy the benefits of both worlds – earning competitive interest and having the freedom to trade, all within the same platform.”

Industry News

FINRA to publish transaction details in U.S. Treasury securities

“Consistent with our longstanding practice, FINRA is introducing greater transparency in a calibrated and careful manner, benefiting liquidity and resilience in this critical market while also mitigating potential information leakage concerns.”

Institutional FX

OpenYield launches “cheap and easy” fixed income trading for brokers

“We’re on a mission to make bonds cheap and easy to trade, and are excited about the opportunity to build generational capital markets infrastructure.”

Digital Assets

Sumsub and Mercuryo publish a guide for VASPs: “Mastering Travel Rule Compliance”

“At Sumsub, we’ve concentrated our efforts on filling the gap in understanding the complexity of Travel Rule regulation and helping organizations find the best solution to stay safe and compliant while minimizing costs and avoiding potential risks of non-compliance. This guide we created with Mercuryo, our trusted partner, is the ultimate navigation tool all VASPs can consult.”

Digital Assets

Bitget Wallet Leads with Record Swap Volume & New Crypto Innovations

This week, Bitget Wallet achieved a milestone by surpassing Metamask with a record 388,757 Swap order transactions, securing the global lead. The significant 7-day trading volume, almost 68,000 more than its rival, underscores its liquidity and user trust. This robust activity signals Bitget Wallet’s prominent role and reliability in the dynamic crypto market.

Digital Assets

Embarking on a Digital Currency Journey

Imagine you’ve stumbled upon a treasure map, leading you to untold riches hidden in the vastness of the internet. Instead of gold coins and jewel-encrusted goblets, this treasure comes in the form of digital currencies, the modern-day loot coveted by many.

Reviews

Traders Union Experts Share The Trading Analyst Review For 2024

Navigating options trading in rapidly shifting markets poses a considerable challenge. This is where options trading alert services become invaluable. They aid traders in keeping abreast of evolving opportunities and market trends. In this assessment, Traders Union experts scrutinize The Trading Analyst alert service to ascertain its efficacy. 

Digital Assets

BlockDAG’s Presale Achieves $9.9M: Aiming For A 5000-Fold ROI As Cardano’s Price Rises And Fantom Launches Sonic

Explore Cardano’s surge, Sonic’s efficiency, and why BlockDAG’s growth makes it the top crypto choice. A deep dive into the future of blockchain investments.

Digital Assets

US, UK probe $20 billion Tether transfers tied to Russian exchange.

U.S. and UK authorities are investigating the movement of $20 billion in the USD-pegged stablecoin tether (USDT) through Moscow-based exchange Garantex.

<