Why FX brokers are leaving traditional regulated regions and going offshore: We speak to FXPIG CEO Kevin Murcko
“Most people agree that the FCA, CySEC, and ASIC are either no longer accepting applicants from non-multinational size participants or are in the process of pushing retail FX onto low leverage exchanges” – Kevin Murcko, CEO, FXPIG
Yesterday, FinanceFeeds reported that retail FX brokerage FXPIG had taken the step of moving its operations from New Zealand to the offshore jurisdiction of Vanuatu after seven years in establishment.
In May of 2016, Prime Intermarket Group Asia Pacific Ltd, an FXPIG Group Company, was issued a Principal’s License for dealing in securities, granted by the Minister of Finance and Economic Development of Vanuatu, under the arm of the Vanuatu Financial Services Commission.
Established in October 2009 by current CEO Kevin Murcko in Auckland, New Zealand, the acronym PIG stood for Premier Interchange Gateway, as well as Prime Intermarket Group, both terms which earned the firm significant presence via its branding.
Mr. Murcko previously spent almost 8 years as a currency trader where he worked for himself trading all three major sessions with a focus on technicals including volume spread analysis, GANN lines, and support and resistance studies.
It certainly appears that New Zealand did not ultimately emulate Australia’s lead in which the regulatory ‘clean up’ which involved the inauguration of the Financial Markets Authority did not attract good quality and well established firms to remain in New Zealand, which is what ASIC achieved in Australia.
Today, FinanceFeeds spoke to Mr. Murcko with regard to the rationale behind the decision to uproot the company from New Zealand and move it to Vanuatu.
“One reason is that banking, as you have covered recently, became almost impossible. Even from the start of the Financial Service Providers Register (FSPR) in New Zealand, banking within New Zealand was basically non-existent for anyone listed on the registry” explained Mr. Murcko.
“Over the years the FSPR registration has basically become somewhat of a pariah. Thus in order to maintain any semblance of banking, even with some reputable PSPs, a change was needed” – Kevin Murcko, CEO, FXPIG
Mr. Murcko explained further “Then there is the simple fact that the FSPR and the Financial Markets Authority (FMA) have several levels of contradicting regulations and like most regulatory bodies no one is able to provide clear guidance on anything, even when asked very specific questions. The FSPR, under the oversight of the FMA, is now just one big gray area.””
“Then you have the tier 1 regulators” he explained, “which most people agree are the FCA, CySEC, and the ASIC, who are either no longer accepting applicants from non-multinational size participants or are in the process of pushing retail FX onto low leverage exchanges. Timing as it were is not really on our side. So as we debate as to whether the FCA will carry the torch as the most prestigious FX regulator once Article 50 is filed and the Brexit begins to take shape or if CySEC will gain the crown due to it’s slightly more ‘business friendly’ attitude, we needed a solution.”
“When it comes to offshore registration of FX companies, there are really no options. Belize now asks for $500,000 when the actual regulatory environment has not gotten any cleaner, the Carribean (which includes the British Virgin Islands and St Vincent and the Grenadines among others) really hasn’t made any strides either over the past few years, and Labuan is just… well… scary. That left us with Vanuatu. Given the fact that the regulator wants to become the offshore FX destination, I felt that it may give us a chance to actually grow with the regulation, rather than having the regulation skirt our growth. We will see. In the end, this is a step forward toward a larger eventual regulatory footprint” Mr. Murcko explained further.
As Mr. Murcko stated yesterday in his commercial statement, he concurs that he does indeed welcome regulatory oversight, concluding “We actually WANT some regulatory oversight. However we want something that makes sense, that protects our clients and our business, but does so from a place of experience, not speculation. This may be impossible to find but as I said GROWING with a regulator is one way to attempt to try and make it happen.”