Brokers Target IPOs and Regulators Take Actions - Best of the Week

During the passing week the most interesting stories from the online trading industry included tough stances taken by financial watchdogs in different parts of the world as well as updates on firms seeking to go public or those that have already done so.

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Belgium is now off limits

On Sunday we reported that the Financial Services and Markets Authority (FSMA) of Belgium revealed a Royal Decree prohibiting the distribution of forex, binary options and CFDs in the country. Belgian Minister Kris Peeters, proclaimed: “This Regulation contributes to better protection of consumers of financial products. Henceforth, it will be clear to everyone that binary options and other speculative derivatives have no place on the Belgian retail market."

A few days later one of the most important regulators for the industry, the Cyprus Securities and Exchange Commission, issued a notice to Cyprus Investment Firms to comply with the regulatory changes. As such, CySEC urged CIFs to immediately stop providing financial services to Belgian residents.

Long road to IPO

On Tuesday EZTrader, (OTCMKTS:EZTD) reported its financial results for Q2 2016, revealing that the board of directors and stockholders took the first steps toward listing in the U.S. market after deciding to reduce the company’s authorized common stock. It was part of EZTrader’s intention to list the company’s shares on the NASDAQ.

The day after Finance Magnates provided an analysis, explaining that while many companies have been vocal about seeking an IPO, very few have been successful at doing it. The mere intention is not a guarantee of success and if history is any guide, most companies that balloon their valuations before an IPO have been badly punished by the market or have cancelled their public trading plans.

XTB

Staying on the subject of IPOs, one brokerage that has crossed this tough briar is XTB. On Wednesday the Polish brokerage reported its outcome for the first half of 2016. The company’s key metrics have dropped somewhat, reflecting a period of lower market volatility and lower interest rates.

Shares of the company have tanked to all time lows of PLN 10.91 after the weak report. The value of the XTB shares was lower by 18% on the day and by 9.3% when compared to the IPO price.

CFTC's SNB Flashback is FXCM's Nightmare

On Thursday the U.S. CFTC filed a civil enforcement action against FXCM Inc (NYSE:FXCM) for failure to meet capital requirements, marketing guaranteeing against customer losses and failure to report its undercapitalization in a timely manner - all on the day of the SNB Black Swan Black Swan A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in Read this Term crisis.

The brokerage replied the following day with apparent shock by the move, stating: "...we could not be more disappointed that the CFTC has decided to pursue an undercapitalization violation claim against FXCM. Such a claim under these circumstances is unprecedented and unwarranted. We are also disappointed in the CFTC’s intimation that the Company’s 'seatbelt' system contributed to the FXCM’s undercapitalization during the SNB Event."

HotForex fine

On Friday HotForex became the latest international brokerage regulated in Cyprus to be fined by the national financial regulator. The fine totaled €105,000 with a detailed breakdown of the different violations officially published by the regulator.

According to CySEC CySEC The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision Read this Term, HotForex failed to comply with legal obligations that require it to adequately maintain records of business operations. The firm had been outsourcing some of its activities to third parties and could not provide the regulator with an official agreement of the service provider to which it was outsourcing its customer services.

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