Offshore Brokerage Operating in Ukraine and Russia Goes Under

The brokerage has switched off its website and published an announcement that it was closing its doors as a result from “black Thursday” or the day when the Swiss National Bank removed the floor under the EUR/CHF exchange rate.

The website states that the company operating the brokerage is registered on the British Virgin Islands (BVI). While there might be some merit behind the official statement, it's nothing less than suspicious that the broker is closing its doors six months after the event which allegedly made it go belly up.

The numerous clients of the brokerage have been informed that the funds in their accounts are frozen until further notice. The website of the brokerage has been shut down without any additional information being provided.

Problematic Hedging Operations

RVD Markets highlights in its announcement that January volatility on the Swiss franc pairs has been the reason for the unfortunate bankruptcy of the firm. According to the company, a set of unfortunate hedges caused a substantial loss for the firm with its Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term providers.

Apparently, the company has since been attempting to find an investor in order to prevent a bankruptcy proceeding since it has been netting client positions internally without sending any order into the inter bank market.

RVD Markets goes on to shift blame on to other companies in the industry which have failed (for the Russian and Ukrainian markets those are the infamous MMCIS and FX Trend). The company’s announcement published on the website of the BVI broker confirming the bankruptcy, alleges that the trust of the public in the industry has diminished to critical levels.

A “Ponzi scheme” Bankruptcy

The broker claims that it used segregated client funds with liquidity providers as collateral for its positions at the prime broker. This mode of operation is anything but a warranty for lost client funds. As a result from the lack of trust in the industry due to the above mentioned bankruptcies, the firm claims that there were more withdrawal requests coming in than deposits.

By this very definition, the broker has been running a “Ponzi scheme” for six months, since it has relied on more deposits flowing in to warrant timely withdrawals. The situation further deteriorated after a number of accounts at banks were frozen for an unspecified amount of time.

Ukrainian Traces & PAMM Accounts

RVD Markets is united under a group of companies registered on the British Virgin Islands which have Ukrainian, Russian and British origins. The latter has been authorized to accept Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term for the Ukrainian entity, which had a license for broker-dealer operations.

Just like MMCIS and Forex Trend, RVD Markets was providing a PAMM account service, where clients were allegedly mirroring the trades of experts to realize gains. Despite its official statement, the company boasted that it will be launching an update to its PAMM services during the summer.

Despite the broker's claim that the bankruptcy is a direct result of the Swiss National Bank debacle, the six month delay and the above mentioned issues seem to contradict their argument.