Many foreign exchange (FX) brokers opt to become regulated by the Cyprus Securities and Exchange Commission (CySEC). The regulator helps serve as a watchdog for a number of clients and groups worldwide, having doled out a number of fines already in H1 2015.
TopFX is one such entity, with a robust suite of services ranging from asset management to prime brokerage – the group specializes in a number of asset classes, namely FX, with a client base on six continents.
Like many other brokers and providers, TopFX opted for CySEC regulation, as, “We have been regulated by CySEC since the end of 2011 and we commenced with our business from the start of 2012,” noted Paul Orford, Business Development Manager at TopFX, in an interview with Finance Magnates.
In addition to our regulatory background, “Our core focus has been ‘professional’ clients who require liquidity or Prime Brokerage services. We believe that we have carved a niche out for ourselves as it differs to other LP / PB providers. From what we have found they usually enforce their entry policies on the end user and we look to offer a more tailor made and refined service.”
Prime brokerage has been called a “boutique service” by some, while others have heralded it as an integral component to its business. Successful prime brokerage firms are built on three premises, access to deep liquidity, reliability as an acting counterparty, and competitive costs, most likely garnered through economies of scale.
“Once this was established we were asked by several of our clients to look at adding an asset management program to our spectrum of services. We implemented a program based upon the risk management and thresholds that they were looking for.”
As such, “We do have a new product, which is about to be launched which we believe will hopefully add a huge added value to the retail traders’ experience.”
Many brokers consider CySEC to be one of the world’s paramount regulators, however, recent criticism has arisen mainly in the area of lax client identification requirements such as Know-Your-Customer (KYC).
“Although some in the industry may criticize the ‘quality’ of the license, if you compare it to what many argue that is the AAA rated regulation, such as the FCA, has faced many challenges in recent years. Being a native of the UK, I understand that it is requires a lot of help from the government in additional funding to match the worldwide perception that it has,” he asserts.
Ultimately, why would you not choose CySEC?
Additionally, Mr. Orford lauds the transparency and success of the regulator, as “the administration process is relatively straightforward for a European-based regulation. There are so many professional services who can assist you in the prompt opening process, it makes things easier as you can focus on the opening of your business. Ultimately, why would you not choose CySEC?”
“I believe that if you are treating your client ethically and transparently then the region that you are regulated should not be the overall deciding factor for the prospective client. Having said that, it is our personal belief that CySEC is a credible EU regulator that strictly follows the same MIFID requirements as the FCA and BAFIN also comply with.”
TopFX also boasts an intricate license, namely with respect to its asset management division. “The implementation of our asset management license came from listening to our clients. Many of them suggested this service and we responded. Due to our close relationship with our client base, it was quite straightforward as they set out the criteria for what they felt was palatable for their end goal.”
Due to the nature of our business, “our focus is on the ‘professional’ client rather than retail, so you have to offer more than your average managed fund in FX. This would cover such things as being able to provide stringent analysis of the strategy in front of board members of investment companies and other various institutions. In other words, offering substance and evidence and not just hot air!”
With respect to people on the losing side of the Swiss National Banking’s (SNB) snap decision earlier this year, one of the biggest headwinds for the FX industry and challenges of late is its transparency.
As a result we live and die by our results so we have to offer the transparency
However, “At TopFX we have a successful business model of finding LP and PB clients by word of mouth and not spamming the internet with banners etc. As a result we live and die by our results so we have to offer the transparency and great execution that we outline to the client in or preliminary meetings, and not just use it like as an empty throw away cliché that we often come to see on a regular basis across in this industry.”