Canadian provincial financial regulator Manitoba Securities Commission (MSC) issued a warning regarding the unauthorized operations of forex and CFDs brokerage IFC Markets, the BVI-based broker.
The company has been targeting citizens of Manitobans via advertisement on classified websites, but it is not allowed to, since it is not registered to trade in or advertise on, securities or exchange contracts in the province.
IFC Markets, doing business via www.ifcmarkets.com, claims to be based in the British Virgin Islands and Malaysia, according to the MSC notice.
The regulator added that investors should not be lulled into investment frauds stemming from the ongoing outbreak. While there are many variations of these tactics, the watchdog said that IFC Markets marketing is taking advantage of the COVID-19 crisis in order to attract Canadian investors. The site makes reference to “excellent trading conditions” in reference to the international pandemic, it further states.
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The regulator also warns of the substantial potential for fraud at this time, saying that crooks often try to capitalize on high-profile news events to lure investors into financial cons.
The recent warning comes a few weeks after the MSC revealed that a Manitoba man has lost more than $550,000 to an offshore forex trading scheme that involved two brands, International Derivatives Group and Valiant Markets.
The chief regulatory body for the Forex market in Canada has recently proposed a regulatory framework that provides clarity for derivatives activities, including Forex and CFDs products. Among other things, all highly leveraged products offered to retail clients must be approved in advance by IIROC. Brokers must obtain prior approval for their leveraged products either when releasing new instruments or introducing any changes to the current offerings.
The regulator also said its updated rules would ‘harmonize’ IIROC requirements with product approval requirements introduced in Europe by ESMA, which banned offering binary options and restricted leverage on CFDs.
FX brokers have experienced some of their busiest ever trading days this quarter as traders flocked to hedge and reposition their portfolios amid volatility on global markets. The continued spread of the coronavirus prompted massive increases in trading volumes across all retail and institutional platforms, as seen in their monthly updates, although it took a step back in April.