Estonian Regulator Slapped €32,000 Fine on Admiral Markets AS

Update: The Tallinn Circuit Court issued an order to revoke the fine of the Financial Supervision Authority against Admiral Markets AS.

The Estonian Financial Supervision and Resolution Authority, locally known as Finantsinspektsioon, has fined Admiral Markets AS, the locally registered entity of the Admiral Markets Group, the sum of €32,000. Announced on Tuesday, the monetary penalty is due to the broker’s way of handling the negative oil price crisis that shocked the derivatives market last year. In April 2020, the price of West Texas Intermediate (WTI), the benchmark for US oil, went into the negative territory. None of the trading platforms were prepared for such havoc. Many brokers stopped offering trading services with crude oil futures due to technical shortcomings.

Brokers Should Be Transparent with Clients

The Estonian regulator detailed that Admiral Markets significantly changed its terms of financial instruments without giving any prior notice to the clients. In particular, the broker changed the methodology for calculating the current price of crude oil. Moreover, it increased the fees for overnight holding some specific securities. The regulator believes that the platforms offering complex financial investment instruments should be very clear in communicating with customers before providing the service. In the case of Admiral Markets AS, the watchdog thinks that the changes were not in the interest of its clients. “The change process and grounds were not transparent to customers,” the regulator stated (translated from Estonian). “As a result, the clients who acquired the financial instrument had to restructure their operations, including taking into account the loss of potential income and/or costs.” Earlier this month, Finance Magnates reported that Admiral markets stopped its commission-free services for selected CFDs of stocks and ETFs. Furthermore, the platform banned the trading of risky penny stocks.