Formax Prime Closes for Trading after Management Decision
- The difficulties facing EU-regulated brokers are starting to bite.
It’s been about ten days since the UK Financial Conduct Authority issued an announcement that delivered some long-awaited regulatory clarity for the industry. Coincidentally or not, on December 11, UK-based brokerage Formax Prime published an announcement on its website stating that it is closing its doors.
Finance Magnates spoke to a customer service representative from the company who shared that the move was a “management decision.” The tough regulatory times for the industry started in August after the introduction of the new Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term cap across the EU.
The ESMA’s move caused a massive decline in trading volumes especially for firms which have no professional clients. The rising costs of acquisition and compressed margins leave some companies little choice but to close down or move offshore.
In the case of Formax Prime, the company doesn’t appear to have an offshore-regulated subsidiary. The closure of the firm’s operations comes only three years after the firm acquired its FCA license.
Earlier this year in May, the brokerage announced that it is launching Chinese and Spanish versions of its website. The effort to diversify its client base appears to have not been successful enough to warrant the continuing operation of the company.
Investments & Diversification Key to Survival
The message on the website of Formax Prime has been made only a couple of days after the FCA’s publication about the permanent restrictions to CFDs trading.
The move serves to prove that some industry participants have been caught ill-prepared. As Finance Magnates repeatedly communicated, there has been little doubt among experienced industry professionals about the serious intention on the part of the FCA to curb retail Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term and CFDs trading.
The official goal of the new regulatory measures on the part of the ESMA this year has been “client protection.” The UK FCA highlighted in its announcement at the beginning of December that it intends to reduce the amount of money which UK retail clients lose while trading with high leverage products.
According to the FCA, the measures taken by the UK regulator would save retail clients between £267.4 and £450.7 million.
Finance Magnates reached out to Formax Prime for a comment on the closure of the company. No official response has been received at the time of publication.
It’s been about ten days since the UK Financial Conduct Authority issued an announcement that delivered some long-awaited regulatory clarity for the industry. Coincidentally or not, on December 11, UK-based brokerage Formax Prime published an announcement on its website stating that it is closing its doors.
Finance Magnates spoke to a customer service representative from the company who shared that the move was a “management decision.” The tough regulatory times for the industry started in August after the introduction of the new Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term cap across the EU.
The ESMA’s move caused a massive decline in trading volumes especially for firms which have no professional clients. The rising costs of acquisition and compressed margins leave some companies little choice but to close down or move offshore.
In the case of Formax Prime, the company doesn’t appear to have an offshore-regulated subsidiary. The closure of the firm’s operations comes only three years after the firm acquired its FCA license.
Earlier this year in May, the brokerage announced that it is launching Chinese and Spanish versions of its website. The effort to diversify its client base appears to have not been successful enough to warrant the continuing operation of the company.
Investments & Diversification Key to Survival
The message on the website of Formax Prime has been made only a couple of days after the FCA’s publication about the permanent restrictions to CFDs trading.
The move serves to prove that some industry participants have been caught ill-prepared. As Finance Magnates repeatedly communicated, there has been little doubt among experienced industry professionals about the serious intention on the part of the FCA to curb retail Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term and CFDs trading.
The official goal of the new regulatory measures on the part of the ESMA this year has been “client protection.” The UK FCA highlighted in its announcement at the beginning of December that it intends to reduce the amount of money which UK retail clients lose while trading with high leverage products.
According to the FCA, the measures taken by the UK regulator would save retail clients between £267.4 and £450.7 million.
Finance Magnates reached out to Formax Prime for a comment on the closure of the company. No official response has been received at the time of publication.