FXDD gets EU license, signals new wave of easy regulation

A few days ago FXDD, a large Metatrader broker, has announced that it has been granted licensing by the Malta Financial Services Authority (MFSA) to operate a Category 3 Investment Services company. Malta is a full member of the European Union, and its financial services regulations are fully harmonized with the EU Markets in Financial Instruments Directive (MiFID). FXDD Malta will provide 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 dealing services to retail and institutional clients. For the uninformed this may cause an eyebrow to be raised: why FXDD gets regulated in Malta out of all places? Malta also has an 'offshore' image which is always associated with easy and loose Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term. Well, they would actually be right in part.

So why would FXDD or any other respectable broker get licensed in Malta?

The answer is simple: the MiFID passport: The Markets in Financial Instruments Directive (MiFID) as subsequently amended is a European Union law that provides harmonised regulation for investment services across the 30 member states of the European Economic Area. The main objectives of the Directive are to increase competition and consumer protection in investment services. As of the effective date, 1 November 2007, it replaced the Investment Services Directive.

In plain words, MiFID passport allows you to get registered and regulated in any of the EU countries and then "copy" the license to almost any other EU country. This way you can get registered in Malta but receive FSA in the UK much easily than doing the standard FSA process from A to Z. This is not to say that the FSA license received this way is in anyway less strict than the usual one but the process is whole lot shorter and easier. The same "copying" process can be made if the broker had gone through the regulation process in Cyprus but it is considerably more expensive. I expect many more small-medium brokers to follow this route in the coming months, especially those migrating from the US or Cyprus brokers looking to expand to Western Europe.