The Malta Financial Services Authority (MFSA) has announced this week that it has fined forex broker FXDD €25,000 for breach of rules in their framework for investment services provider (ISP). The MFSA didn’t describe exactly what the infraction by FXDD was or how they discovered it. However, the MFSA did state that FXDD was in breach 2.01 of Part B1 of the ISP rules.
Section 2.01 of the ruling delineates rules governing honestly with clients as it states, “When providing Investment Services to clients, a Licence Holder shall act honestly, fairly and professionally in accordance with the best interests of its clients and shall comply with the relevant provisions of the Act, the Regulations issued thereunder, these Rules as well as with other relevant legal and regulatory requirements, in particular those set out in the Prevention of Money Laundering Act, 1994, and the Prevention of Financial Markets Abuse Act, 2005 and Regulations issued thereunder.
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For FXDD, the company was granted a MFSA license in early 2010, and the office has become their location for onboarding non-US clients. Due to restrictions placed by the US’s NFA in regards to leverage and CFD trading, arriving in Malta provided a more lax regulatory environment for FXDD to market its product to a wider global audience. Currently there are over 20 firms holding MFSA ISP licenses that have established presence in the country for the goal of passporting their business outside of Malta to the rest of the EU. Among major firms, other than FXDD, Swissquote also operates an office in Malta that provides services to their non-Swiss EU client base. The current fine on FXDD is the first monetary penalty of 2014 on an ISP and first since 2008.