The latest batch of warnings about unregulated and unregistered brokers comes from Japan and the Kanto Local Finance Bureau. The financial regulator stepped in to warn the public about dealing with several companies which do not possess a license to operate in the country.
The Kanto Local Finance Bureau singled out 8MAX Trading, FXSuit, and Titan FX. The entities are located in Bermuda and Vanuatu and are therefore prohibited from operating in Japan. The Japanese regulator outlined in its warning that the public should be especially wary of dealing with the above-mentioned brokers.
The move on the part of the Japanese regulator continues a trend of brisk warnings from financial regulators worldwide about the business conducted by unregulated brokers. With the lesser amount of protection for retail investors who are dealing with such firms, watchdogs have expressed worries about the safety of retail clients’ funds.
As to the increasingly popular offshore jurisdictions, brokers which are solely relying on establishing a solid reputation by only operating on a remote island in the Pacific or the Caribbean are likely to have to spend an increasing amount of resources if they are willing to onboard and retain clients.
Bonus Schemes Reimagined
A glimpse at the websites of the brokers singled out by the Japanese financial regulator shows a well-known tactic to attract inexperienced clients to trade highly leveraged products. FX Suit and 8MAX Trading are offering bonus schemes for their clients to the tune of 100 percent of their deposits.
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With the usual draconian conditions required to withdraw funds from the account once a bonus is applied, the end-result for such tactics are usually disgruntled clients who have withdrawal issues. With the forex brokerage industry in the developed world being forced to halt any such practices, offshore jurisdictions remain tolerant of bonus schemes.
With the high turnover in the offshore industry, usually, brokers disappear long before the relevant loosely regulated jurisdiction is able to inspect a client complaint.
BaFin Warns on TradeToro
In another official regulatory warning from earlier today, the German financial regulator also warned the public about an unregulated broker. A company called Ivory Group Limited has allegedly been operating a brokerage company from Dominica. The BaFin has warned the public to avoid dealing with the entity running a website called TradeToro (www.tradetoro.com).
The German regulator is advising the entity to immediately halt contacting German citizens and unlawfully offering them proprietary trading services. The company has been contacting customers with unsolicited calls and offering them to trade forex and cryptocurrency CFDs.
Elaborating on the matter, the German regulator stressed: “Currently, a large number of potentially dubious trading platforms are entering the market. Some are also suspected to be run by organized crime.”
The BaFin and the German police have already warned the public in early December 2018 about fraudulent international online trading platforms.