CySec regulated Liquid Markets announced that they have partnered with Swiss based and FINMA licensed asset manager, Delman SA. Under terms of the partnership, Liquid Markets will be offering clients access to regulated asset management services. For Liquid Markets, the new offering continues a string of product launches, that began after the broker rebranded to Liquid Markets from Tadawul FX. Initiatives include launching cTrader, providing interest bearing accounts, and offering VPS services.
Demand for regulated asset managers
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Although, a relatively light headline and many brokers already offer similar services, asset management as a whole is evolving within the retail forex industry. In the past, it was common for an introducing broker (IB) to also partner with a Multi Account Manager (MAM) trader to stimulate volumes of their introduced accounts. However, due to complaints about account churning to drive IB commissions higher, as well as overall underperformance, regulators have begun to take notice. In addition, sources have told us that CySec has received inquiries from other EU regulators following reports from clients in their jurisdiction.
As a result, specifically in Cyrpus, Forex Magnates has heard reports from brokers that they have received warnings from CySec about working with unregulated managers. According to insiders at one firm, the broker is planning on launching a non-regulated (or at least, lightly regulated) subsidiary to handle non-EU accounts that desire MAM services, in order to work around CySec. A similar situation was cited by FXCM’s Drew Niv to Forex Magnates, in regards to their launching of the unregulated FXCM Markets subsidiary.
In regards to the Liquid Markets partnership, we expect more EU firms to follow suit and begin to work with established asset managers. While typically geared towards larger sized clients (Delman SA has a $50,000 minimum for Liquid Market customers), if the market for such products takes off, it should lead to a slate of ‘retail’ focused managed products hitting the market. Beyond existing firms with FX management services, one area to watch is whether non-FX managers launch products for the retail forex industry. Such a scenario would validate the opportunities available for regulated asset managers in the retail forex sector.