Maltese Regulatory Watchdog Warns That Merex Markets Not Licensed with MFSA

Monday, 24/02/2014 | 11:34 GMT by Steven Hatzakis

The Malta Financial Services Authority warns against MerexMarkets.com, an apparently unregulated broker with offices in Cairo and Tbilisi, advising the public that the firm is neither registered nor regulated in Malta.

Maltese Regulatory Watchdog Warns That Merex Markets Not Licensed with MFSA

The Malta Financial Services Authority (MFSA) announced last Friday that Merex Markets, operator of the website merexmarkets.com, is neither a company registered in Malta nor licensed by the MFSA to provide any kind of financial service, according to the public advisory.

The warning comes as financial services requires authorization or a license in terms of current law in Malta, according to the press release which warned both the public in Malta and people abroad against entering into any transactions or otherwise dealing with this entity, as per the description. This is the latest warning from the MFSA in less than two days after it had issued a warning about ABFX, as covered by Forex Magnates last week.

Merex Markets Boasts 'Faultless' Strategy

In reviewing brief parts of the MerexMarkets.com website, Forex Magnates' research team concluded that although the firm lists offices in Cairo, Egypt and in Tbilisi, Georgia, there were certain claims boasting a 'faultless' strategy, including the following excerpt from their in-house managed account offering: "Our faultless system is based on constant volume being traded, whilst our expert team has complete control over risks involved. This same strategy has been tested over a period of 2 years, in all the FX currencies, and the profit always averages between 7 and 12% monthly. The minimum deposit required is 10,000 USD."

The firm claims to offer an MT4 platform on its website, and in addition, the track record listed for the above mentioned strategy hasn't had a losing month in two years, and purported double-digit returns on many of the months.

While this could be true, a lack of regulatory status, absence of disclaimers and unbalanced claims of profit potential without any mention of risk, lead one to believe that either the level of professionalism is missing (at best), or results are cherry-picked, as the described "tested" strategy would mean that the numbers are hypothetically-based, and probably on an over-fitted back-test, meaning the results were curve fitted to the data (something easy to do using the MT4 strategy tester back-testing feature).

Malta Increasingly Sought for Forex Regulatory Status, Binary Options Soon

While the island country of Malta is quite small relative to other island nations, the Mediterranean paradise has attracted considerable interest as its regulatory framework has improved in recent years.

Just weeks ago, Forex Magnates reported that FXDD was fined by the MFSA for its Malta-regulated operation, citing minor violations that accounted for a EUR 25,000 fine. Firms such as SwissQuote, HSBC, Deutsche Bank, and other retail and institutional FX Dealers have become regulated with the MFSA under respective entities in recent years. Late last month, the Maltese Regulator announced a framework for binary options that it was considering, as covered by Forex Magnates, a flocking of binary options brokers could ensue to become MFSA-regulated.

With regards to last Friday's warning, also noted from the MFSA was the reminder that investors and financial services consumers should conduct thorough due diligence to ascertain the regulatory status with any financial company offering services, whether regulated with the MFSA or other reputable financial services regulator.

Currently there are about 117 entities regulated by the MFSA under the category of 'Securities & Markets' and sub-category 'Investment Services', including known FX brokers, as Malta continues to build its stake in the market share of global regulatory hubs attractive to online investment companies.