The Malta Financial Services Authority (MFSA), the regulator responsible for the oversight of the Forex sector in the Mediterranean island, today issued a warning against FxTrade Gains, a Forex broker that offers its services without having the authorization to do so.
The watchdog said that contrary to claims on its website, FxTrade Gains was not a Maltese entity, not known to the MFSA or authorised to provide any type of financial service in or from Malta, including the provision of investment services. Further, it described the firm as likely a scheme of dubious nature with a high risk of loss of money.
FxTrade Gains claims that they have licenses to operate and are they regulated in the country. However, the regulatory information on its website were only copied from an authorised firm called ‘NSbroker,’ which operates under the brand NSFX Ltd. But, ironically, FxTrade Gains operatives sound unprofessional to the extent that they forgot to replace NSFX Ltd’s name on some of their website pages.
Mfsa Had a Peak on its Warning List
Following in the footsteps of several European regulators, the Malta Financial Services Authority has revamped its regulatory landscape over the last two years. The changes hit almost all investment services providers, including applicants for Category 2 or Category 3 licenses which allow firms to offer contracts for differences (CFDs) and spot forex contracts under the MiFID regime.
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One of the changes for Category 2 Investment Services Licence applicants was that the introduction of a higher capital requirement of €730,000, compared to €125,000 under the previous rules and similar to the initial capital requirement for current Category 3 licence holders. The tougher rules came as the Category 2 firms were assuming a significant element of risk as Category 3 Investment Firms, albeit for a very short period of time until such instruments are transferred to the respective counterparty.
Furthermore, the Maltese financial watchdog emphasized that operating a crypto-related business in the country requires an MFSA license under the Virtual Financial Assets Act of 2018.
As such, the MFSA reminded the public that due diligence is important.