OctaFX has filed a compulsory strike-off application in the aftermath of the conclusion of the regulatory debate in Europe. The company, which voluntarily suspended its UK FCA license in April 2017, is now halting the development of its UK subsidiary.
The news comes after the temporary product intervention measures, which were imposed by the ESMA and the FCA in Europe, are to become permanent. The national regulators are taking the necessary steps to make leverage restrictions permanent.
OctaFX in the meantime has a subsidiary in the St. Vincent and the Grenadines. The company is operating in a manner which is familiar to a few years back, offering deposit bonuses and high leverage.
The company’s UK subsidiary is undergoing a process of transformation and restructuring. The director of the firm is being replaced, while the company’s team is awaiting the incoming regulatory developments related to Brexit.
Commenting to Finance Magnates, a spokesperson for the company said: “The FCA is a strong, reputable authority that we consider to resume working with in the future, as soon as the Brexit situation becomes more clear and transparent.”
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Limited EU Deposit Options
Opening an account with the offshore subsidiary of the company is easy, but the deposit and withdrawal options are limited for EU clients. The company is only working with Neteller and Bitcoin at the moment, at least when it comes to clients from the region.
The challenges associated with providing payment services to brokers offshore have made this aspect of supporting a brokerage outside of the EU rather challenging. VISA and MasterCard reclassified forex and CFDs brokers as high risk in 2018.
OctaFX has been working with banks in South-East Asia to expand its services in the region.
The Popularity of Offshore Subsidiaries
Different brokers have adopted different strategies over the past several quarters when it comes to tackling regulatory changes. Some companies have wholly moved offshore; others are keeping regulated subsidiaries in the EU but also attach regulatory diversification.
The changes to the EU industry have resulted in a sharp spike in the prices of client acquisition. Over the past year, brokers have also been squeezed by the difficult market conditions in Asia, where the Chinese government has made it very difficult to funnel money outside of the country.
The move by OctaFX to shift its business offshore emphasizes the changes to the industry. A number of firms are already working on the development of new solutions to tackle the challenges facing the all-important payments aspect of the brokerage business.