One Broker Delays Withdrawals as Regulators Focus on the Industry

EQTrades, CMC Markets and ACFX are among the firms that appeared in last week's top articles.

During the passing week the most interesting news from the online trading industry included another unfortunate situation with clients in China, but also stories about new innovations changing the financial world.

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On Monday we wrote about how a convergences in artificial intelligence (AI) are set to transform the next generation of robo-advisors. The advantages of robo-advisory generally have been seen as saving costs and using a systematic and non-biased approach. However, the real potential benefit could be leveraging machine-learning to take advantage of tailored investment opportunities, not based on just pre-selected criteria or underlying pre-determined assumptions.

The race to advance artificial intelligence is speeding up so that earlier this month in South Korea, Google’s AlphaGo beat a human player in a game of ‘go’, and elsewhere, new approaches to wireless technology are fast underway thanks to a recent military inspired initiative by U.S. Defense Advanced Research Projects Agency (DARPA) which could help develop technologies applicable to industries beyond defense, including in finance.

ACFX Vs China

On Tuesday we broke the news that Cyprus regulated brokerage ACFX is delaying withdrawals as it sent a note to the company’s Chinese clients that their accounts are due for a screening. Its clients in China are worried by the move as it is directly impacting access to their funds.

A company spokesperson stated to Finance Magnates: “Due to recent incidence of clients in China abusing the trading platform in order to benefit from the swap rates on oil contracts, the company has decided to filter out all accounts in order to identify those who abused the system. Due to the large amount of trading accounts being affected this causes a slowdown and delay in the accounting department process.”

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Regulatory Focus

On Wednesday the Australian watchdog (ASIC) released an enforcement report where it stated that it is undertaking a proactive stance regarding the conduct of retail foreign exchange brokers that are holding an AFS. ASIC is focusing its efforts on brokers that are not adequately disclosing the risks associated with trading and aims to ensure that clients are adequately informed about the inherent conflicts of interest and risk management practices.

Soon after ASIC, the French authorities have jointly come to the conclusion that existing practices in the forex and binary options industries have led to an outbreak of nothing less than financial fraud. The regulators are jointly pressing for tighter standards when regulating these products and the French will be joining the Cyprus watchdog (CySEC) in devising appropriate standards of conduct. In addition the regulators will be cooperating in finding ways to limit the access of unregulated entities to the market and prosecuting the entities which are engaging in financial fraud.

Volatility Helped CMC

On Thursday retail brokerage CMC Markets Plc published its latest trading update just before the end of Q1 2016. The report drew attention primarily to the strong growth in the number of active clients, which on a year-over-year basis (YoY) amounted to approximately 13%, translating simultaneously to average revenue growth generated by retail traders using the company’s services.

The latest CMC results were in line with earlier forecasts, which was achievable due to the continuation of the higher volatility that has been driving growth. The increased market activity is caused primarily by the current monetary policy actions of the Federal Reserve and the European Central Bank, the downward trend seen on crude oil prices and the potential risk premium.

Pivot to Asia

On Friday we reported that the MetaTrader5 (MT5) FX startup, EQTrades, is preparing to readjust its focus while testing a new web-based platform. EQTrades is preparing to launch an additional platform very soon according to people familiar with the developments, as the firm is seeking regulatory approval in additional jurisdictions.

The company is looking at Asia as it undergoes a reorganization in preparation of its next pivot. EQTrades already has MT5 up and running since last year, and a web trader platform named EQ.Trader, developed by a 3rd party, is currently being tested.

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