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 ProuFX, a Forex broker that offers its services without having the authorization to do so.
The watchdog said that contrary to claims on its website, ProuFX was not a Maltese entity, not known to the MFSA or authorized to provide any type of financial service in or from Malta, including the provision of investment services.
ProuFX is a brand is owned by an Estonia firm called Yield Enterprise Currency Software OÜ, operating from its capital city Latvia. The parent entity, which doesn’t hold any regulatory approvals from any jurisdiction, also operates other FX-focused websites such as Libra Markets and UproFx, which were also blacklisted by other regulators. ProuFX itself was red-flagged by Spain’s financial markets and services regulator CNMV. Perhaps more warnings against this Forex broker are in the pipeline.
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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MFSA had a peak on it warning list
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.
Earlier today, the MFSA has issued a warning about an entity calling itself UMarkets, saying it has never been granted the required authorization to offer financial services in or from Malta and is therefore not supervised by the regulator.
The authority has previously warned many trading firms against falsely advertising unregulated products as being supervised in Malta. The watchdog added that these financial promotions were unlikely to provide consumers with the clarity required by its rules and could leave them unable to understand whether the promoted products or services were beyond its remit.
Finally, the MFSA tells investors that in case they were in doubt about a brokerage firm, and whether it is truly licensed by the regulator, they can view the list of entities approved by the MFSA on its official website: www.mfsa.com.mt/pages/licenceholders.aspx