Hong Kong’s Securities and Futures Commission (SFC) has issued a statement cautioning investors about Capital Markets, which has been offering financial services to the public without being authorized to do so.
The move comes less than two weeks after the regulator released a report on its survey of the leveraged FX trading at licensed brokers between January and December 2018.
The survey found that 98% of active clients were retail investors and more than 99% of turnover in the currency market was attributable to spot forex contracts. However, turnover was relatively low for more complex forex products such as options and forward contracts, which may be difficult for retail investors to understand, the SFC concluded.
Capital Markets says it maintains offices at Wall Street, New York while its headquarters located in Hong Kong. The regulatory body of Hong Kong, however, states that the HK address is invalid as the unregulated firm is not located in the region, although it may be using the details of a legitimate company to mislead investors. The SFC further notes that the brokerage has a bank account under the same name for settlement purposes. This knowledge may come in handy for the public if the company changes its name.
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Hong Kong regulators stepping up compliance actions
Capital Markets says its US office is headed by someone named M. Butcher, who previously held positions with such giants of the financial world as the Singapore holding company DBS Bank and the Tokyo corporation Sumitomo Mitsui Financial Group.
Capital Markets is the latest FX broker to be included on the watchdog’s warning list, which comes in parallel with a statement on its website warning residents about the increase in similar solicitations.
The SFC serves as the region’s paramount regulator, and it routinely shores up forms of market abuse, regulatory lapses and other compliance issues.
The Hong Kong regulator has recently made fighting against corporate fraud its top enforcement priority. Other key tasks include battling insider dealing and market manipulation, intermediary money-laundering, and internal control failures. Most recently, it fined FIL Investment Management, the arm of US asset manager Fidelity Investments, HK$3.5 million ($450,000) for regulatory breaches between 2007 and 2018.