Witch-hunt Towards Non-US Brokers Continues - CFTC Obtains Injunction Against Halifax Investment Services
by
Adil Siddiqui
Australia based Halifax Investment Services has been shown the red card by the financial regulator in the US. The CFTC has reported that it has obtained a permanent injunction against the FX brokerage firm for soliciting US residents.
The U.S. Commodity Futures Trading Commission (CFTC), the main financial watchdog that supervises FX derivatives in the US has given the concept of free-market a new meaning. In a notification issued today, the regulator announced that it has received a legal mandate from the courts which prohibits an Australian based financial services firm from soliciting US residents for investment purposes.
The United States exercised its might in the world of financial markets through its directive against Halifax Investment Services. The Sydney head-quartered firm, which offers traders a number of trading platforms and products was found guilty by the regulator for promoting its services to US residents, despite the firm not holding the correct regulatory status in the US.
James B. Zagel of the U.S. District Court for the Northern District of Illinois issued a Consent Order of Permanent Injunction that bars Australian firm Halifax Investment Services, Ltd. from soliciting orders to trade foreign currency (Forex) from United States residents who do not qualify as eligible contract participants (ECPs). Details in the Order state; “that between October 18, 2010 and February 5, 2013, Halifax maintained a website that permitted United States residents who were not eligible contract participants to potentially apply to open leveraged Forex Trading accounts by submitting information online to Halifax’s website.”
Since 2008, FX traders in the USA have witnessed a number of significant changes that alter the way they deal with global FX brokers. New rulings deployed by the financial watchdog have prohibited foreign based brokers to solicit and promote products to US residents. Only firms registered in the US as a Retail Foreign Exchange Dealer (RFED) or Futures Commission Merchants (FCMs) are allowed to offer their products to residents.
The latest directive (Order) comes one year and two months after the CFTC filed a complaint against the broker. According to the CFTC complaint, Halifax acts as an RFED and knowingly solicits or accepts orders from non-eligible contract participants (non-ECPs) located in the U.S. without being registered with the CFTC as an RFED. Among other things, the complaint states that Halifax operates a website that permits U.S. customers to open trading accounts by submitting online account applications, and that nothing in Halifax’s online account application states that Halifax does not accept U.S. customers or precludes non-ECPs from opening forex accounts with Halifax. Apart from the permanent injunction, details in the complaint state that the CFTC; “also seeks civil monetary penalties, trading and registration bans, disgorgement and rescission.”
Australian providers are all too familiar with regulatory dealings with the US. In 2011, the CFTC reported that a number of global providers were soliciting US clients without the necessary paperwork. Vantage FX was caught-out along with ten other providers. The internationalisation of business and commerce has created a uniform code of conduct; this was reinforced during the 2009 G20 Summit which looked at OTC products and the role they played in the 2008 global recession. The US and Japanese regulators were the first major bodies to implement new leverage restrictions post the discussions, a concept that is expected to roll out in Singapore and other jurisdictions in the coming months.
Halifax Investment Services offers a wide range of asset classes. According to its website it also offers traders a choice of platforms including; MT4, GFT’s Deal Book and the Saxo Trader.
Surprisingly, the firm has not placed a standard disclaimer that is common on several non-US brokers website, the fact that they do not deal with US residents. Several competitors including Think Forex has the necessary data on its website which states: “Please note: We do not service United States entities or residents.” Brokers have questioned the role of regulators when trying to impose rules against firms authorised under another authority, the US has been prominent in its targeting of misbehaving firms however the implications of non-compliance are unclear. The key question is what powers the regulator has in enforcing its rules!
The U.S. Commodity Futures Trading Commission (CFTC), the main financial watchdog that supervises FX derivatives in the US has given the concept of free-market a new meaning. In a notification issued today, the regulator announced that it has received a legal mandate from the courts which prohibits an Australian based financial services firm from soliciting US residents for investment purposes.
The United States exercised its might in the world of financial markets through its directive against Halifax Investment Services. The Sydney head-quartered firm, which offers traders a number of trading platforms and products was found guilty by the regulator for promoting its services to US residents, despite the firm not holding the correct regulatory status in the US.
James B. Zagel of the U.S. District Court for the Northern District of Illinois issued a Consent Order of Permanent Injunction that bars Australian firm Halifax Investment Services, Ltd. from soliciting orders to trade foreign currency (Forex) from United States residents who do not qualify as eligible contract participants (ECPs). Details in the Order state; “that between October 18, 2010 and February 5, 2013, Halifax maintained a website that permitted United States residents who were not eligible contract participants to potentially apply to open leveraged Forex Trading accounts by submitting information online to Halifax’s website.”
Since 2008, FX traders in the USA have witnessed a number of significant changes that alter the way they deal with global FX brokers. New rulings deployed by the financial watchdog have prohibited foreign based brokers to solicit and promote products to US residents. Only firms registered in the US as a Retail Foreign Exchange Dealer (RFED) or Futures Commission Merchants (FCMs) are allowed to offer their products to residents.
The latest directive (Order) comes one year and two months after the CFTC filed a complaint against the broker. According to the CFTC complaint, Halifax acts as an RFED and knowingly solicits or accepts orders from non-eligible contract participants (non-ECPs) located in the U.S. without being registered with the CFTC as an RFED. Among other things, the complaint states that Halifax operates a website that permits U.S. customers to open trading accounts by submitting online account applications, and that nothing in Halifax’s online account application states that Halifax does not accept U.S. customers or precludes non-ECPs from opening forex accounts with Halifax. Apart from the permanent injunction, details in the complaint state that the CFTC; “also seeks civil monetary penalties, trading and registration bans, disgorgement and rescission.”
Australian providers are all too familiar with regulatory dealings with the US. In 2011, the CFTC reported that a number of global providers were soliciting US clients without the necessary paperwork. Vantage FX was caught-out along with ten other providers. The internationalisation of business and commerce has created a uniform code of conduct; this was reinforced during the 2009 G20 Summit which looked at OTC products and the role they played in the 2008 global recession. The US and Japanese regulators were the first major bodies to implement new leverage restrictions post the discussions, a concept that is expected to roll out in Singapore and other jurisdictions in the coming months.
Halifax Investment Services offers a wide range of asset classes. According to its website it also offers traders a choice of platforms including; MT4, GFT’s Deal Book and the Saxo Trader.
Surprisingly, the firm has not placed a standard disclaimer that is common on several non-US brokers website, the fact that they do not deal with US residents. Several competitors including Think Forex has the necessary data on its website which states: “Please note: We do not service United States entities or residents.” Brokers have questioned the role of regulators when trying to impose rules against firms authorised under another authority, the US has been prominent in its targeting of misbehaving firms however the implications of non-compliance are unclear. The key question is what powers the regulator has in enforcing its rules!
Interactive Brokers Settles Nasdaq Charges, Agrees to $475,000 Fine
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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