Five Views of Forex Service and Tech Firm Leadership on Licenses and Regtech

"Exclusive Interview​" column on Fazzaco website is well accepted by people in the Forex industry since its launch. This column covers industry leaders' insights and opinions in the fields of liquidity, white label, CRM, payments, regulations and so on.

In this article, let's take a look at Forex industry leaders' opinions on regulations and regulatory licenses.

In June this year, Doris Yao, the Account Director of PRC Group, joined Fazzaco to share her insights on offshore regulation. In the interview, Doris said, "The pros and cons of offshore regulation are actually quite clear. There may be some inherent views that offshore license means loose regulation and little security for clients' funds. However, one point should be taken into consideration, that is, if the broker has great reputation and holds multi-licenses, then the credibility and authority of its offshore license will be enhanced accordingly."

Speaking on the concept of offshore regulation, Evdokia Pitsillidou, the Risk & Compliance Director at SALVUS, said in the interview with Fazzaco in August, "As long as it is not used for tax avoidance, money laundering and it is used to only onboard clients from legally compliant jurisdictions, we consider them a fair tool in the arsenal of a global or aspiring to be a global broker."

Back to March, Fazzaco invited Remonda Kirketerp-Moller, Founder & CEO of RegTech firm, Muinmos to share her views on RegTech solutions and the influence of tightening regulation from ESMA and other regulators on forex brokers. 

In the interview, Remonda said, "The tightening regulation has resulted in an increased need for RegTech solutions such as our proprietary Regulatory Compliance Engine. The reality is that no firms just operate locally and, as such, they need to comply with the regulations in all the countries in which they are onboarding clients from."

"At Muinmos we constantly review the guidelines from ESMA, the FCA, ASIC etc. and these are all accounted for in our product modules. We fully support the MiFID II client categorisation obligations as this Directive has been implemented by each Member State and as mandated by ESMA."

Transaction reporting plays an important role in meeting regulatory requirements. After an interview with Remonda, Fazzaco invited Quinn Perrott, Co-CEO and Founder of TRAction to discuss the transaction reporting process and how brokers report transactions with changing regulations.

Quinn said in the interview, "Essentially it is just sending data about trades, on a daily basis, in a set format, to the relevant financial regulator. Where things get tricky is that one regulation will cover a very broad set of financial products, all with the same fields. For instance, a speculative crypto CFD trade may be reported into the same fields as an importer's FX hedge of Euro movements against the British pound."

"I have seen surveys lately that show self-reporting at 40%, 12% delegated reporting and 48% a combination of both, but that's for the broader market and the survey was a likely somewhat skewed as it was performed by the trade repository itself. From our experience I would estimate it to be 85% delegated in the forex and CFD market."

Fazzaco also invited industry leaders to share their views on regulatory licenses. 

In May, Fazzaco caught up with Isavella Evripidou, the founder and CEO of GFSC Global, to explore the topic of forex licence. 

In the interview, Isavella said, "We do offer licensing solutions in: Cyprus, Malta, UK, Latvia, Belarus, Gibraltar, Poland, Bulgaria, Ireland, Czech Republic, New Zealand, Lithuania, Mauritius, Cayman Islands, Seychelles, Belize, BVI, Singapore, Australia, Vanuatu, Hong Kong, Labuan, South Africa, Bahamas, Georgia, Malaysia, Cambodia, Isle of Man, St Vincent and the Grenadines and many others. The most popular in EU is Cyprus, Ireland and within offshore is Mauritius, Seychelles, Belize, UK."

"Definitely each jurisdiction has different license requirements, but we can guarantee with a confidence that we know them all and can fully assist any application with full success. Easiest jurisdiction is Cyprus, Mauritius, Belize, Vanuatu and stricter is Czech Republic and Australia."

Speaking on the trends in terms of the licensing of brokers and other financial firms, Evdokia said, "The first wave saw brokers running towards offshores jurisdictions for a sort of regulatory arbitrage. While this still happens and we have several applications for clients of ours in different places of the world, we see another trend rising. We see brokers investing in improved user interfaces both on mobile and desktop, we see brokers investing in customer support and great user experience, aiming to increase the lifetime value of the clients, in addition to improving their conversions. We consider this a healthy and admirable path."

For more information about regulations and forex licenses, stay tuned on Fazzaco​ and its forthcoming Special Report on Forex License.