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HF Markets Regulation Question

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  • First Post: Apr 14, 2015 5:17am Apr 14, 2015 5:17am
Hi FF members,
I'm a sheer noob in trading, so please forgive me if I dont understand something evident. I'ver registered with a company called HF Markets (HotForex) and while taking careful stock of their regulation I found that apart of CYsec regulation theyre also in FCA directory http://www.fsa.gov.uk/register/firmR....do?sid=318628.
Does it in fact mean theyre FCA authorized and thus more trustable? Or do I totally miss something here?
Any feedback will be much appreciated.
If you click on "Permission" you will see that there are none listed. They are regulated by Cysec and if you click on "passport" you can see that they are supervised by their home state regulator in Cyprus.

You can google "mifid passport" to see how the EU passport system works. Basically a firm will register with the regulatory authority in one EU country(Cyprus in this case), and can then get passports for other EU countries, so that they can offer their service there too, while still only being supervised by the homestate authority.
Quoting SPforex
Hi FF members, I'm a sheer noob in trading, so please forgive me if I dont understand something evident. I'ver registered with a company called HF Markets (HotForex) and while taking careful stock of their regulation I found that apart of CYsec regulation theyre also in FCA directory http://www.fsa.gov.uk/register/firmR....do?sid=318628. Does it in fact mean theyre FCA authorized and thus more trustable? Or do I totally miss something here? Any feedback will be much appreciated.
EXACTLY like Shrike said. CySec is TOTALLY separate from the FCA and is not related in any way. CYSec and FCA are financial regulatory bodies from two TOTALLY different countries, one is from Cyprus and another is from UK and FCA does NOT supervise or oversee CySec in any way and thus has no bearing on any decisions that CySec might make whatsoever in any complaints should you ever need to launch any.
Make your losses in demo. Earn your profits live.
Quoting Forexia
{quote} EXACTLY like Shrike said. CySec is TOTALLY separate from the FCA and is not related in any way. CYSec and FCA are financial regulatory bodies from two TOTALLY different countries, one is from Cyprus and another is from UK and FCA does NOT supervise or oversee CySec in any way and thus has no bearing on any decisions that CySec might make whatsoever in any complaints should you ever need to launch any.

But still, to offer trading services to UK residents Hotforex must comply with FCA rules like any other FCA regulated broker, right? What about investor compensation schemes??
Quoting leebsurag
{quote} But still, to offer trading services to UK residents Hotforex must comply with FCA rules like any other FCA regulated broker, right? What about investor compensation schemes??
Check the database of FCA to see if you can find HotForex there. If it's a broker regulated by FCA, you should find the company in the register of FCA. If you can't find the company in FCA's register, that means the company is not regulated by FCA and it would be doubtful that it's part of FSCS. Then it's invest at your own risk.
Make your losses in demo. Earn your profits live.
Quoting Forexia
{quote} Check the database of FCA to see if you can find HotForex there. If it's a broker regulated by FCA, you should find the company in the register of FCA. If you can't find the company in FCA's register, that means the company is not regulated by FCA and it would be doubtful that it's part of FSCS. Then it's invest at your own risk.
Check the link TS provided http://www.fsa.gov.uk/register/firmR....do?sid=318628 Hotforex is in the FCA database. It appears they're FCA regulated.

Regulator Name
Cyprus Securities And Exchange Commission (CySEC)
Financial Conduct Authority (FCA)
Quoting leebsurag
{quote} Check the link TS provided http://www.fsa.gov.uk/register/firmR....do?sid=318628 Hotforex is in the FCA database. It appears they're FCA regulated. Regulator Name Cyprus Securities And Exchange Commission (CySEC) Financial Conduct Authority (FCA)
Regulators for:
600473 - HF Markets (Europe) Ltd
This firm is authorised or registered by its home state regulator[s] (other regulator[s] within the European Economic Area but outside the UK) below and may be subject to limited regulation by the Financial Conduct Authority.

It's NOT regulated by the FCA in the UK. It's basically regulated by CySec in the EU but NOT UK. It's NOT the same. And you want a firm that's regulated by the FCA in UK otherwise its regulation doesn't really carry much weight in my personal opinion, no offence to CySEC.

Below is an example of a firm that is regulated by FCA.

__________________________________________________________


http://www.fsa.gov.uk/register-res/images/blank.gif

Provided by the Financial Conduct Authority

The Financial Services Register

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Regulators
Basic details
Contact for complaints
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Regulators for:
509778 - LMAX Limited
Where this firm carries on regulated activities in the United Kingdom, it will be subject to regulation by the FCA. Where it carries on regulated activities in other EEA States, it may be subject to regulation by the FCA, a local EEA State regulator or both, depending on the activity undertaken.
Regulator NameFirm reference numberEffective
FromTo
Financial Conduct Authority 01/04/2013
Financial Services Authority 28/06/2010 31/03/2013

Provided by the Financial Conduct Authority

Make your losses in demo. Earn your profits live.
I traded with them since 3 years now, its a Mauritius-born broker. They grew so probably decided to aim for a "better" regulatory enviroment, so they moved the legal stuff to Cyprus. I had to recreate my account, im Italian, because it was created under the precedent FSC-M(financial service comminssion-Mauritius)
Quoting Forexia
{quote} Regulators for: 600473 - HF Markets (Europe) Ltd This firm is authorised or registered by its home state regulator (other regulator within the European Economic Area but outside the UK) below and may be subject to limited regulation by the Financial Conduct Authority. It's NOT regulated by the FCA in the UK. It's basically regulated by CySec in the EU but NOT UK. It's NOT the same. And you want a firm that's regulated by the FCA in UK otherwise its regulation doesn't really carry much weight in my personal opinion, no offence to CySEC....
I understand you reasoning, but the question remains unanswered: to offer trading services to UK residents should Hotforex comply with FCA rules like any other FCA regulated broker?
Quoting leebsurag
{quote} I understand you reasoning, but the question remains unanswered: to offer trading services to UK residents should Hotforex comply with FCA rules like any other FCA regulated broker?
That I don't know. You will have to ask FCA what's their rules regarding their requirement for a firm to provide financial services to UK residents.
Make your losses in demo. Earn your profits live.
Quoting Forexia
{quote} That I don't know. You will have to ask FCA what's their rules regarding their requirement for a firm to provide financial services to UK residents.
Yeah, direct inquiry would clear out this situation for sure, but common sense says that rendering such type of financial services but ignoring the rules of home regulator is simply.. contrary to law. There may be restrictions applied to Cysec regulated broker in Uk but general frame of rules should be observed, I guess.
It is by the analogy of driver license - you can get it in your country but use worldwide.
What about MiFiD? Does it grant the opportunity to offer services across all EU?
Quoting leebsurag
{quote} I understand you reasoning, but the question remains unanswered: to offer trading services to UK residents should Hotforex comply with FCA rules like any other FCA regulated broker?
No, that would defeat the whole purpose of the Mifid directive. They are regulated in Cyprus and thats it. If it were any different, they would need to comply with 20 different regulators across the EU and you would need an army of lawyers to do that. The goal of the directive is to create a single EU-wide market for financial services. Mifid defines minimum standards that each member must implement in national law. So there are still differences between countries. One noteable difference between UK and Cyprus is for example that a CY broker is allowed to use client money as collateral at their prime brokers for margin obligations, whereas in UK client money of retail clients must stay in a client trust account at all times.
Quoting shrike
{quote} No, that would defeat the whole purpose of the Mifid directive. They are regulated in Cyprus and thats it. If it were any different, they would need to comply with 20 different regulators across the EU and you would need an army of lawyers to do that. The goal of the directive is to create a single EU-wide market for financial services. Mifid defines minimum standards that each member must implement in national law. So there are still differences between countries. One noteable difference between UK and Cyprus is for example that a CY broker...

Got your idea. But what are the differences between FCA and CySec rules? Capital adequacy requirements? Leverage limits? Or smth else?
Quoting shrike
If you click on "Permission" you will see that there are none listed. They are regulated by Cysec and if you click on "passport" you can see that they are supervised by their home state regulator in Cyprus. You can google "mifid passport" to see how the EU passport system works. Basically a firm will register with the regulatory authority in one EU country(Cyprus in this case), and can then get passports for other EU countries, so that they can offer their service there too, while still only being supervised by the homestate authority.
Ok so just to clarify in this case any firms that's registered with a regulatory authority in one EU country is automatically allowed to offer their products and services to residents of ALL of the other European countries including the UK via the "mifid passport but is ONLY regulated and supervised by the regulatory body of the country where they were registered?

So in this HotForex's example, it was registered with the regulatory body in Cyprus, its home country and yet is allowed to offer its products and services to residents of UK via this "mifid passport" BUT only the Cyprus regulations applies to them and in other words, any UK residents that invest with HotForex will NOT enjoy any requirement or regulations or protection offered under the UK FCA.

Is this correct? I suspected something like this with the "dual" registration but good to receive the confirmed information.
Make your losses in demo. Earn your profits live.
Quoting Forexia
in other words, any UK residents that invest with HotForex will NOT enjoy any requirement or regulations or protection offered under the UK FCA. Is this correct? I suspected something like this with the "dual" registration but good to receive the confirmed information.

Yeah, let's wait for replies from HF traders from UK. I suppose they cleared that up before going for a deal with Hotforex.
Btw, SPForex, have you tried to inquire FCA with your question?
Thank you for your replies guys, especially for @Forexia and @leebsurag, it cleared up some points for sure. I havent contacted FCA yet cause used to get help on forums rather than with official inquiries. But can you tell me about that broker in a nutshell any interesting points I should figure out before trying FX with them? Can I trust them?
Quoting SPforex
Thank you for your replies guys, especially for @Forexia and @leebsurag, it cleared up some points for sure. I havent contacted FCA yet cause used to get help on forums rather than with official inquiries. But can you tell me about that broker in a nutshell any interesting points I should figure out before trying FX with them? Can I trust them?
I have never traded with that broker so I cannot tell you how good or bad that broker is. Personally I only trust brokers regulated in the following countries: Canada, US, UK (registered DIRECTLY with FCA) and Australia IF really pushing it.
Make your losses in demo. Earn your profits live.
Quoting SPforex
Thank you for your replies guys, especially for @Forexia and @leebsurag, it cleared up some points for sure. I havent contacted FCA yet cause used to get help on forums rather than with official inquiries. But can you tell me about that broker in a nutshell any interesting points I should figure out before trying FX with them? Can I trust them?
Glad to know we were of help to you.
Although I'm not keen on delving into legal subtleties of trading, questions raised in this thread spurred me on making a research of how different is FCA and CySec.
FCA is considered "the harshest" watchdog (maybe after CFTC), what's taken as a token of safety and reliability of a broker but CySEC made great steps in last years towards transparency and more effective monitoring of financial activities, so IMO we can't simply take it off from the records.

As @Forexia mentioned there are two types of brokers in FCA registry:
Authorised
FSA UK regulated broker. A firm that FSA UK has given permission to carry out regulated activities.
EEA Authorised
A broker that's been registered with FSA UK, but is regulated in its home country. The EEA Authorised status is given to firms that are authorised in another European Economic Area (EEA) state and been given a "passport" by FSA UK to provide cross border services to UK citizens according to MIFID. These firms are regulated in their home country, and not by FSA UK, although must comply with standards agreed across all EEA countries.

Don't know that before but it appears there is a compensation fund for investors, although only up to 20K EUR vs 50K under FCA https://static.hotforex.com/assets/c...ation_Fund.pdf

Note, that OTC market in itself is very flexible for different kinds of manipulations by brokers and there are still a lot of UK brokers receiving dozens of complaints of improper order handling, taking their clients for a ride with inapplicable fees etc. Don't want to mention any of them but just a quick search will show that sad truth.
Quoting leebsurag
{quote} Glad to know we were of help to you. Although I'm not keen on delving into legal subtleties of trading, questions raised in this thread spurred me on making a research of how different is FCA and CySec. FCA is considered "the harshest" watchdog (maybe after CFTC), what's taken as a token of safety and reliability of a broker but CySEC made great steps in last years towards transparency and more effective monitoring of financial activities, so IMO we can't simply take it off from the records. As @Forexia mentioned there are two types of brokers...
There might be some progress made by the CySEC in regulating the financial market and its players but it falls short in many ways especially in terms of protecting investors I find. Just look at how they handled the case of IronFx against the Chinese traders and you will get a good idea.
Make your losses in demo. Earn your profits live.
Quoting Forexia
{quote} There might be some progress made by the CySEC in regulating the financial market and its players but it falls short in many ways especially in terms of protecting investors I find. Just look at how they handled the case of IronFx against the Chinese traders and you will get a good idea.
If I'm not mistaken a regulator provides compensations only to traders of those brokers which announce insolvency. Regarding Chinese case, it'd too hard for Cyprus regulator to probe into it and figure out if accusations are valid. Moreover, Ironfx being FCA authorized undermines the authority of UK regulator realizing potentially fraud schemes under it's wing.
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