Markets.com abandons market maker concept on back of regulatory changes in Cyprus

Markets.com abandons market maker concept on back of regulatory changes in Cyprus

Markets com

Forex and contracts for difference (CFDs) broker Markets.com has decided to no longer act as market maker, finance media Finance Feeds reported on Friday, citing an email the broker has sent out to clients. The broker switching to straight through processing (STP) order execution and is making changes to its trading conditions to meet the new regulatory rules of the Cyprus Securities and Exchange Commission (CySEC), from which it holds a license. 

The changes will come into effect as of 29 January, 2017.

STP brokers refer client orders directly to liquidity providers through a no dealing desk (NDD) service. This way orders are executed faster, with no unnecessary delays and no re-quotes.

The broker is lowering the default leverate to a maximum 50:1 and restricting leverage ratios for less experienced traders. Moreover, it is introducing a negative balance protection and hiking the margin close-out level to 50%, as well as the margin call level to 70%. In addition, Markets.com will no longer offer bonuses and other awards. For more details refer to the table below.

“[…] we consider that the fair treatment of all clients, in a transparent and secure dealing environment, is crucial for generating long term trust from clients. We therefore fully support these regulatory efforts and are taking the below action to address these,” Markets.com said in its email, as cited by the media.

To reflect the changes, the broker will also update its documentation, including its Terms and Conditions of Trading, Key Investor Document, Conflicts of Interest and Best Execution Policies.

The CySEC announced in late November last year it was to alter the standards for key forex trading conditions. It said it was setting a new leverage cap of 50:1 and to ban bonuses or other benefits to promote risky trading instruments. The changes were triggered by the recommendations and guidelines of the European Securities and Markets Authority (ESMA) from mid-October in regards to forex and binary options regulation.

Safecap Investments CySEC“Our home regulator – the CySEC, is seeking to raise conduct standards across the industry for CFDs, to ensure fair outcomes for all clients. This initiative by CySEC is broadly in line with guidelines issued by the European Securities and Markets Authority (ESMA) and measures introduced or being planned to be introduced by other European Union regulators,” according to Markets.com.

Indeed, the UK Financial Conduct Authority (FCA) has also announced the introduction of similar limitations. While the new requirements set by the CySEC sounded rather as a recommendation, the UK watchdog used a more compulsory tone.

Markets.com is operated by Safecap Investments, a CySEC licensee and also a subsidiary of gambling platform developer Playtech. In addition, Markets.com holds a license by the Financial Services Board (FSB) in South Africa.

Following are the changes Markets.com will make in its business conditions:

Item Number

Overall description

Key notes and Alert

1

Introduction of lower default leverage ratio of 1:50 and the option to select 1:25, 1:100 and 1:200 leverage ratios, based on the underlying instruments and our leverage policy

  • Changing leverage will affect your open positions

  • Existing client trading accounts will continue at current leverage levels unless you choose otherwise

2

Restrictions to leverage ratios for Less Experienced retail clients

  • Introduction of definitions for Experienced and Less Experienced Investors

  • As noted in Item 1 above, existing clients can, at their discretion, trade at lower leverage ratios

  • Criteria for mapping of investors from Less Experienced to Experienced

3

Negative Balance Protection

  • This feature is already available to all our clients

4

Change to Margin Close Out level from 20% to 50%

Change to Margin call notifications at only the 70% level

  • This may affect your open positions at 29 January 2017. Action maybe required

  • Margin call notification feature exclusive for Markets.com Web/Mobile Trader users

  • Clients remain at all times responsible for monitoring the performance of their trading accounts and taking relevant action

5

Termination of bonuses

  • Bonuses awarded prior to the effective date (as defined below) will be allowed to lapse and terminate.

6

Introduction of Market Execution mode of trading

  • Available for Markets.com Web/Mobile Trader and MT4 users

  • This affects the way you trade with us

7

Changes to inactivity fee

  • Change to inactivity fee from USD 5 to USD 10 per month

  • Applies for trading accounts that are inactive for more than 3 months from last trade day

8

Revised Best Execution Policy

  • Revised Best Execution Policy that reflects the guidelines set out in the Questions and Answers Document of the European Securities and Markets Authority (“ESMA”) issued on 11 October 2016

  • Amongst others defines the sources of the prices for the underlying financial instruments, the order types and the nature of our spreads and charges

9

Revised Conflicts of Interest Policy

  • Revised Conflicts of Interest Policy that reflects the guidelines set out in the Questions and Answers Document of the European Securities and Markets Authority (“ESMA”) issued on 11 October 2016

  • We explain our dealing with you in Principal capacity and how we seek to avoid conflicts of interest

10

Introduction of new complaints page on our trading platform

  • Our aim is to enhance your ability to communicate with us as well as the efficiency of our services to you

11

Key Investor Document

  • Part of our culture of Treating Customers Fairly. Provides you with summary information on us, our services and obligations to you

12

Revised Terms and Conditions of Trading

  • Reflects all the changes set out above as well as a number of other changes introduced by European Regulators

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *

You may also like

Abu Dhabi regulator to draw crypto regulations, reminds of risks

The Financial Services Regulatory Authority (FSRA) of the