The Financial Services and Markets Authority (FSMA) made an announcement on its website on Wednesday informing the public it has reached a settlement with Irish forex brokerage AvaTrade for EUR 175,000. According to the regulator, AvaTrade has been offering Contracts-for-Difference (CFDs) in Belgium without prospectus and without submitting any documents for approval to the FSMA.
The Belgium financial watchdog requires all brokerages that offer CFDs or binary options in the country to provide a prospectus, which must include complete information about the type of investment instrument, the issuer, and the risks associated with the investment. Moreover, all documents and advertising materials relating to the public offering of investment instruments in the country must be submitted for approval to the FSMA before they may be distributed.
AvaTrade is a major forex brokerage, whose units are regulated in Ireland, Australia and Japan. As it is regulated in the EU, AvaTrade is free to provide financial services in all EU Member States, Belgium included. However, the situation with Belgium is a bit tricky, as FSMA banned the public marketing of OTC derivatives last year.
In addition to the salty settlement payment, AvaTrade is required to change the information on its websites, indicating that its services are not intended for Belgian investors. Besides, the broker must contact all Belgian clients to terminate their trading accounts and offer reimbursement of their current balances.
This is not the time Belgium’s financial regulator “punishes” a major forex broker for lack of prospectus. In April this year major brokerage Plus500 had to pay €550 000 to FSMA in settlement for that reason.
The Financial Services and Markets Authority (FSMA) appears to be one of the harshest EU financial regulators. Apart from the ban of public marketing of OTC financial products introduced previous year, it regularly issues warnings against unregulated companies operating in the country. Previous week FSMA issued a public warning against 9 binary options brokers.