Cypriot regulator CySEC has issued a warning to investors regarding Russian Forex and CFD Brokerage 4XP (Forex Place Ltd.). The warning which can be found on the regulators website states that it wishes to inform investors that the company isn’t permitted to other financial services in European Union countries and in addition has never been regulated by CySEC. 4XP operates as an unregulated off-shore brokerages with the firm being officially registered in the British Virgin Islands. Several years ago 4XP enjoyed a brief stint as UK FSA regulated firm, before the brokerage decided to drop its FSA licence. The brokerage now also finds itself listed on the FSA’s foreign regulator notices/warnings page, which can be found here.
While operating from an offshore jurisdiction, 4XP has continued to accept clients from jurisdictions where there is a competent regulatory authority. Notably the brokerage has steered well clear of offering services to those based in the US. According to a ForexMagnates source clients of the brokerage have issued numerous complaints to regulators based in jurisdictions where 4XP markets its services. In addition sources voiced considerable concern regarding a number of back office failings which occurred earlier in 2013, though these same sources went on to confirm that these issues had now been resolved.
4XP shares a mutual service provider with a number of other brokerages including CySEC regulated SkyFX and ASIC licensed FTXG brands. Again according to ForexMagnates those who hold accounts and have partnered with 4XP have stated that representatives from the service provider may have cross promoted the various brands. If this is the case then this latest warning from CySEC may have been triggered by complaints from customers based in EU countries.
Additional confusion has been caused by some believing that 4XP is a regulated entity due to the brokerage proudly displaying its FMRRC (Financial Markets Relations Regulation Center) membership throughout its website. OTC Regulation in Russia is only in the very early stages and firms with a strong presence in the Russian Federation have sought to create industry bodies which attempt to reassure clients and self regulate the industry. It is important to note that institutions such as the FMRRC and RAFMM provide clients with little or no real protection, with financial regulation in Russia being handled by Federal Financial Markets Service (FFMS).
Whether other EU regulators will follow the lead of CySEC and release warnings regarding the firm remains to be seen.