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CNMV announces new measures to reinforce its monitoring activities

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Because of the recent high-risk activities in the market, the regulatory agency of Spain, National Securities Market Commission, CNMV, announced that it has made a decision to adopt different types of measures to protect traders both in Spain and the EU. The regulatory body has reinforced the monitoring and supervision activities of products that are particularly complex.

CNMV notes in a special statement that it has detected different types of inappropriate firms located in EU member countries, promoting their services without having an establishment or representation in Spain. The regulatory body noted that these companies include those that offer services and practices that require special guidelines and rules.

The statement of the regulatory body states that it is very common for such companies to offer third parties special payments for the purpose of finding new clients. These third parties are companies or individuals who have not received or obtained any type of license for providing such services.

In most cases, these third parties are using different types of channels, such as the internet, mobile phones, and many other things to attract more users. The regulatory agency also added that sometimes, these are a special type of call centers working for this purpose without having needed knowledge or right to do this.

CNMV is the main financial regulator of Spain. It oversees the whole financial market, including Forex trading, and works very hard to keep the safety of local traders.

Aggressive acquisition

CNMV also noted that these people are doing this acquisition activity in a, particularly aggressive manner. According to the official laws in Spain, in particular, Article 144 of the Spanish Securities Market Act, marketing of the financial and investment services and client acquisition should only be carried out by professionals working for investment firms or through tied agents with appropriate knowledge and experience.

According to local laws, engaging in such paid activities for marketing or popularization of services can only be done with the help of the companies that are authorized with specific licenses and rights.

Other than this case, client acquisition in Spain by investment companies is unacceptable and goes against the local laws. The main reason for this is that this could potentially allow promoting unauthorized services that could endanger the safety of local investors.

Promotion of CFDs transactions

The statement of the Forex regulatory agency of Spain also talked about CFDs trading and the issues that it was able to find. The statement reads that it is very common for websites in the country to popularize Contracts for Differences, CFDs, and other complex assets. In most cases, many of these companies are located in third countries, and the companies are not licensed to offer services in the EU. This enables traders to transact through these websites, which reduces the protection levels.

To guarantee the safety and protection of local retail traders, CNMV decided to transmit to financial intermediaries who provide different types of investment services in Spain the duty of complying with Article 144 and to ensure that the marketing of the services and acquisition in Spain is only carried out by licensed companies and agents.

Also, when offering such services, the companies have to warn clients that such programs are only applicable to authorized companies in the country. CNMV also noted that it might adopt additional measures to maintain the safety of investor’s rights. The regulatory agency also noted it will continue to actively support the adoption in ESMA to enhance investor protection in this area.

Spain is not the only country that faces the same challenge, however. There are many other jurisdictions where people lacking appropriate knowledge and skills are offering retail traders special services. This way, traders are open to a lot of risks. In most cases, the acquisition process is very aggressive, and the risks that might come with the investment opportunities are not fully disclosed.

Source: https://www.forexnewsnow.com/top-stories/cnmv-announces-new-measures-to-reinforce-its-monitoring-activities/

Blockchain

Bank Cartels Might Have Used 200 Chat Rooms for FX Rigging

The new evidence shows the market manipulation was even bigger than previously anticipated.

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The on-going lawsuit against the forex rigging cartel of seven banks has taken a massive turn as the defendants’ lawyer told a London court that the traders might have used up to 200 chat rooms to co-ordinate forex price manipulation, according to a Bloomberg report.

Marie Demetriou is representing the investment funds, including Allianz, PIMCO, Brevan Howard, BlueCrest and some pension funds. They have sued big banks, like Barclays, Citigroup and JPMorgan Chase, over allegations of losing money due to price rigging.

Demetriou revealed that some of the traders communicated on some of the instant chat rooms that lasted for hours. However, some of the messaging groups were permanent.

The accused have used several chat rooms, emails, Whatsapp messages and even telephones to co-ordinate the FX market manipulation. If the evidence can back these claims, this could make the case against them strong.

The investors are now repleading the case, and Demetriou believes that: “further chat rooms and unlawful anticompetitive communications will be identified.”

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A Massive Scandle in the Forex Market

More than a dozen major multinational banking giants were accused of rigging the forex currency benchmark rates between 2003 and 2013. The manipulation is massive as it impacted a market with a daily volume of multi-trillion dollars.

These accused banks are facing multiple lawsuits in several jurisdictions. Last year, a US court allowed institutional investors to pursue a class-action lawsuit against 15 major banks for rigging forex rates.

Meanwhile, many of these banks were fined by regulators for some specific price rigging incidents. Five banks, including Citi, Barclays and JP Morgan, paid 1.07 billion euros ($1.3 billion) in fines to the European Union antitrust regulator as a part of their settlement in 2019 for probes in only two chat rooms.

In total, over a dozen of these banks have paid around $11.8 billion in fines to several global regulators and had to shell out another $2.3 billion as compensation to customers and investors.

Source: https://www.financemagnates.com/institutional-forex/bank-cartels-might-have-used-200-chat-rooms-for-fx-rigging/

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Admiral Markets ‘punished’ for unexcited price increases

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Last year, April 2020, Admiral Markets changed the terms of financial instruments trading without any prior notice to traders. This happened when the prices of crude oil dropped significantly. At the beginning of the Covid-19 pandemic, because of the ongoing events globally, the price of crude oil dropped so much that its price was negative.

To avoid complications, Admiral Markets decided to change the trading terms, however, no prior statement was made by the broker before the decision. In addition, Admiral Markets also increased commissions for keeping positions open at night.

Because of the steps taken by the broker, the Financial Supervision Authority has decided to ‘punish’ the brokerage, by forcing it to pay a fine of 32,000 Euros. According to the representatives of the regulatory agency, the decision was made because the reasons behind the decision were not disclosed to traders in a timely manner.

Admiral Markets is a very well-known Forex broker, which offers its services to European traders.

The decision of the regulatory agency

Although the step taken by the regulatory body to somehow punish the broker for not taking into account the interest of traders is a fair thing, the amount of fine is basically nothing for a company such as Admiral Markets. Admiral Markets is a giant brokerage, the company has made almost 20 million euros of profit last year. 32,000 Euros of fine is nothing for such a company.

The regulatory body noted that the decision was made because a lot of clients who purchased this trading asset had to restructure their positions, which was almost impossible because the broker didn’t give traders any prior announcement or warning about the step it was planning to make.

How did the public react?

The decision of Admiral Markets was followed by a massive backlash from the public, especially the client of the broker. Many have claimed that it would lead to Admiral Markets losing its clients. admiral markets fined

One of the users wrote that the decision was made ‘out of nowhere,’ while another user wrote that after contacting the broker, he found that the broker ‘switched to the contract to December 2020 futures’.

WTI admiral markets decision

Many others said that if the decision was announced prior, so many traders would not end up losing their money. On the other hand, the representatives of Admiral Markets claim that they have acted in the ‘best interests of its customers’, and the decision was made to ensure that clients would still be able to continue trade in global financial markets. However, it has also noted that not all market-specific circumstances have been taken into account while making the decision.

It still is very much unclear why the company did not make any prior warning or statement about the decision that was made. Most of the traders ended up finding out about the steps taken by the broker only after the decision was executed.

Source: https://www.forexnewsnow.com/top-stories/admiral-markets-punished-for-unexcited-price-increases/

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USD weakens after Friday’s disappointing jobs data

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The recent movements in the market show that the prices of the USD are down in several pairs. The Dollar Index, which measures and tracks the USD against a basket of six other currencies was down 0.3, at 90.638. The weakness of the Dollar Index continues after the disappointing data about US jobs was released on Friday. Before that, the US Dollar Index was up, standing at around 91.6.

The USD was down in a number of pairs, including USD/JPY, GBP/USD, EUR/USD, and many others. According to the official report published on Friday, which showed the job data for January, showed that fewer jobs were created in the economy than was originally expected. According to the data, only about 49,000 nonfarm payrolls were recorded.

According to official data, as many as 779,000 unemployment claims were filed only last week in the USA. The number is only slightly lower than the previous week. Some of the experts are claiming that the US might not be able to return to full employment until 2022, however, it needs some type of a robust enough stimulus package for that.

New stimulus and its impact

On the other hand, the current US Stimulus, which is said to easily pass Congress coupled with the massive fiscal spending and ultra-easy Federal Reserve monetary policy might drat the dollar down in the longer term. According to some of the best Forex brokers, investors are very confused about the current ongoing events in the market, with everything changing very fast.

While some are saying that the stimulus is absolutely necessary for the country right now, there are others who claim that it might cause many problems for the economy of the country.

Traders are advised to keep an eye on the ongoing events in the market, while also using different types of indicators before making any decisions. Since the beginning of the pandemic, the market has changed very much. Even the slightest news is proved to have a huge influence on the prices of the currency pairs.

On the other hand, there are some experts who are claiming that the hopes for the stimulus might help the USD. However, it is very much unclear how things are going to develop in the coming weeks. Some are claiming that the stimulus is very much likely to widen the US current account deficit, which, in turn, will weigh on the state of the USD. Also, the Euro is very much likely to continue rising in the coming months as Europe announces to catch up with the vaccination program by summer.

Source: https://www.forexnewsnow.com/forex-analysis/currency/usd-weakens-after-fridays-disappointing-jobs-data/

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Traders claim eToro forced stop loss against their consent

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On eToro, it is mandatory for every position to use Stop Loss, the only exceptions are the non-leveraged buy positions. As traders on Reddit are claiming, the brokerage has forced a stop loss on their trades, which were non-leveraged buy positions. Traders on Reddit are specifically saying that they did not want to use stop loss, and as the brokerage forced it on them, they can’t reverse it.

“This is my money to lose… If I lose my positions, I will take legal actions,” wrote one of the users on Reddit.

Another client of eToro claimed that when you disable the SL, eToro just takes money from the trader’s balance and puts it in the shares. This happened for GameStop traders, which is a company that has been under a great focus from trades globally.

As traders are saying, there was no Stop Loss earlier. As the brokerage added it on multiple accounts, it has forced the traders to close the positions at a loss, bringing down the price of the stock.

The traders are saying that the most unacceptable thing about this is that the brokerage did not even issue a warning. “My position was also forcefully closed on me! This is my money and a non-leveraged trade. This is 100% no fair and should be taken to justice,” wrote another user of eToro.

What is a stop-loss?

EToro forces SL on trades of GameStopStop-loss orders are placed by traders who want to limit their risks. In most cases, it is offered as an option through a trading platform when a trade is placed. It can also be changed at any time. Once the price threshold is reached, the stop loss activates market order.

Every broker has different types of requirements and laws regarding stop-loss. Mostly it is something that the trader has control over. Stop-loss was created to limit the losses of traders, and by forcefully adopting them, Forex broker is creating a lot of problems for traders.

Although it is designed to safeguard traders from higher risks, using it forcefully can be riskier for traders. According to the official information from eToro’s website, a Stop Loss is mandatory in every position. However, there is an exception. For non-leveraged buy positions, stop-loss is not mandatory.

The positions that eToro forced SL onto were non-leveraged buy positions. This goes against the official statements of the broker. What’s worse is that the broker did not make any warning or previous statement regarding the step that it was planning to make.

A huge majority of eToro users are claiming that they were unable to reverse the SL. Some even said that they have ended up losing a certain amount of money because of the forceful SL. One of the users noted that they lost $30. The broker has inserted a -20% Stop Loss on non-leveraged positions.

As one of the clients of eToro wrote, he bought the shares of GameStop at $298. EToro sold it without any previous warning at $232, after which, the trader bought it back at $243. “They created the low of the morning by selling their customers shares without warning in massive volume,” writes one of the clients.

The step comes after the developments in the stock trading market. Redditor traders have previously decided to buy the shares of underperforming companies, that were largely shorted. As a result, the prices of such companies, one of which was GameStop, have skyrocketed.

After such events, leading brokerages online have decided to impose special limitations on trading several companies’ shares. This was followed by a massive backlash online, some traders even filed legal lawsuits. As some of the brokers are trying to limit access to the shares of companies with huge demand, traders of Reddit are saying that they are nowhere close to stopping.

Source: https://www.forexnewsnow.com/top-stories/traders-claim-etoro-forced-stop-loss-against-their-consent/

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