Losses can exceed your deposits. Issued by IG markets limited
CySEC, the Cyprus regulator, has recently disclosed that an audit of the troubled broker, IronFX shows a $175 million-dollar shortfall in customer funds. If IronFX were a US firm not only would they be closed by now, and the FBI would have raided their offices and arrested top officers and management.
Fortunately for IronFX and its management, they are in Cyprus and are under the jurisdiction (some would argue protection) of CySEC. Without question, the Cyprus Regulator has grossly mishandled this case. If CySEC is looking to re-establish any credibility they need to take immediate action and shut IronFX down. CySEC has been disproportionate in its treatment of offending brokers. In many cases with far fewer offenses than IronFX many brokers have been given the boot. Companies like FXFINPRO and Falcon Brokers have been dealt with much harsher than IronFX. This demonstrates that CySEC can pull the trigger on a broker when needed.
There is no Too Big to Fail in Retail Forex
One of the arguments that have been made in allowing IronFX more time is that the size and the scope of the shortfall would have too great an impact. There were even arguments made by the company that there was a pending investment and that the actions taken by the CySEC would have an impact on the investor’s decision. This is about as believable as was the rumor of a reverse merger and NASDAQ listing.
The issue should not be about the solvency of the company. The company and its management need to be dealt with for the complete disregard of regulations and its obvious abuse of its customers. If CySEC is buying time in hopes that IronFX can write the ship this too is the wrong approach. CySEC needs to demonstrate that it is a real regulator and will hand down an appropriate judgment against IronFX.
Trading Forex and Derivatives carries a high level of risk, including the risk of losing substantially more than your initial investment. Also, you do not own or have any rights to the underlying assets. The effect of leverage is that both gains and losses are magnified. You should only trade if you can afford to carry these risks. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved.