UK-based broker Formax Prime has announced on its website that it temporarily suspended all trading activities.
December 22, 2018 | AtoZ Markets - Following the announcement by the UK Financial Conduct Authority (FCA) that it would clarify the long-awaited specifications for the industry, the UK licensed broker, Formax Prime coincidentally announced that it has temporarily suspended foreign exchange transactions to customers. It further added:
"We will not be accepting any new clients until further notice. If you are already a client of Formax Prime you will receive client communications from us direct."
What Caused Formax Prime UK to Announce Closure?
While the official announcement was made via its website on December 11, a customer service representative from the company revealed to AtoZMarkets that the tight regulatory framework that commenced in August 2018 has led the management to make this decision.
At the moment, the European Securities and Markets Authority (ESMA) 's recent rules on the leverage cap has led to a massive decline in the volume of brokers without professional clients. Meanwhile, the rising cost of mergers and acquisitions and compressed margins have led some companies to either shut down or move abroad.
In the case of Formax Prime, the brokerage firm seems not to have any offshore regulated subsidiaries, hence its closure, coming only after three years of obtaining the FCA license.
Back in May of 2018, the UK-based firm announced that it would launch Chinese and Spanish versions of its website. This effort to diversify customers, however, did not seem to yield any success enough to ensure the continued operation of the company.
ESMA 2018 Focus is on “Client Protection”
Just a few days after the UK regulator posted about the permanent restrictions on CFD trading on its website in December, Formax Prime also published the news on the website.
As per the FCA statement, the new regulations on the part of the ESMA this 2018 has been about “client protection.” While the regulatory agency is geared towards reducing the amount of money lost while trading with high leverage product -- with the new regulatory measures -- they expect UK retail clients to save between 267.4 million to 450.7 million pounds.
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