Regulators: SVG FSA does NOT regulate FX, Binary Options, or CryptoCurrencies

4evermaat

2nd Lieutenant
Messages
1,906
There have been several recent posts with either the thread's OP or other readers falsely assuming that a company mentioning that they are "registered", "regulated", et. al. by St Vincent and the Grenadines Financial Services Authority (SVG FSA or SVGFSA) implies some regulatory safeguards. So this article is to explain quite bluntly that SVG FSA has not and currently does not provide any regulation for forex, binary options, or crypto-currency service providers. This includes brokers, signal providers, and technology providers.

Just because there is no regulation, does not necessarily prevent a company from offering those services. It depends on the region. It just means that if there is no no regulatory oversight, then there is no recourse via that region's regulatory authority should a transaction turn out to have adverse outcome. So basically it is no different than having a private agreement between you and the company. If you are ok with that, then caveat emptor my dear reader.

My understanding of financial markets (particularly off-exchange markets) is that most regions do have some regulatory oversight. This can include:
  • mandatory registration into a regulatory database,
  • minimum capital requirements,
  • post trade statistics reporting,
  • segregation of client funds from other firm assets,
  • fiduciary responsibility to honor deposits/withdrawals timely,
  • electronic surveillance of order flow,
  • other rules deemed necessary to protect the larger public.

These rules are put in place mainly due to the systemic risk that can spread to the larger society should large losses or loss of confidence occur in certain capital markets.

Another important note. There are other ways that service providers use "regulation" to try to trick people into thinking their services are more credible. So even the regulated are often fooled as they often only use very basic metrics to judge a broker's performance (spreads, leverage) and overlook other aspects of evaluating a broker's "true" business model. Those details are for another article. In the mean time, you can read this report on Prime of Prime service evaluation to get a basic idea of how the different brokerage Tiers work.

With that said, I will quote/attach the proof directly from the horses mouth (SVG FSA and the Financial Intelligence Unit--FIU):

[[2019 March 29]...The FSA does not issue any licenses to carry on the business of FOREX Trading or Brokerage or Binary Options Trading nor does the FSA “Regulate, Monitor, Supervise or License” International Business Companies (IBCs) which engage in such activities.

IBCs incorporated in St. Vincent and the Grenadines are authorized to engage in any business activity without approval from the FSA, except where the proposed business activity relates to banking, insurance or mutual fund businesses. Banking, insurance and mutual fund businesses are licensed activities. FOREX or Brokers Trading licenses are not issued by any authority in St. Vincent and the Grenadines....
[2019 June 15]...The Authorities in St. Vincent and the Grenadines are aware of the recent growing international trend of Forex Trading and Cryptocurrency. It is advised however, that there is no regulation in place for Foreign Exchange (Forex) Trading and Cryptocurrency offerings in St. Vincent and the Grenadines. Furthermore, no Forex Trading or Cryptocurrency licenses are issued in St. Vincent and the Grenadines. These are speculative investments with considerable risks to the investor.

Members of the public are urged to exercise caution before engaging in any Forex Trading activities or accepting Cryptocurrency offerings....
[Emphasis mine]

fpa svgfsa saint vincent grenadines 2018 alert 1 re forex trading.png

Source: http://svgfsa.com/alert-1-of-2018-f...ading-or-brokerage-or-binary-options-trading/ and

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This is not a recent development. SVG has never regulated forex et. al. from at least since June 2014

[≈ 2014 June]
...The Authorities in [SVG] are aware of the recent growing international trend of Forex Trading and Cryptocurrency. It is advised however, that there is no regulation in place for Foreign Exchange (Forex) Trading and Cryptocurrency offerings in St. Vincent and the Grenadines. These are speculative investments with considerable risks to the investor.

Members of the public are urged to exercise caution before engaging in any Forex Trading activities or accepting Cryptocurrency offerings....
[Emphasis mine]

SaintVincentGrenadines_noRegulationForexCrypto.png

Source: https://web.archive.org/web/20140618123554/http://svgfsa.com:80/warn.html


In the event that SVG FSA does begin to regulate these activities, this article may be updated. I do recommend FPA place a link to this article on all brokers review pages with SVG FSA regulation business registration.

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#RegulatedFool
 

AMust123

Recruit
Messages
7
Okay my good man, I shall counter you on your argument.

Firstly, it is important to understand that many high flying brokers have adapted to this set up in terms of regulation due to the fact that the ASIC board members decided to become risk averse and only allow AU clients to receive cover from the regulator.

To save huge swathes of business, the Australian brokers now have registered offshore to allow international clients, which is a huge chunk of business for their balance sheet, so effectively, they have created subsidiaries in response to the policy change.

What does that mean for clients? Well, that would mean that, as your post says, are pseudo-covered. But the important thing to remember is in this unique situation is that the main broker IS REGULATED BY ASIC and the subsidiaries are an extension of a safe, regulated broker. Goodwill and favourable outcomes will be conducted as their brand depends on this.
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A
 

AMust123

Recruit
Messages
7
Also, it must be noted that regulation is only one aspect of it and it tends to be the payout incase of insolvency within the broker. Clients should also look at whether they use a tier 1 bank to hold segregated funds, who audits them (firms like KPMG, BMO, Deloitte) and their LPs. The years of service are also very important and always check if they offer free toll number internationally as it is a sign of an advanced customer service base.
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4evermaat

2nd Lieutenant
Messages
1,906
Firstly, it is important to understand that many high flying brokers have adapted to this set up in terms of regulation due to the fact that the ASIC board members decided to become risk averse and only allow AU clients to receive cover from the regulator.
1) what does this have to do with SVG?? This thread is about svg. You should write a new article about ASIC decision

2) Can you provide screenshot, video, url, or upload document where ASIC has stated that they will only consider complaints from Au residents? To my knowledge, you can complain regardless of your geographical location. In fact, in their complaint form, they have ability to write addresses outside of Australia and insert non-Australian phone numbers.

This also applies to AFCA.

Again. this belongs in a separate thread.

To save huge swathes of business, the Australian brokers now have registered offshore to allow international clients, which is a huge chunk of business for their balance sheet, so effectively, they have created subsidiaries in response to the policy change.
Nothing new. But many Au brokers did prepare for the possible sweeping changes in Au regulation in regards to CFDs, particularly the leverage caps.

Again. this belongs in a separate article.
 

Scam Reporters

Master Sergeant
Messages
253
It should be added here that, in spite SVG does not oversee Forex and similar online brokers and scammers use SVG as a leverage to present themselves as offshore broker, SVG actually has a Cybercrime Act (2016):


Points 10 to 13 quite interesting...so maybe, just maybe, this was not widely known so far, but may be of some use to scammed investors. Provided that the 'broker' really has its operating entity in the SVG jurisdiction and is not just inventing a name an 'license' number (that would be just an IBC number in registrar and has nothing to do with actual financial regulator's licence).
 
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