FSCA temporarily suspends JP Markets forex trader’s licence

July 30, 2020 at 08:44 PM

The Financial Sector Conduct Authority (FSCA) has temporarily suspended the financial service provider (FSP) licence of a forex trader, JP Markets. The regulator investigates the trader’s alleged breach of certain laws in the financial sector. During the period of JP Markets provisional suspension, it is also not permitted to take on any new business. 

According to the official statement, there was a conflict situation between the trader and its clients. It has allegedly been tampering trading conditions to minimise some high-level clients’ earnings and instead maximising its own. The trader has also amassed a huge number of complaints from its clients for the past year. The clients mostly complain about company’s failure to honour client withdrawal requests and losses due to not having a constant access to the trading platform. Due to these events, the FSCA stated that there is reasonable belief that substantial prejudice to clients or the general public may occur if they continue rendering financial services.

The regulator is now moving to have the trader liquidated, and has filed papers to this effect with the High Court in Johannesburg. While on suspension, JP Markets are not permitted to take on any new business or clients or render any services; however, it is not prohibited from processing client withdrawals. The firm had to inform all affected clients of the recent events. The FSCA’s investigation is currently on-going and any new findings will be made public.

JP Markets logo

The public is further warned that JP Markets is not authorised as an OTC derivative provider and therefore is not permitted, as a regular feature of its business and acting as principal to; originate, issue, sell or make a market in OTC derivatives. The investigation in respect of JP Markets is currently on-going.

The head of the FSCA business supervision division, Kedibone Dikokwe, explained the nature of the investigations. According to her, JP Markets allowed its clients to access a platform to trade in contracts for difference (CFDs), and to deposit their funds into its bank accounts. These deposits would then seemingly allow the clients to trade in forex CFDs, enter transactions, and make profits or losses depending on how the underlying forex exchange rose or fell. However, it transpired these clients were not trading on an online decentralised global financial market, but merely on a software application that the firm acquired ready-made and pre-programmed, that recorded these trades. According to Dikokwe, these clients were in fact purchasing CFDs issued by JP Markets, for which the trader by law required an OTC derivative provider licence. Without one, the trader is not permitted, even under regular features of its business, to originate, issue, sell or make a market in OTC derivatives.

FSCA warns the public against Tradehedges 

In another case, the FSCA also warned the public against entering in any financial business with Tradehedges. It received information by concerned members of the public that this trader claimed to be an authorised FSP, operating under a false FSP number and licence, and allegedly displayed a certificate claimed to have been issued by the FSCA back in 2017 when it was still the FSB (Financial Services Board). According to FSCA, it researched its records, and subsequently found that Tradehedges is not an authorised FSP nor a juristic representative, and no records of any applications for such exist, or of the licence number in question.

The FSCA again strongly advised members of the public to check that a trader is registered with it and to verify which categories it is permitted to trade and advise in, before entering any business or trade agreements, or depositing any funds to into any bank accounts these traders proffer.

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