Forex Street Weblog

Open letter to FXstreet's Swiss brokers - Crown Forex S.A response

Hi everyone

Here you have the response to our Open letter to FXstreet's Swiss brokers from Crown Forex S.A CEO Mr. Shadi Swais.

I want to thank Crown Forex S.A and its CEO for their full and positive collaboration.

Francesc

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Hello Francesc,

The following are brief answers to your questions:

1. Is your company going to apply for a banking licence? Either yes or not, please explain why?
Due to the recent amendment in Swiss regulations, every Swiss Foreign Exchange broker must fall under the banking ordinance. Crown Forex has already started the process of obtaining a bank license with the Swiss Federal Banking Commission for the following reasons:

· Comply with the new regulations.
· Provide more security and higher standard services to our clients.
· To be able to expand our products to a wider selection of securities.

2. Are you keeping your clients reported? How will you inform about the new regulation and the impact on your business? Will you warn them in case that you don't get (or even ask for) the banking licence?
Crown Forex is one step ahead of the new amendment, as we have been working on the license for over a year now and we will our clients informed through newsletters regarding the status of the procedure. On the other hand, investors must be very careful when dealing with Swiss brokers that do not see the high importance of applying for a bank license. It is important to keep in mind that many small brokers will not be able to apply or even comply with the new regulations due to the huge financial requirements this type of license incurs. 

3- A Swiss banking licence implies to meet higher capital - Sfr10 million ($9 million)- and/or organisational requirements. The licence also calls for Bank management members to meet certain professional standards. Do you think these measures could affect your company's business in some way?
As mentioned above, we are one step ahead of the new laws. Moreover, we decided to put all chances on our side:

· Crown Board of Directors is made up of skilled lawyers specialised in corporate law, who are already members of other banks and securities dealers.
· We will be raising the company share capital up to CHF 11.5 Mil in the next six weeks, aiming to a 25Mil share capital target within the end of this year.
· Crown Forex management is assembled of highly experienced and motivated professionals.
· Additional specialized staff will be employed in order to support the private banking services that Crown will be providing in the beginning of 2009.

This change has already positively affected our business especially that all Crown VIP and institutional clients are already aware of our internal developments and have already entrusted even larger sums of investment with Crown Forex.

4 - Do you think SFBC taking over the regulatory control of Swiss FX brokers could be a breath of fresh air that may result in more investors joining the FX Market?
I personally think that it is high time the SFBC stepped into the picture in order to control the highly liquid and unregulated domain of Swiss Foreign Exchange brokers. With higher regulations such as a bank license, investors will be more confident to approach Swiss brokers than any other brokers. Needless to mention that at the same time, Swiss regulations became by far the most stringent and effective compared to other regulatory environments around the world.

5 - The U.S. has already started a similar process, what is your opinion on this? Is it affecting Swiss FX brokers business somehow?
The change in the US regulations consists mainly of higher capitalization requirements, while the Swiss regulations upgrade consists of the highest banking regulatory standards, accompanied of course by a much more significant capital requirement. You can add to that the unique Swiss bank secrecy Act that protects the investors’ interests, while in the US, the investors’ funds are always subject to the discretion of the US federal governing body.

6 - How do you see the M&A market in the FX industry? Do you expect important corporative movements in the next months? Would your company be on the bid side?
Well, there have been some mergers and acquisitions going on lately in the Forex industry.  Most of them took place towards the end of the year 2007, where the Expo season was at its peak. Nevertheless, Crown Forex is not interested in bidding on anything yet, neither in offering some of its own shares on the market in spite of how fast and powerful the industry is.

7 - Would you like to add something else?
As a result in the regulatory ordinances in Switzerland, very few Swiss brokers will remain in the game, if I may say so, by the end of 2009. Probably only 5 or 6 brokers will survive out of all the brokers, whether medium or small.

On the other hand, the quality of the services that the remaining brokers/Banks will have to offer will be of very high standards, such as the services that Crown will provide to its clients.

Best regards

SHADI SWAIS
CEO
CROWN FOREX SA

Open letter to FXstreet's Swiss brokers - GFX Group S.A (Forex.ch) response

Hi everyone

As you already know, on Friday we sent the Open Letter to FXstreet's Swiss Brokers in order to get the feedback from top Swiss firms management about all the goings with the regulatory process opened by the SFBC.

I already got the response from Peter Furrer, CEO at GFX Group S.A (www.forex.ch).

I was expecting to get my questionnaire filled-up but Mr. Furrer preferred to send me a short reply.

I respect his choice of opting for this type of reply and I want to thank Peter and GFX Group for their full and positive collaboration.

Francesc

Good morning Francesc

Thank you for your mail.

As you know, GFX Group SA underwent a thorough audit by the SFBC during the course of 2007. As a result of this review we learned early that the SFBC will be requesting FX brokers in Switzerland to apply for a banking license as from April 1st, 2008 and we had started to prepare our company by increasing our share capital to CHF 10 Mio. (fully paid in). We also changed our external auditor to KPMG, who just completed our 2007 financial & MLA review.

We are in the process of applying for a banking license and as soon as we have the formal response from the SFBC we will let our clients and of course you know immediately.

With kind regards

Peter FURRER
Tel: +41-22-799-4105
Fax: +41-22-799-4109

Winds of Change in Switzerland - Open letter to FXstreet's Swiss brokers Sent

Hi everyone

A quick e-mail before going for the weekend to let you all know that the Open letter to FXstreet's Swiss brokers has been sent to Forex.ch, ACM Advanced Currency Markets SA, MIG Investments S.A and Crown Forex S.A.

I´m looking forward their responses that will be published here

Enjoy your weekend

Francesc

Winds of Change in Switzerland - Open letter to FXstreet's Swiss brokers

Hi everyone

As you are already aware off, the SFBC took action in November 2007 by proposing that Forex dealers will be required to apply for a banking status under the Swiss Banking Act of 1934, as amended.

A banking status requires a minimum paid-in share capital of Sfr10 million ($9 million) and further equity requirements to appropriately cover credit, operational and other risks.
Bank management members in Switzerland must also meet certain professional standards. A Swiss bank must also meet organisational standards, providing for separate corporate bodies for supervision, management and control.

From April 1 2008, existing forex traders in Switzerland are required to register with the SFBC. The registration process ends on June 30 2008. One year later, that is, on March 31 2009, forex traders must meet the above requirements and must have applied for a banking licence.

I´m contacting through this open letter the CEO's of all the Swiss brokers that are listed @ FXstreet's leading brokers & FDMs list in order to know from top management the situation of the firm and its plans for the next future.

I hope with this open letter we would help somehow traders to have a clearer picture about the new developments going on in Switzerland.

If you miss something or would you like to add/change proposed questionnaire, please do not hesitate to let me know.

Francesc

Proposed Questionnaire

1. Is your company going to apply for a banking licence? either yes or not, please explain why?

2. Are you keeping your clients reported? How will you inform about the new regulation and the impact on your business? Will you warn them in case that you don't get (or even ask for) the banking licence?

  3- A Swiss banking licence implies to meet higher capital - Sfr10 million ($9 million)- and/or organisational requirements. The licence also calls for Bank management members to meet certain professional standards. Do you think this measures could affect your company's business in some way?

4 - Do you think SFBC taking over the regulatory control of Swiss FX brokers could be a breath of fresh air that may result in more investors joining the FX Market?

5 - The U.S. has already started a similar process, what is your opinion on this? Is it affecting Swiss FX brokers business somehow?

6 - How do you see the M&A market in the FX industry? Do you expect important corporative movements in the next months? Would your company be on the bid side?

7 - Would you like to add something else?

Winds of change in Switzerland now in place

Hi everyone,

My friend Arnaud Jeulin, owner at Mataf.net sent me this interesting article that confirms the winds of change in Switzerland we were talking about last June 2007 are now in place.

Switzerland: Foreign exchange traders
Thouvenin Rechtsanwälte, Zurich
By Dr Thomas Rihm

The Swiss Federal Banking Commission (SFBC) estimates that about 150 foreign exchange (forex) traders are registered as financial intermediaries in Switzerland, who have not been subject to regulation under Swiss banking and finance legislation. In particular forex traders managing accounts for more than 20 individual clients did not fall under SFBC supervision in the past, as long as those accounts were not interest-bearing and were only used to execute customer orders.

In recent years, the SFBC has seen a growing number of complaints, especially from smaller investors, regarding transparency, liquidity and risk disclosure, let alone the substantial losses sometimes suffered by these investors.
Read Full Story

Enjoy it!

Francesc

Swiss brokers: Should they have the right to be in FXstreet's Brokers list?

This is an email I just sent:

Dear XXXX,

We at FXstreet.com only accept companies regulated in the US, UK, Switzerland, Nordic Countries, Australia and Japan.

A couple of years ago - maybe it was even before but I can´t remember it for sure - we accepted firms regulated in Switzerland and recently we have accepted firms from Nordic countries.

What's going on with Switzerland?
We had many discussions at FXstreet whether to accept Swiss firms or not.
On one hand, Switzerland is a main financial place and Swiss firms can'¡t be excluded because they are an important part of the FX market.

On the other, as you very well said, FX is completely unregulated in Switzerland. The so called regulatory organizations as

    * Groupement Suisse des Conseils en Gestion Indépendants
    * Polyreg
    * Organisme d'autorégulation fondé par le GSCGI
    * Association Romande des intermediares financiers

are no more than private self regulatory services and probably you are right that their only duty is to apply the Anti-Money-Laundering Act.

On May 18th I published on my blog a post titled "Gossip from Switzerland". I was explaining that the SFBC (Swiss Federal Banking Commission) had finally decided to rule the Swiss FX market. My source told me that this process should be concluded in 2 to 3 years.

So we decided to accept Swiss firms and keep an eye on them. Since then, we have had proven claims against some Swiss firms and we have intervened siding the trader, but we have not received more proven complaints against Swiss firms than against US firms, all of them regulated by the NFA.

Recently we've accepted Nordic firms because firms in all fields from those countries are well known for their honest practices and we trust their local regulators.

We can´t be sure that all firms included in our brokers list will behave as they should, but I can guarantee that we are watching them and backing traders if they come to us with proven claims against brokers.

We are not a body regulator but we do not want bad people on our site. If you have any solid prove against any of the companies listed there, please let me know.

Regarding Swiss firms, we will keep them on our site and wait for the SFBC to do its job.

We will try to monitor things as close as possible and keep our visitors posted.

I´m going to post this reply on my personal blog

http://weblog.fxstreet.com

Feel free to reply me there if you wish so

All the best

Francesc

----- Original Message -----
This is just something you may not be aware of:
The so called regulation of Brokers in Switzerland is in no case ANY regulation.
The whole Forex market is completely unregulated in Switzerland. The often mentioned Self Regulation Service is only due to the Anti-Money-Laundering Act. No authority in Switzerland cares for any activity of the FX brokers there. But the SFBC is just closing FX brokers there. There is no official mentioned reason. You may ask the SFBC yourself for those often mentioned SWISS "regulations".
Also the Swiss Finance Ministry does not care of FX.

Just some facts and our question why do your promoted Non regulated brokers following your "rules"
Thanks for your attention.

Sincerely Yours, XXXX

GFX Group S.A (Forex.ch) succesfully approves SFBC's review

GFX Group S.A (Forex.ch) announced yesterday that the Swiss Federal Banking Commission (SFBC) determined that GFX Group's business and procedures meet the standards for FX business in Switzerland.

Peter Furrer, CEO at GFX Group S.A said: "The SFBC has – on an exceptional basis – agreed to the following wording: The SFBC has conducted an investigation on GFX Group SA’s activities. As a result of the auditing process, the SFBC has concluded that the activities carried out by GFX Group SA comply with the Swiss banking and securities regulation and lie outside the scope of its supervision.”

Congratulations to Peter Furrer and GFX Group S.A for getting the Swiss Federal Banking Commission (SFBC) approval.

Francesc

Wind of important changes in Switzerland II

Hi everybody,

I did not give you correct information in my previous post  when I was talking about SFBC's decision to not allow Swiss FX brokers to charge overnight charges anymore. My Swiss source warned me about it so I must immediately correct what I said wrong.

What my source was telling me was that the Swiss Banking Commission has decided that fx brokers can still charge clients overnight charges but they are not allowed to pay overnight interest to their customers anymore.

Please, accept my apologies for the misunderstanding

Francesc

Wind of important changes in Switzerland

Hi Everybody 

As you may probably already know, SFBC (Swiss Federal Banking Commission) is decided to regulate the Foreign Exchange business in Switzerland .

This process already started a couple of months ago and some important brokerages are already going through the process of getting SFBC’s approval.   

One of my sources in Switzerland told me this morning that SFBC is implementing big changes in the way Swiss brokers use to work as for instance the fact that overnight charges are not going to be allowed anymore.

The restrictions that SFBC will require to brokers to implement to get their approval will probably force those not strong enough to disappear and this process could be faster than we think and could take place before the end of the year. 

I’ll keep you posted about all this very interesting process. 

Under my point of view, the fact that SFBC puts order in the Swiss Foreign Exchange business should be considered as a very good news for all the community, but we must remain alert over the whole process.   

Francesc

Swiss broker Forex.ch closed? - Part III

Hi Everybody

A friend of mine alert me today that GFX SA web site was up and running again after being down for a few days.

I just checked it out and certainly the web site is up and running again

www.forex.ch

At this time I still don´t know what has happened here but I´ll try to find out

Thanks

Francesc

Swiss broker Forex.ch closed? - Part II

I got some feed-back from a friend of mine a few minutes ago.

At this time a non-official explanation is that they had to take the website down while they deal with some internal issues in Switzerland, but this should not last longer and they expect their site to be up by the beginning of next week, if not later this week.

As soon as I got more info, I’ll come back to you all

Francesc

Swiss broker Forex.ch closed?

Hi everybody

We have just been informed that the Swiss broker www.forex.ch (GFX Group SA) is down.

The message you get when entering the site says

"Dear clients - we are currently experiencing unexpected technical difficulties with our trading system and are therefore unfortunately unable to execute new trades from you at this point in time."

This message is worrying as does not leave clear what will happen next.

The broker was regulated by Polyreg

Francesc