AFX Markets Stops Operational Activity
AFX Markets Limited, a United Kingdom-based brokerage, has ceased all operations. This operational cease-fire comes from the Financial Conduct Authority, a Finance Regulator in the UK, noted severe concerns regarding the lapse of their Cryptocurrency License. After refusing to update their license, the FCA ordered the firm to stop trading and blocked them from being able to sell assets to clients. On August 27th, it was revealed that CG Recovery Limited would act as specialised administrators to AFX Markets. This decision came from the High Court of Justice in England and was selected to ensure that customer interests are protected at AFX Markets Limited.
Additionally, the Financial Conduct Authority also informed AFX Markets that they’re not allowed to dispose of personal client assets until the internal investigation is complete. The only form of business currently being maintained by AFX Markets is Closing of Trading Positions. This will inevitably freeze-up all their assets. Any brokerages not renewing a legal cryptocurrency license is disobeying regulation in the Financial Services Compensation Act. It’s estimated that due to the abrupt cancellation of the product, clients have lost more than £85,000 in compensation to AFX Markets Limited.
Two Licenses Lost
The Financial Conduct Authority still authorises AFX Markets Limited and subjects to their code of conduct regulation. However, there’s a chance that AFX might lose their license with the FCA in the coming weeks. This all depends on if the Special Administrator Unit determines that AFX needs to enter insolvency. If they reach this level of investigation, then it’s likely the license will be lost shortly after. It wouldn’t come as a shock, considering that back in July the Cyprus Securities and Exchange Commission announced that it’d suspended AFX’s license in the region. It would only be two weeks later that AFX Markets Limited would begin being questioned by the FCA.
A significant market share will be up for grabs if the AFX Group has to leave the European Market. They currently stand as the second-largest brokerage in the continent, with an average of 1200 clients trading with the firm before their services were suspended. Hourly, more than £7.5 Million, is transferred between clients and exchanges. Their products have primarily related to the crypto space with contacts-for-difference, spreads and foreign exchange. Hopefully, the Special Administrator Unit will find that AFX Limited hasn’t broken any regulation.