Back in April, Swiss regulator Finma decided to follow in the footsteps of US regulators and clamp down on unregulated Swiss-based foreign exchange firms providing retail customers with access to highly leveraged forex trading accounts.
Accordingly, from April onwards all existing Swiss foreign exchange providers must have made moves to obtain bank licenses from the regulator, and amassed a minimum liquidity pool of SFr100m (£60m). The providers, Finma said, had had a year’s warning to meet the new requirements.
Nevertheless there was still fallout. Crown Forex — one of Switzerland’s biggest retail foreign exchange providers — was declared bankrupt by Finma in May.
At the time, Finma’s spokesman Alain Bichsel stated to Reuters:
“We had a lot of complaints from a lot of forex traders all around the world, these providers were not under supervision. The license requirement gives more stability and legitimacy to the whole system,” said Bichsel. “Crown had time to prepare to get the license, but the problesm were too big.”
(On a tangential note, it’s worth pointing out that US regulators have also in the meantime moved against the US operations of Patrick Kiley — one of Crown Forex’s main shareholders).
Fast forward to December, however, and out of the five or so big existing FX names affected by the new Swiss rules, only one provider has actually been granted a Finma license.
MIG Investments, now rebranded as MIG Bank, declared on Thursday via a press release:
The first Swiss Forex broker to obtain a Swiss banking license, M I G BANK continues its ascent
Neuchâtel, December 10th, 2009 — Neuchâtel-based Foreign Exchange Broker M I G, is the first currency trading company in Switzerland to be approved by the Federal Financial Market Supervisory Authority (FINMA), thus becoming M I G BANK. The revision of the decree on banks affecting Forex brokers came into effect on April 1st 2009 and means that Swiss Forex companies must obtain a banking license to continue their activity.
As the first Forex broker to obtain a banking license in Switzerland and the third bank headquartered in Neuchâtel, M I G BANK has taken a decisive leap forward in its development, enabling it to accelerate its growth in Switzerland and internationally as a provider of specialized currency trading services and products for private and institutional clients.
“This outcome is no coincidence,” states Hisham Mansour, CEO of M I G BANK. “We anticipated FINMA’s requirements and have been preparing for this change in status for nearly 2 years. Obtaining the banking license is a major phase in our planned development. It will allow us, in particular, to diversify our activities by providing brokerage services in precious metals and offer other added value services as well.”
M I G BANK aims to offer two key service skill sets to its clients: the rigor and security of a Swiss bank, coupled with the versatility and responsiveness associated with a Forex broker. “As one of the global leaders in online Forex trading, we will continue to focus
Which means the likes of Dukascopy — a frequent advertiser on financial networks like CNBC — and ACM are still very much awaiting their licenses, Finma’s spokesman Alain Bichsel confirmed to FT Alphaville.
Bischel, however, also made the point that even though MIG had now rebranded itself a ‘bank’ on account of having received a banking license, in the eyes of Finma the group was still very much considered an FX provider rather than a regular bank.
As he stated:
“They do have a ‘bank license’ but they’re not a regular bank. It’s just in Switzerland we don’t have several categories in our licensing, they’re only authorised to participate in forex dealing.”
But then again, MIG is not the first FX provider to capitalise on a bit of clever marketing when it comes to its name.
Related links:
Anna’s story – FT Alphaville
A Twin Cities FX scandal – SEC freezes Pat Kiley assets – FT Alphaville