We last reported on the Financial Commission in reviewing the unauthorized offshore broker AMarkets. This broker claims on its website that they are a member of the Financial Commission. Furthermore, AMarkets clients would be protected by the Financial Commission’s “Compensation Fund for up to €20,000 per trade claim.” However, the Financial Commission is neither a regulator nor automatically compensates traders in case of claims.
The Financial Commission is an independent self-regulatory organization and external dispute resolution (EDR) body for the forex industry. In discussions with the Financial Commission, it was confirmed to us that member clients are not entitled to investor protection. The Financial Commission acts as an arbiter between the brokers and their clients in case of claims. If no agreement can be reached, the clients (traders) are out of luck.
The Financial Commission finances the Compensation Fund by allocating 10% of the monthly membership fees. Allegedly, they are held in a separate bank account and cannot be used to finance operations or other organizational activities. However, only in rare exceptional cases does the Financial Commission pay compensation to clients of its members. It is only used if a member broker refuses to adhere to a judgment from the Financial Commission. Traders should be super-cautious with offshore brokers. They are not entitled to investor compensation schemes or the assistance of Financial Ombudsman Services.
