And so it begins. Switzerland has finally decided to flush their financial system and purge the worst forex dealers from their bloated and cramped bowels. Henceforth, any forex dealer who wishes to do business in Switzerland
MUST get a banking license. No longer can firms deceive the public by claiming they are regulated because they have a worthless registration with ARIF or some other anti-money laundering committee. Now they must get an actual license, that comes with an actual license number, which allows the trading public to do an actual background check on them. I congratulate the Swiss on taking this huge step forward and with that, leaving the dark ages and entering the modern era.
For more information on this new law read below. Next week I'll discuss how this law is effecting forex brokers all over Europe. Already two major players are closing their doors (WestCap FX and Northfinance.) Other Swiss brokers are sure to close up shop as well. If you have your money at a Swiss broker you should immediately check with them to see if they plan on complying with the new law. If they do not plan on complying
TAKE YOUR MONEY OUT NOW. And if they plan on fleeing to some God forsaken island where there is no regulation
TAKE YOUR MONEY OUT NOW.
Quote:
Switzerland: Foreign exchange traders
Thouvenin Rechtsanwälte, Zurich
International Financial Law Review - Foreign exchange traders March 2008 1 March 2008
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.
The SFBC took action in November 2007 by proposing an amendment to Article 3a paragraph 3 section c of the Swiss Banking Ordinance. Forex dealers will be required to apply for a banking status under the Swiss Banking Act of 1934, as amended. At the same time, security dealers and precious metal traders continue to be exempted with their client accounts under said Article 3a paragraph 3 section c. A banking status under the Swiss Banking Act 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 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.
It is expected that many forex dealers will not be able to obtain a Swiss banking licence because they may not be able to meet the capital and/or organisational requirements. Instead of applying for a banking licence they may explore other legal avenues, such as teaming up with a Swiss bank or Swiss security dealer for example and acting as an independent asset manager, converting their business model by no longer accepting deposits from the public, or by offering their forex products by means of securities or through mutual funds.
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