HFM (former HotForex): Relationship with the Japanese Financial Services Agency Unregistered Is it illegal?

HFM

HF Markets is one of the most popular Forex companies in the world. There are users in Japan, and core traders open accounts and trade, but HF Markets is not registered with the Japanese Financial Services Agency. Why is that?

HF Markets License

HF Markets was founded in 2010, has offices around the world, and has numerous financial licenses. Our services and free tools are available worldwide, with excellent spreads and features, and we operate in Seychelles, Cyprus, Dubai, Kenya, South Africa, and more, and are regulated by each country’s Financial Services Authority. Assets are managed separately. The management company’s support is also very transparent and substantial. Please refer to the article below.

bonuses and campaigns

HFM offers plenty of campaigns, promotions, and bonuses for premium accounts. The maximum leverage is 2000 times, and it is highly rated compared to overseas FX industry and companies such as xmtrading, axiory, and exness. In financial services, we have group companies that operate all over the world and have investors all over the world. The content on the official website is also of a very high quality. It has a cushion function, so you can trade up to the limit of your margin.

Products and platforms

There are quite a lot of financial products, including currency pairs, stocks, precious metals, CFDs, energy, commodities, virtual currencies, stock indexes, etc. Important loss cut and zero cut rules have been introduced in the market. The brand will change depending on the individual’s selection of the account type. Platforms include MT4 and MT5, and there is also a proprietary web trader. There will be no rejection of contract. Swap points occur when the day passes.

Full of trading methods

HFM offers a high degree of freedom in trading methods. Scalping, automatic trading tools (EA), and both positions are also OK. There are few disadvantages and no major restrictions. High leverage trading is possible up to the limit of your balance. We also offer some VPS services for automatic trading. Transaction history can also be downloaded online and can be used for tax returns.

What is a financial license?

A financial license is a permit issued to businesses that handle investment as a business, and must be obtained in each country. This is because each country has different laws and different standards. If the Forex company clears the standards set by the financial institution of the country and obtains a financial license, it can demonstrate reliability and safety.

Difference between FSA approval and license

By the way, there is a slight difference between the approval by the Japanese Financial Services Agency and the acquisition of a license. License refers to obtaining permission to operate from the Financial Services Agency. Licensing, on the other hand, refers to obtaining permission to operate based on the standards of the issuing country. The difference is whether or not the standards set by the country are cleared.

Why is HF Markets unregistered?

HF Markets has many Japanese users, so it seems wise to get permission from the Japanese Financial Services Agency, but why not? As you can see from the reasons below, Forex companies have not been approved by the Financial Services Agency because they have safety issues, but they have not dared to register.

Leverage regulation

Leverage is one of the attractions of HF Markets. If you want to get permission from the Japanese Financial Services Agency, you have to lower the leverage to 25 times. This is a very disappointing story for traders, as fewer users sign up and the company loses sales. So it’s not a good idea.

Zero cut system

With the zero-cut system, if the market fluctuates greatly and you lose a lot, the loss may be more negative than the principal amount, but the FX company will compensate for this negative amount. This means that traders do not have the risk of incurring debt. HF Markets has adopted this system, but once permission is obtained from the Japanese Financial Services Agency, this system cannot be used. This is also a disadvantage for traders.

HF Markets has been warned in the past

Due to the above background, HF markets has not obtained permission from the Japanese Financial Services Agency. In response, the Japanese Financial Services Agency has issued warnings to HF Markets in the past. However, most of the Forex companies have obtained a financial license from the country where they are based, not Japan, and operate according to the laws of that country. The intention is to increase the benefits for traders. In other words, just because it is not registered with the Japanese Financial Services Agency does not necessarily mean it is dangerous.

Is an unregistered company illegal?

Is it an illegal company because the FX company does not register in that country? In other words, there is no clear definition. However, under Japanese law, it is necessary to obtain approval from the Japanese Financial Services Agency when conducting financial business. Companies not licensed by the Financial Services Agency cannot operate in Japan. In other words, if the Forex company actively sells and develops new customers, it will be a problem. However, HF Markets does not operate in this manner.

FX broker receiving warning from Financial Services Agency

In fact, some FX brokers have received warnings from the Japanese Financial Services Agency. Here are some companies that have received warnings. According to the information published on the Japanese Financial Services Agency’s website, many FX brokers have received warnings.

Source : 金融庁

NameAddressViolation details
Tradexfin LimitedF20, 1st Floor, Eden Plaza,
Eden Island, Seychelles
The solicitation for over-the-counter derivative transactions was conducted over the Internet.
FxPro Financial Services
Ltd(FxPro)
Karyatidon 1, Ypsonas 4180,
Cyprus
The solicitation for over-the-counter derivative transactions was conducted over the Internet.
IronFX Limited
(ironforex)
30, Gr. Xenopoulou Street,
3106 Limassol,
Cypru
The solicitation for over-the-counter derivative transactions was conducted over the Internet.
Pepperstone Financial Pty
Ltd
(Pepperstone)
Level 3, 27-32 King Street
Melbourne
VIC 3000
Australia
The solicitation for over-the-counter derivative transactions was conducted over the Internet.
FXDD Malta Limited
(FXDD)
K2, First Floor,Forni
Complex,
Valletta Waterfront
Floriana,FRN 1913,
Malta
The solicitation for over-the-counter derivative transactions was conducted over the Internet.

Is it a crime to use a FX broker that has received a warning?

Using a FX broker that has received a warning is not a crime. If you end up being penalized, it will be the FX broker who will be penalized, not you. In other words, the user will not be arrested for a crime.

Self-responsibility

As mentioned above, if you are a Japanese person living in Japan, if you use an FX broker that has received a warning or a broker that is not licensed, you will use it at your own risk. However, it is important to understand that the reason why brokers are not licensed by the Financial Services Agency is not because they want to engage in fraudulent operations, but because they want to provide high leverage.

Compensation scheme up to €5 million

HF Markets has a financial license and a trader compensation scheme of up to €5 million. This is to compensate for the loss that occurred when HF Markets went bankrupt or the server went down. If HF Markets were a malicious company, there would be no such system. Because of this system, traders can trade with peace of mind.

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