The Financial Conduct Authority put out a warning for investors about the risks of CFD trading on Thursday.
The regulator made two points in that announcement. One was about clients being pressured into converting to professional status.
In the UK, a professional client can get access to higher leverage, among other benefits.
However, to qualify as a professional, a trader has to meet two of three standards. Those are:
- Having financial investments, including cash, worth more than £500,000
- Placed 10x quarterly trades of significant size over the prior 12 month period
- Worked in financial services for at least one year in a role that requires knowledge of the products the client wants to invest in
“Firms must not push elective professional or redirection promotions onto their retail clients,” said the FCA in their statement. “The FCA will take action against firms breaking the rules.”
Did BDSwiss make more than £75m from offshore UK?
The other warning that the FCA made was about finfluencers directing UK customers to trade with offshore brokers.
This is a very common phenomenon on Meta’s platforms, where you see influencers promoting signals, copy trading, and educational portals, almost always with a link to Telegram.
Once the client is on Telegram, they will be directed to trade with an offshore broker.
The UK regulator noted that one firm made over £75m from over 90,000 UK customers over a four year period.
That firm was not named but it is almost certain to be BDSwiss. Back in 2021, the FCA went after BDSwiss for directing clients offshore, rather than to its Cypriot entity.
In a document published by the regulator, they noted from 2017 to 2021 there were 94,038 UK customers who opened accounts with the broker.
A huge chunk of those were from affiliates. The regulator said BDSwiss paid 129 affiliates £14.7 million for referring 48,038 UK-resident consumers in that time.
That document did not say what overall revenues were at the broker. However, it is hard to believe that the firm the regulator was referring to in Thursday’s press release was not BDSwiss.
The time frame fits, the client numbers fit, and the payouts to IBs would also fit.
BDSwiss appears to still be active but the firm has faced huge problems over the last 12 months, with most senior executives leaving the firm.
