Earlier this week Finance Magnates reported that FBS had stopped all marketing activity. There have been some rumours that this was due to activity in India.
As reported on TradeInformer last month, MetaQuotes has asked some brokers to stop accepting customers from the country.
However, it’s plausible that the FBS marketing pause is also related to regulatory activity in Brazil.
Documents seen by TradeInformer show that the broker is now being formally sanctioned by the Securities and Exchange Commission in Brazil (CVM).
The case file was opened at the end of September and has now got to the stage where the CVM has sent a summons to two FBS entities in Belize and Vanuatu.
The CVM database shows the regulator is arguing that FBS was offering securities and brokerage services in Brazil without being authorised to do so.
Like many other firms, FBS has been on the CVM’s warning list since 2017. This is not uncommon and, like in other jurisdictions, any broker getting clients via organic reverse solicitation could end up on the list.
However, last year two IBs working with HSFX were also targeted by the CVM.
The latest case is also more serious because, if it goes through, FBS can be referred to for criminal prosecution.
The broker can also be shut out of payments systems, have its URLs blocked, and have higher fines imposed on it.
There are a couple of signs the firm is actually taking this seriously as well. FBS used to target Brazil via a specific URL – PTFBS.com.
That URL now no longer has any Portuguese language options. The broker also removed reference to its Belize entity on the site and now only lists its Vanuatu entity. External Portuguese-language content, like the broker’s YouTube channel, is now no longer linked to.
Two executives that TradeInformer spoke to noted this is part of a wider trend of the Brazilian regulator and other local bodies attempting to shut the door on foreign CFD providers.
“Brokers need to wake up,” said Rodrigo Mariano da Rocha, who runs Brazilian legal firm Fin+ and also chairs the Association of Foreign Brokers in Brazil. “Today, Brazil represents a regulatory risk level comparable to India, the US, or Italy. And the consequences are only going to become increasingly severe and energetic in the months ahead.”
