Is it safe to trade with LiquidityX?Recently on web many unfavorable comments are directed towards LiquidityX, reflecting a widespread discontent with this broker’s practices. We have been also approached by a victim who provided us testimony on LiquidityX’s unreliable practices.
1. Victim’s profile
The victim belongs to a high-risk category making him more susceptible to potential fraud.
He can be described as a senior citizen without any previous experience and no knowledge in Forex and CFD’s trading. What’s more, he has only limited knowledge of English and is not able to understand complex English financial terminology.
The victim was targeted and lured to invest by numerous promises of secure profits and quick gains. The actions of the representatives of LiquidityX towards him (cold calls to attract new clients, gaining our client’s trust, frequent phone calls with him, their self-presentation as experienced professionals who will help him to make his investment successful, urging him to invest, misleading promises of secure profits, manipulating him into a risky trading strategy, etc.) appear to be deliberate and suspectedly planned in order to deprive him of all invested funds.
He started with a small investment and from then the amount periodically grew until he lost a solid amount of his invested money.
2. LiquidityX Broker Investigation
LiquidityX is a brand operated by Capital Securities S.A. Capital Securities S.A., is a Greek Investment Firm with licence number 2/11/24.5.1994(1).
LiquidityX is a Hellenic Capital Market Commission (HCMC) regulated and licensed Broker, authorised for CFD Trading within the European Economic Area (excluding Belgium) and Switzerland.
LiquidityX does not execute orders on an own account basis (principal to principal) but acts as an agent in relation to CFDs across a range of asset classes: stocks, commodities, indices, currency pairs and Cryptocurrencies.
The Company uses third party Financial Institutions as Execution Venue and arranges for the execution of client orders with such Execution Venue.
The Execution Venue currently used by the broker is Coincoptrade, an entity registered in Mauritius and regulated under its jurisdiction (2).
According to LiquidityX’s Execution Policy (2), the Execution Venue may be changed at the Company’s discretion by giving at least one business day prior notice to the clients on the Website.
Our practice shows that Liquidity Providers based in offshore jurisdiction such as Mauritius do not provide enough legal security to the European investors.
We consider that each investor should be extremely cautious and avoid Brokers using an offshore entity as liquidity provider.
The regulator that controls the Forex market in this jurisdiction is the Financial Services Commission (FSC). FSC monitors the activities of Forex brokers and issues appropriate licenses. Companies that intend to obtain Mauritius Forex license must demonstrate to FSC that they meet the established criteria and parameters. If all requirements are met correctly, the license will be approved.(3)
3. Why are companies operating under Mauritius jurisdiction not reliable?
The regulatory rules for Forex brokers operating under this jurisdiction are not so strict as the EU regulations imposed by MiFIDII therefore investors’ interests are significantly less protected.
For example, the minimum capital requirement in Mauritius for such investment firm is around EUR 20,000 (MUR 1,000,000) whereas under EU MiFID II, the minimum is set to EUR 750,000 (4).
In conclusion, it’s always better for EU traders to invest under EU regulated brokers and to check if other Execution Venues are listed in the broker’s policies.
