Customers of AFX Markets may receive FSCS compensation
There is finally some good news for customers of retail Forex broker AFX Markets Ltd.
The UK Financial Services Compensation Scheme (FSCS) has completed its initial review of AFX Markets Ltd. FSCS has concluded that customers may be able to receive compensation from FSCS regarding the losses suffered.
FSCS will shortly be asking clients of AFX Markets Ltd to submit claims via the online claims service. Owing to the complexity of the AFX Markets failure, the Scheme will review claims on a case-by-case basis. Also, customers are likely to be asked to complete a supplementary form in relation to AFX.
FSCS notes that it is free to use and customers do not need to use a representative to make a claim. If you claim with FSCS directly you will receive 100% of any compensation you’re due.
AFX Markets Limited is a UK registered company that has been authorised by the FCA since May 2012. AFX Markets acted as broker for customers trading on its online trading platforms (ww.afxgroup.com and www.stofs.co.uk), principally in Forex and CFD products. According to figures provided by the firm to the FCA, it has approximately 1,200 customers and is responsible for the safekeeping of approximately £7.5m of client money.
AFX Markets acted as an intermediary and trades placed were contractually executed by AFX Capital Markets Limited (AFX Capital). One consequence of this is that the majority of client money, in the form of margin to secure open positions or to cover obligations, was held with AFX Capital.
AFX Capital is AFX Markets’ parent and is based in Cyprus – its license with Cyprus Securities and Exchange Commission (CySEC), the Cypriot regulator, has been suspended since 19 July 2019.
On 31 July 2019, as a result of concerns over AFX Markets’ financial position and its arrangements for safeguarding monies held on behalf of its clients, the FCA required AFX Markets to cease conducting any regulated activities, except solely for the purpose of closing trading positions, and freezing all its assets.
Subsequently, the FCA made an application to the High Court to appoint special administrators under the Investment Bank Special Administration Regulations 2011. The application was made to protect the interests of the customers of AFX Markets by ensuring that a responsible official with lawful authority is appointed to take control of the affairs of the company. The special administrators will attempt to reconcile and distribute the client monies as quickly as practicable.
The special administration order was made by the High Court on 27 August 2019, appointing insolvency practitioners from CG Recovery Limited (CG Recovery) (which also trades as CG&Co) as special administrators of AFX Markets.