We received a press release last week from 4XCube, an FX broker who has set up with a license in the Cook Islands. An offshore brokerage certainly isn’t anything new and to be fair it’s not something we’d usually look at here at The Armchair Trader, but given the year of regulatory change which has dominated the European CFD & FX industry, we put a few questions to the CEO, Joao Monteiro, for his take on what sort of reception he expects from the trader community for his firm.
AT: Can you explain why you’ve been regulated via the Cook Islands?
JM: ESMA has had a profound impact on the retail forex market, both in Europe and also for global clients papering through Europe. The draconian leverage restrictions have presented an imperfect situation for brokers and their clients alike. The former – where high leverage has allowed spreads to tighten dramatically – now struggle to make money. The latter can’t get the leverage they sometimes need and whilst this isn’t a universal problem, it’s especially pertinent for those using automated, algo-driven trading strategies to make incremental gains.
AT: So you’re after the disenfranchised European trader?
JM: No, not at all. We are agnostic as to where our client comes from, obviously so long as they can pass our necessary due diligence process. Whilst retail clients in Europe have been hit by these regulatory changes, so have others from around the world who have papered their accounts through European brokerages.
AT: Offshore brokers have a bad reputation. How are you any different?
JM: Unfortunately there’s no escaping the fact that over the years, disreputable brokers have set up off shore and used this as a route to fleece unsuspecting clients. But let’s be clear we’ve made this decision so we can offer clients the service they have been used to – that combination of tight spreads and high levels of leverage. We’ve also spent almost two years building this offshore brokerage business up and going through the rigorous licensing process laid down by the Cook Islands. We have a physical office in the Cook Islands, employ eight full time staff and will be working closely with the regulator throughout. Furthermore, we have appointed BDO as our auditors, adding an extra layer of transparency to our processes.
The Armchair Trader says:
Obviously trading with an offshore brokerage comes with an added degree of risk – to start with, the process for dispute resolution is going to be significantly more convoluted than you’d find with a European broker and just how much the regulator will care if you approach them is open to debate too. We’re aware that some of the most established brokers with European licenses are already setting up entities regulated in places like the BVI, so this move by 4XCube is probably a good indicator of the sort of innovation we’ll continue to see As with any situation like this, the buyer needs to show caution and do their own research, but the days of high leverage and low spreads aren’t dead yet. Offshore pressure like this could even help encourage European regulators to dial down their aggressive stance in the future.
Here’s the full press release:
A new boutique brokerage firm licensed by the Financial Services Commission in the Cook Islands is providing the perfect hub for algorithmic trading.
4xCube (4xcube.com) offers traders ultra low spreads, true Electronic Communication Network (ECN) trading, low latency, higher leverage, tailor-made partnership plans, and all kind of trading strategies for trading Forex, CFD, indices, commodities and cryptos.
Under Europe’s new ESMA directive, brokers are not able to offer leverage higher than 1:30 for retail investors. 4xCube is providing FX traders with an alternative option for algorithmic trading, as they are licensed in the Cook Islands, where they operate via a brick-and-mortar office in Rarotonga. Through their new online portal, they will offer 24-hour support to traders around the world.
“A few years ago, offshore investing was considered less attractive, but the tide has turned,” said João Monteiro, spokesperson for 4xCube. “Today, this model offers the best way to access the best trading conditions for success.”
The 4xCube team has more than 20 years of experience across different markets. Drawing from their extensive knowledge of trading, they have built a user-friendly trading environment that incorporates innovative trading technology to offer users ultra low spreads, fast execution and unparalleled customer service while complying with international regulatory standards.
4xCube is an execution-only broker with no dealing desk. They accept all type of trading strategies, making it the perfect environment specially for those who seek low latency for algorithmic trading. With the 4xCube, traders can plug their Expert Advisors or test their own manual strategies.
“4xCube was the result of years of dialogue with traders, partners, and simple investors who shared their concerns about their existing brokers, including high spreads, terrible execution, lack of support, and, most of all, lack of trust,” said João, spokesperson for 4xCube. “With 4xCube, our goal is to provide the best true ECN environment, where clients can finally focus on the markets.”