From the completion of Brexit transition that led to the suspension of numerous businesses, to the proposed sale of IG's stakes in Nadex that kind of signaled the focus shifting from traditional to emerging marketing, the year 2021 certainly sees remarkable changes across the global forex markets. To end the year, this article collects the ground-breaking events the FX industry witnessed in 2021 as it's crucial to look back to move forward.
End of Post-Brexit Transition Period
Following the end of the Brexit transition period on December 31, 2020, the European Securities and Markets Authority (ESMA) withdrew the registrations of 6 UK-based Credit Rating Agencies(CRAs) as well as 4 Trade Repositories(TRs). Global brokers like TP ICAP have to adjust operating model as soon as practicable to ensure continued services in the UK and the post-Brexit EU.
During that period of time, authorization from the Cyprus Securities and Exchange commission (CySEC) has seen an explosion in popularity among UK firms seeking to continue to provide investment services in the European countries after Brexit. As a result, the CySEC extended the deadline for the submission of notifications by UK firm wishing to make use of the Temporary Permission Regime (TPR) up until 28 February 2021, from the previously decided December 31, 2020.
From late January to early February, Reddit retail investors piled into GameStop shares. The frenzy has rattled Wall Street, forcing some brokers to restrict trading. These brokers include but not limited to US trading app Robinhood and Interactive Brokers, the leading software based broker.
Reddit Mania Spread to the Silver Market
In February, as GameStop shares retreated, Reddit traders turned their sights to silver, pushing silver prices up to an 8-year high and forcing GAIN Capital, Admiral Markets, City Index, FXCM and many other brokerages into tightening trading terms for the precious metal.
ASIC's CFD Product Intervention Order Took Effect
The Product Intervention Order issued on October 23, 2020 by ASIC came into effect on March 29, 2021. That order reduces the maximum CFD leverage available to retail clients to a range from 30:1 to 2:1. Multiple brokers, including City Index, IG, Saxo Markets, eToro, Rakuten Securities, FP Markets, CMC Markets, have changed their margin requirements or revised account structure to ensure compliance.
Dogecoin Became the 5th Largest Crypto
On April 16, 2021, Dogecoin jumped more than 225% over 24 hours, which made the joke cryptocurrency the fifth-largest cryptocurrency by market cap.
ASIC's Ban on Retail Binary Options Trading
On May 3, 2021, ASIC's new rules that ban the issue and distribution of binary options to retail clients took effect.
First Bitcoin ATM Installed in Alaska
In mid-June, US Bitcoin ATM provider CoinFlip brought 3 Bitcoin ATMs to Alaska. Despite the wild fluctuations in the prices of Bitcoin and other cryptocurrencies, an increasing number of financial institutions have expanded their businesses in the crypto markets.
Binance Beleaguered by Tough Regulatory Actions
The biggest drama of FX in the second half of 2021 would be Binance getting slapped in the face by regulator one after another. As the largest de facto virtual assets exchange on the planet, the situation of Binance is undoubtedly the attention of the industry.
Binance has been warned consecutively by Japan FSA, UK FCA, Cayman Islands Monetary Authority, and Thailand SEC since July 2021. Followed by Italy CONSOB, MFSA and HK SFC, all issued warnings, claiming that Binance had been engaging in providing investment services and other financial activities in the countries and regions above without authorization.
According to an industry insider, "no smoke without fire", so somewhere in the background there was some smoke at some stage. The insider also mentioned that some big crypto scams were operated via Binance platform and this might be a strong and valid reason why the company got in trouble. But on the other hand, many believed that "excessive regulation is killing the crypto business" too.
The latest updates involving Binance indicate that the situation is becoming quieter. But just like the business itself, many of the once "shocking" news might just go away like the water under the bridge. And those "big news" would all become the topic of some random chitchat someday.
This August, the Financial Conduct Authority (FCA) banned BDSwiss Holding Plc and other members of the BDSwiss Group from offering high risk contracts for differences (CFDs) to UK investors, citing that the group was selling high risk investments to UK investors in breach of the FCA's perimeter and its rules for CFDs.
In response, BDSwiss suspended its services and terminated partners operating in the UK. The group also launched an additional internal investigation of its existing network of partners as certain affiliates of the group were said to be the wrongdoers.
Interactive Brokers Launched Crypto Trading
In September, Interactive Brokers, one of the biggest US-based brokerage firms, started to offer cryptocurrency trading via Paxos Trust. The company's CEO Thomas Peterffy had confirmed this launch back in June.
In addition to Interactive Brokers, there were 7 more brokerages who launched or expanded their crypto offering to fulfill customer demands only in September, according to Fazzaco News team's coverage. Obviously, their volatile nature did not slow cryptocurrencies down to gain momentum and become a favorite among investors.
Brokers Encouraging Clients to Trade with Foreign Firms Identified by FCA
In October, the FCA released its Perimeter Report for 2020-2021, where the regulator identified several brokers encouraging clients to trade with entities in third-country jurisdictions and alleged that these companies were conducting unregulated activities.
Deposit via Shiba Inu (SHIB) Available
At the end of November, US-based crypto exchange Kraken added support for deposits via Shiba Inu (SHIB), an Ethereum-based memecoin inspired by Dogecoin, giving additional evidence to back up the sustainability of the crypto boom.
IG to Sell Nadax and Small Exchange
In the last month of 2021, IG Group, a world leader in derivatives trading, proposed to sell its stakes in North American Derivatives Exchange, Inc. (Nadex) and Small Exchange, Inc to Foris DAX Markets at an aggregate price of $216 million.
According to June Felix, CEO at IG Group, the deal will allow the group to further sharpen its focus on integrating and expanding the US options and futures business through its tastytrade and tastyworks franchises. IG completed the acquisition of tastytrade, a fast-growing online brokerage and investor education platform, at the end of this June.
These are what mark off the year 2021. Fazzaco has focused on up-to-date industry news meant to inform and inspire individuals and teams in the forex trading ecosystem ever since our establishment. So stay tuned to know what happens in the industry in real time!
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