Rectification (26 February 2014): The AFM published the press release below on 7 May 2012, which stated that NordFX.com had been included in the AFM’s warning lists. The AFM had included NordFX.com in the foreign warning list following a warning from French supervisor Autorité des marchés financiers (AMF). However, the French supervisor withdrew this warning in July 2012. The AFM has therefore removed NordFX.com from the foreign warning list. NordFX.com has also been removed from the press release below.
The Authority for the Financial Markets (the AFM) is investigating investment products in foreign currency, known as foreign exchange or forex. The AFM has seen an increase in the number of parties offering consumers the opportunity to invest in foreign currency. These offers frequently suggest the prospect of a high positive return for consumers. The AFM has also noted that some of the parties actively involved are on international warning lists. The AFM advises consumers not to enter into offers made by these parties.
Most foreign exchange investment products involve a high level of risk due to the use of large degrees of leverage, which increases the effect of price movements. The intention is to achieve an extremely high return in the short term through frequent and highly-leveraged trading. Leverage can also however lead to heavy losses which can be greater than the initial amount invested. It is also difficult to estimate the costs and risks of these complex products.
Advice to consumers
The AFM advises consumers considering an investment in forex to carry out thorough research in advance. They should first consider whether investing in risky currency trading is appropriate in view of their goals and their financial circumstances. They should also, in any case, take note of the following:
Check the AFM registers and warning lists. There are parties that hold a licence from the AFM, or another European regulator, for the provision or offering of foreign exchange services and related products. These parties are listed in the AFM register. A licence does not however mean that investors will incur less risk.
There are parties operating in the Netherlands which are on the AFM’s warning lists, for instance MyPrivateTrade.com and YouTradeFX.com. Previous warnings have been issued with respect to these parties, either by the AFM or by a foreign regulator. The AFM advises consumers not to enter into offers made by these parties.
Holding out the prospect of a future return gives no guarantee that the return will actually be achieved. Therefore it is vital to look carefully at what the forecasts are based on, and ask about negative scenarios and risks if these topics are not already covered in the brochures or on the website. Remember that as a general principle a higher return normally involves a higher risk. Also ask for information regarding the costs paid out of the amount invested.
The AFM is committed to promoting fair and transparent financial markets.
As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.