Estonian regulator applies sanctions to Admiral Markets

12-02-2021

While oil quotations are going through a crisis, the forex broker has shifted the risks to its clients.

The Financial Supervision Authority, which regulates on-exchange and off-exchange trading in Estonia, said that Admiral Markets will be fined up to 32,000 euros. The sanctions are applied due to breach of obligations to the broker’s clients.

According to the representatives of the regulator, in mid-spring 2020 Admiral Markets has dramatically changed the conditions of financial instruments without notifying clients. The formula for assessing the current value of crude oil has changed, while at the same time there were increased commissions for the transfer of positions for the next day (SWAP).

The head of the Estonian Financial Supervision Authority, K. Kessler, said that professional market participants that trade in complex financial instruments and provide services to a wide range of people have to manage and hedge risks, while bearing the relevant costs. It is important for such brokers to be as transparent as possible with traders even before providing services. “Unexpected and uncertain transfer of risks to clients is unacceptable, such actions should be refrained from,” Kessler said.

Note that in the spring of 2020, clients of the OTC forex brokerage, who had firsthand experience with “black swans and Mondays,” had to act urgently to limit trading in oil instruments given the extraordinary volatility and market shocks that the coronavirus crisis led to. After WTI futures crashed below zero on 04/21/20, securities were trading at -$40 a barrel, while Brent dropped 20% to an unprecedented $20 a barrel.

During the oil plummet certain forex brokers stated that the Swap on such contracts increased, based on the difficult situation on the market, and trading was available only at the close. In fact, intermediaries stopped operations with oil instruments.

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