Regulations and Licenses
JFD Brokers is committed to keeping its Clients’ money safe and operates under strict European regulations.
JFD Brokers is authorised and regulated as a Matched Principal Broker (i.e. 100% Agency Model), which may not hold any proprietary positions, has no exposure, and is therefore only acting as an intermediary between its Clients, Liquidity Providers and major Exchanges. In other words, we have no rights to hold a “B Book” (i.e. Make the Market), hence have no conflict with our clients and are in business to protect their interests.
JFD Brokers Ltd. is a Limassol-headquartered financial services company authorised and regulated to conduct Portfolio Management and Agency Only execution activities by CySEC in Cyprus (License number: 150/11), is registered with Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) in Germany (Registration number: 126399), and the FCA in the UK (Registration number: 580193), the ACPR - French Autorite de Controle Prudentiel et de Résolution Banque de France (Registration number 74013), is a Member of ICF (the Investor Compensation Fund), and is MiFID compliant in Europe under the Investment Services and Regulated Market Law of 2007 (Law No. 144(I)/2007).
Under MiFID, JFD Brokers can offer authorised and regulated cross-border services to all Member States, including to the following jurisdictions: Austria, Belgium, Bulgaria, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lichtenstein, Lithuania, Luxembourg, Malta, Norway, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, the Netherlands, the United Kingdom.
Our annual financial reports are audited by a leading Cypriot financial auditor, and our regulatory status gives our clients assurance that we will never take the opposite side of their trades, that any funds held with us are secure and that our resources are adequately managed at all times.
Our authorisations include the following services and activities:
- Reception and transmission of orders in relation to one or more financial instruments
- Execution of orders on behalf of clients
- Portfolio management
We are also allowed to offer the following ancillary services:
- Safekeeping and administration of financial instruments for the accounts of clients, including custodianship and related services such as cash/collateral management
- Granting credits or loans to an investor to allow him to carry out a transaction in one or more financial instruments, where the firm granting the credit or loan is involved in the transaction
- Foreign exchange services where these are connected to the provision of investment services
- Investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments
100% DMA/STP Agency Model
Unlike Market Makers (including those promoting Non-Dealing-Desks - NDD, Straight Trough Processing - STP, or Electronic Currency Network - ECN models) JFD Brokers does NOT run any dedicated dealing desks to constantly monitor its financial position and set appropriate risk limits.
In effect, any Broker claiming an STP/NDD/DMA/PRO offering, may nevertheless “Make the Market” even if only partially (i.e. STP 50% of clients’ orders and make the market on the other 50%). In theory, there is nothing wrong with this configuration as long as the Broker runs an ethical business. In practice, Regulators such as the NFA and the FCA have both demonstrated condemnable practices conducted against clients’ interests by brokers claiming STP/NDD operations. The temptations to manipulate pricing and execution to the sole interest of the broker’s bottom line remain systematic.
Full or partial Market Making Brokers are systematically exposed to risk, as if a larger proportion of their clients are in profit, they may not be able to meet their financial obligation to pay all clients which may possibly lead them to bankruptcy. This is precisely why Regulators do systematically require Market Makers for high capital requirement and greater control in order to cover the risks inherent to such business models. This is also why Regulators are constantly monitoring retail clients’ interests against all possible deviations such as stop hunting, price manipulation or execution manipulations operated by Market Makers.
We at JFD refuse to operate under such terms.
It is important to note that unlike the vast majority of Retail CFDs and FX Brokers, JFD Brokers deliberately chose NOT to be authorised to conduct the following activity: “dealing on own account”. The activity of “dealing on own account” authorises Retail Brokers to Make the Market by taking the opposite side of their clients’ trades, hence creating a systematic conflict of interest.
Both CySEC and FCA Registers present the different levels of license/permissions held by Retail Brokers.
As an example, all of the companies listed hereby offer ECN Accounts, or PRO Accounts, yet have the permission to Make the Market in order to generate profits on client losses: Alpari FS, Alpari (UK), Etoro, Easy Forex, FXPRO, FX Sol (company of City Index), FXCM Securities Limited, ODL Securities, FXDD Malta Limited, Tadawul (now Liquid Markets), Windsor Brokers, etc.
100% MiFID Compliant Post-Trade Transparency
Every single one of our Clients’ orders are systematically Straight Through Processed to our Liquidity Providers on a "Fill or Fill" basis (i.e. no requotes) with both positive and negative Slippage enabled (i.e. no broker intervention). We pride ourselves for being able to provide upon Clients’ requests all relevant Post-Trade Execution Reports presenting Execution Times (often averaging sub 2 milliseconds) and naming which Liquidity Providers filled our Clients’ orders.
Segregation of Clients Funds
All client funds, without any exceptions, are fully segregated into a special client account and kept separate from JFD Brokers’ company funds. Segregation ensures that client funds will not be used to pay back creditors in the unlikely event of JFD Brokers’ default or insolvency. All funds, whether they are classified as company funds or client funds, are kept without any exceptions in world class financial European and Middle Eastern institutions, amongst the safest in their category.
Investor Compensation Fund (ICF)
Our clients may be eligible to put a claim into the Investor Compensation Fund (ICF) in the event JFD Brokers is unable to meet its financial obligations. Eligibility depends on the status and the nature of the claim.
Custom Risk Management – Airbag and Lower Leverage Setup
JFD Brokers’ automated risk management system, also called the Airbag, coupled with lower leveraged client trading accounts is designed to reduce the risk of your trading account being depleted to zero or turning negative. This is especially useful to prevent negative impacts generated by weekend Market Gaps.
Supervision by the Regulators
The Cyprus Securities and Exchange Commission (CySEC), a mature world-class regulator, has long-term experience in the CFDs and Forex industry, allows passporting to other European territories’ jurisdictions and is viewed as a leading regulatory authority in Europe.
All firms regulated by CySEC have to meet strict financial standards, including capital adequacy requirements. Companies are required to submit financial reports to the regulator on a regular basis and CySEC has the right to fine companies and/or terminate a company’s regulatory status for violations.
CySEC has the following responsibilities:
- To supervise and control the operation of the Stock Exchange and the transactions carried out in the Stock Exchange.
- To supervise and control the issuers of securities listed on the Stock Exchange, the Licensed Investment Services Companies as well as the Collective Investment Schemes.
- To carry out inspections over companies, the securities of which are listed on the Stock Exchange, over brokers and brokerage firms, investment consultants, mutual fund management companies.
- To request and collect information necessary for the exercise of its responsibilities, to demand in writing the provision of information from all natural or legal persons or organisations that are considered to be in a position to provide such information.
- To grant operation licences to investment firms, including investment consultants, brokerage firms and brokers.
- To recall these operation licences for special reasons, as it is more specifically determined in Regulations that are published in accordance with the Law of Establishment of the Cyprus Securities and Exchange Commission.
- To impose administrative sanctions and disciplinary penalties to brokers, brokerage firms, investment consultants as well as to in any other legal or natural person whom fall under the provisions of the Stock Market legislation.
JFD Brokers’ Internal Auditors, External Auditors, Compliance and Legal Teams provide a comprehensive Audit, Special Investigations and Compliance set of solutions (to CySEC, FCA, Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and MiFID). Our duly certified Auditors and experienced Compliance Officers are continuously trained and supported by one of the largest team of experts in the EU to deliver the highest levels of services to our clients.
- Full Audit Services, in accordance with the Home State regulatory bodies' (CySEC, FCA, Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), and MiFID) requirements of JFD Brokers
- Full range of comprehensive Compliance support services (MiFID), by a qualified team of legal experts and professionals
- Q&A MiFID Compliance e-support
- Special investigations and due diligence of processes and procedures by requests of the Board of Directors or the company’s Management Team
- Preparation and documentation of internal procedures and processes in accordance with JFD Brokers’ needs and in accordance with the relevant EU regulatory bodies' requirements
- Preparation of internal audit reports for management and company's Internal Audit Committee
- Systems’ Audit: verification of systems, platforms and computer applications. Assessment of their suitability, efficiency, and the level of controls to ensure valid, reliable, timely, and secure input, processing, and output during their operation, in accordance with the requirements of the regulators
- Independent 'compliance checks necessary to keep internal procedures in full compliance with the fast-changing European regulatory environment
- Monthly and Quarterly Compliance reports
- Compliance for KYC and Anti-Money Laundering procedures
- Q&A Know-Your-Client (KYC)
The new directive MiFID was officially adopted on 30 March 2004 and brought a variety of changes for investment service providers. MiFID was transposed into Cypriot legislation with the New Law 144(I) of 2007 (Law which provides for the Provision of Investment Services, the Exercise of Investment Activities, and the Operation of Regulated Markets).
JFD Brokers’ Auditors and Legal Department pride themselves to be the top experts in this field, works closely with the Financial Services Advisory Team.
Prime Brokerage Model
JFD Brokers’ best execution commitment is tied to the prime brokerage model. This model enables JFD Brokers to offer accurate and ultra-low latency execution on aggregated multibank liquidity, with the added bonus of lower costs (i.e. Core Spreads with a 0.1pip average on the EUR/USD London Session). Our technology coupled with our business model gives us the opportunity to deliver an absolute trading environment to the retail trading community.
Established in Cyprus
In the last few years many brokers have appeared on the CFDs and Forex marketplace operating from Cyprus which offers one of the lowest tax systems (e.g. 10% on taxable profits) in the European Union (Cyprus joined the EU in 2003) along with the local availability of highly skilled yet more affordable professionals. Finally, under CySEC, retail customers benefit from up to EUR 20,000 coverage in case of broker default, a cover provided by the Investor Compensation Fund (ICF) of which JFD Brokers is a member. Lower operational costs and high degrees of client protections is what Cyprus has to offer, and why JFD Brokers established its headquarters there.