Belgium’s FSMA Cautions against Trading Software Firms

Belgium’s financial market regulator, the Financial Services and Markets Authority (FSMA), issued a warning against Finiko, a company offering Expert Advisors, and also cautioned against the industry of such trading software as a whole on Tuesday.

Expert Advisors, or popularly known as EAs, are scripts and software that are used to automate the trading of the forex, CFDs and other derivatives. These trading parameters are pre-programmed, and rookie traders only need to run them on trading terminals to initiate trading with minimum or no manual intervention.

The regulatory warning came as Belgium prohibits the retail sale and distribution of the over-the-counter forex instruments, CFDs and crypto derivatives. It is one of the very few modern economies that has imposed such a ban.

“These [trading software] companies do not have [the] authorization to offer financial services and products in Belgium,” the FSMA stated.

Pyramid Schemes

According to the Belgian watchdog, these trading software companies operate in a pyramid structure and incentivize users to introduce new members. “In exchange, they receive compensation in the form of a commission or discount on the price of the software package,” it added.

Additionally, the regulatory warning elaborated that these trading software businesses usually target young and inexperienced traders promising a luxurious lifestyle.

“The message is that everyone can afford a luxurious lifestyle provided they bring in enough new members and make the appropriate investment in the software being promoted,” the FSMA added.

The Belgian regulator always remained vigilant against financial frauds and unregulated financial markets. In September last year, the regulator reiterated its warning against the selling and trading of the banned leveraged financial products.

Moreover, it maintains a list of flagged platforms that include the names of derivatives platforms, crypto exchanges, boiler room scams and many more. Furthermore, last year the regulator raised alarms against the rising number of recovery room scams in the country.