Regulatory Compliance Case Study

AvaTrade

AvaTrade is a foreign exchange (Forex) and contracts for difference (CFD) broker located in Dublin,
Ireland. The company offers trading in numerous markets including currencies, commodities, stock
indices, stocks, exchange-traded funds, options, cryptocurrencies and bonds through its trading
platforms and mobile app.

History

AvaTrade was founded as Ava FX in 2006 by Emanuel Kronitz, Negev Nosatzki and Clal Finance Ltd. In
founding the company, Kronitz and Nosatzki guided AvaGroup, a group of professional financiers
who were aspiring to create a client-oriented Forex broker. In 2013, AvaFX changed its name to
AvaTrade, to reflect the company's expansion beyond forex brokerage services to a wider range of
financial services, including stocks, indices (including Dow Jones Industrial Average and S&P 500),
commodities and bonds. Since 2013, AvaTrade has had over 200,000 client accounts registered in
over 150 countries, executing over 2 million orders per month.

Operations

AvaTrade is headquartered in Dublin, Ireland, with its proprietary company in the British Virgin
Islands, and with offices and sales center in Spain, Tokyo (Japan), Milan (Italy), Paris (France), Sydney
(Australia), Shanghai (China) and Ulaanbaatar (Mongolia).

Regulation

AvaTrade is a company regulated in the European Union by the Central Bank of Ireland, in Australia
by the Australian Securities and Investments Commission (ASIC), in the British Virgin Islands by the
British Virgin Islands Financial Services Commission, in South Africa by the Financial Services Board
(FSB) and in Japan by the Financial Services Agency (FSA), the Financial Futures Association and the
Futures Markets Association. The company offers its services to traders from all countries of the
world with the exception of the United States, Belgium and New Zealand. Its strongest markets are
the European Union, the Middle East and Asia.

Criticism

In May 2016, the British Columbia Securities Commission in Canada has warned against AvaTrade
because the company is not regulated in the province.

In May 2017, the Israel Securities Authority imposed a fine of ILS 150,000 (USD 42,000) on
AvaTrade's subsidiary in this country.

In August 2017, the Financial Services and Markets Authority of Belgium and the broker reached an
agreement to pay €175,000 because AvaTrade has been providing financial services in the country
without meeting all legal requirements.

In April 2018, the Saskatchewan Consumer and Financial Affairs Authority issued a warning against
the company due to operating an unregistered online platform.

AP Review
Review 2022

AVA CAPITAL MARKETS AUSTRALIA PTY LTD (“AVA”)

According to the website URL provided (“https://www.avatrade.com”), we noted that AVA is a forex
trading and broker company. Their Indonesia branch listed by Indonesian Financial Services
Authority (IDOJK) as being unregistered to offer investments in Indonesia – July 2020

As per the UnionPay International Merchant Category Code Manual, this sub merchant falls under
the MCC 6211 Securities – Brokers and Dealers which is fully prohibited.

Review Feb 2023

Few merchants to onboard with us in Singapore previously questioned due to various True hit in
World check on merchant. Merchant continuously following up onboarding with CS team. Recently
they asked us to re-review the Avatrade onboarding with CS Team and highlight business volume we
may get from the business activity.

All are review findings are related to adverse news, fines, and operations without certain licenses in
those jurisdictions.

Avatrade

2021- Malaysia

https://www.sc.com.my/regulation/enforcement/investor-alerts/sc-investor-alerts/investor-alert-
list

2018- Canada

https://www.saskatchewan.ca/government/news-and-media/2018/april/23/cease-trade-order

2020-canada

https://www.wealthprofessional.ca/investments/alternative-investments/asc-fine-offshore-firm-for-
unregistered-trading/325195

2016-Canada

https://www.bcsc.bc.ca/enforcement/early-intervention/investment-caution-list/2016/ava-trade-ltd

2013-HK

https://www.sfc.hk/en/alert-list/1207

https://www.financemagnates.com/forex/regulation/avatrade-fined-141000-by-israeli-regulator/

https://www.thelitigator.ca/2019/09/foreign-online-trading-platforms-pay-steep-fines-to-osc/

https://www.thenationalnews.com/business/2022/09/01/agdm-regulator-fines-five-financial-
institutions-for-breaching-reporting-requirements/

Business activities
Avatrade

AvaTrade specialises in online trading of Forex, and CFDs for commodities, Stocks, ETFs, bonds,
cryptos and indices. The group holds licenses and is regulated in various countries as per websites
and licensed in UAE as well. Ava Trade Middle East Ltd is regulated by the Abu Dhabi Global Markets
(ADGM) Financial Regulatory Services Authority (FRSA) since 2020 in UAE.

Note – I agree that MCC 6211 Securities – Brokers and Dealers which is fully prohibited, and they do
not operate under the recommended MCC of 5399 Miscellaneous General Merchandise. This
prohibition applicable for mainland China but if merchant has legitimate operations without any
adverse finding on case-to-case basis, we may onboard in other activities except mainland China.

Now based on current and previous reviews on Avatrade onboarding issues please make our
compliance conclusion on the merchant. Ultimately its business decision to take risk on such
merchant onboarding as volume suggested by sales might be in millions.

Questions

Is it we have appetite to take risk on such merchants.

Determine the validity of the allegation.

Were there any compliance issues in Avatrade and if it’s there….

Discuss Best Practices from these compliance experiences.

What may have been done differently to prevent the compliance issue, if possible, in the future.

Sources:

https://es.wikipedia.org/wiki/AvaTrade

https://www.avatrade.com/

Refinitiv World Check

Various Security Commissions views as per above provided weblinks.