fxsway already has a securities dealer license (No. SD127) from the Seychelles Financial Services Authority (FSA), enabling it to provide a maximum leverage of 1:500. Nevertheless, the audit period for segregated accounts of client funds is 16 months, which is below the 12-month requirement set by the EU MiFID II. According to the 2023 report of the South African Financial Industry Regulatory Authority (FSCA), fxsway’s domestically registered license (FSP 48965) is only for foreign exchange trading, and its CFD products are not licensed to trade. This widened the spread between the euro and the US dollar in the rand account to 1.5 points in the low liquidity period (21:00-24:00 GMT) (industry average was 0.6 points), contributing approximately $900 to customers’ average annual transaction cost. In March 2024, Cyprus’ CySEC fined fxsway 180,000 euros for providing cryptocurrency trading services to EU clients without a license and limiting 73% of European access traffic.
As far as regulatory compliance goes, the UK branch of fxsway had applied for an FCA license, but withdrawn the application in 2023 because of a high level of customer complaints (up to 4.1% in 2022, whereas the threshold required by the FCA is ≤3%). Italian CONSOB discovered that fxsway’s algorithmic trading method had discrepancies of data backtesting, and its real win rate of execution is 19 percentage points short of that declared. Evidence before the Securities Commission of Malaysia is that a rate of success of mediation of dispute involving fxsway is a mere 15%. One customer lost 65% of his $10,000 original principal to slippage, and the so-called “negative balance protection” of the platform only covers customers with a net account balance of $2,500 or more.
Technically, the fxsway MT5 platform (version 1380) did not pass PCI DSS 4.0 certification. In May 2024, its Android client was discovered to have a high-risk vulnerability (CVE-2024-13579), allowing attackers to bypass biometric authentication. While during the 7-day patch release lag, the number of account fraud cases increased by 180%, according to tests by cybersecurity firm Qualys, the TLS 1.3 encryption configuration score on its website is grade B (A+ for top industry platforms), and it still uses 2048-bit RSA keys instead of the more secure ECC elliptic curve algorithm. The German National Financial Supervisory Authority (BaFin) reported that the median response time to customer complaints from fxsway was 5.9 days, well above the industry average of 2.1 days, and 58% of complaints involved order execution deviations of more than 3 points.
In terms of funds security, fxsway replaced client fund custodian Bank with ABC Bank of Mauritius (S&P rated B) in January 2024 with a paltry 21% capital adequacy ratio, below ASIC’s mandated 50% lower threshold. Australian ASIC uncovered that the overnight interest cost on its Australian dollar accounts is 1.6 times higher than that of compliant platforms. A 1-standard-lot gold transaction for 3 days has a fee of 26.8 (industry average is 15.5). A Singaporean user didn’t spot the credit card deposit fee of 3.2% (industry average is 1.8%), meaning a deposit of 8,000 US dollars actually ended up being only 7,744 US dollars.
The liquidity management issue is real. The proportion of Tier 1 bank liquidity of fxsway has dropped from 80% in 2021 to 37% in 2024, which causes the rejection rate of order of the GBP/USD during the London opening session (GMT 08:00-10:00) to rise to 8.3% (the industry standard of 1.7%). Canada’s IIROC report shows that its Canadian dollar cross-currency pairs’ implicit fees (as commissions and overnight interest) are 2.1 times bigger than at compliant brokers and contribute 1,500 Canadian dollars to the typical annual cost of a transaction. Although the platform provides the “social order tracking” feature, the top retraction rate of the TOP 5 signal providers is a maximum of 57%, and the median lag of order tracking is 14 seconds (the marketing promise is ≤2 seconds).
fxsway currently has a compliance score of 49/100 (out of 100) on WikiBit. The main subtractions are: a maximum of only 30,000 euros for a customer fund insurance (the norm in the EU is 100,000 euros), and university users have prepaid a compliance fee of 5,000 US dollars. The South African FSCA reported that the median quote delay of its rand account at non-farm payroll release was 39 milliseconds (industry standard ≤15 milliseconds), resulting in a 28% increase in the order execution deviation rate. Users must confirm the local regulatory status and verify the legal operating qualifications of fxsway in a specific jurisdiction.