MyForexFunds without access to accounts and with regulatory problems

MyForexFunds (MFF), one of the most popular prop-trading companies, has been virtually banned by the Canadian financial regulator. Thus, all traders cooperating with MFF lost access to their accounts, allocated funds and ongoing investment challenges. What actually happened?

What are proptrading companies?

Proprietary Trading (Proprietary Trading) is a model of cooperation between a company and a trader. The company provides traders with the necessary tools, such as access to the entire infrastructure (e.g. platform, additional indicators, futures quotes), education and, above all, financial resources. In return, the trader trades on the proptrading company's account, and the generated profit is divided in agreed proportions between both parties.

The condition for establishing cooperation is usually passing a selection in the form of the so-called investment challenge, during which the trader must prove his skills. It usually takes place on a demo account, and the trading conditions, risk and profit criteria are precisely determined by the trading company. There is a fee to participate in the challenge, although this fee is often refunded if the trader achieves a positive result.

Sam proptrading in many countries this is the so-called Gray area, i.e. activities not regulated by financial supervision authorities. Often, regulations are circumvented in such a way as to avoid being subject to any regulations. The greatest doubts concern possible settlements between both parties and the issues "management" company's capital, without having an investment advisor's license.

MyForexFunds without access to funds

MyForexFunds (MFF) is one of the largest and most popular prop-trading companies. The Canadian company's domain was visited by over 5 million users in July (for comparison, the website XTB.com slightly over 6 million visitors in the same period).

On Friday, September 1, the MyForexFunds website was practically disabled and until now there is only one message available on it, which reads:

Yesterday we learned that, without notice or discussion, the provincial securities regulator in Canada and the commodities regulator in the United States had issued orders preventing us from trading securities or accessing funds in our bank accounts.

Until the freeze orders are lifted or modified, our business will also be effectively, and at least temporarily, frozen.

We will be contacting regulators to discuss their concerns, and the first court hearing to determine whether the freeze orders should be lifted or modified is currently scheduled for September 11 in the US, with another hearing in Canada later that week.

We hope this issue will be resolved as quickly as possible and will update this message as events occur.

Many theories have appeared on the Internet about possible allegations that could have been made against MFF by the above-mentioned regulators. One of them is the manipulation of quotes to the detriment of traders so that they do not pass the selection stage -> we mentioned earlier that the challenges take place on demo accounts belonging to proptrading companies, and participation in the challenge is paid, i.e. it is the pure profit of the proptrading company.

Other suspicions concern issues related to traders' de facto management of funds belonging to a company (third party?), where traders usually do not have any rights and are often not employed as employees of these companies. With such a huge scale of operations as the MFF, conflicts and misunderstandings with traders from all over the world are practically inevitable, and this could contribute to possible, precise documentation of the entire process.

What actually happened? Perhaps we will find out in a week, after the first trial in the USA.