Forex firm calls FSCA ‘ignorant’

Locally-based online forex broker JP Markets has accused the Financial Sector Conduct Authority (FSCA) of not understanding “the very sector it aims at regulating”.

This was contained in papers filed in the High Court in Johannesburg in response to the FSCA’s urgent bid to have JP Markets liquidated. The company’s chief executive, Justin Paulsen, said in the papers that JP Markets was “a substantial business”.

“It poses no danger to its clients or to the integrity or stability of the financial sector,” Paulsen assured the court. “It has more than sufficient cash resources to pay out all of its clients forthwith, should they have wished to withdraw all the monies standing to credit in their accounts.”

In the founding papers, Kedibone Dikokwe, who heads up the business supervision division at the FSCA, said JP Markets had been operating in “absolute conflict” with its clients, a claim which Paulsen denied.

“This allegation is incorrect and must be analysed in the context of the respondent’s business model,” he said in response. It was the same business model used by “most” of his peers, he added.

The FCSA said its investigation into JP Markets was in response to a barrage of complaints from clients, mainly that the firm had failed to pay out or that they had suffered losses due to interrupted access to the platform.

This Paulsen took issue with too, saying before JP Markets’ licence was suspended in June, the firm had received “no more than 20 complaints”.

At the heart of the FCSA’s case is its view that JP Markets “structured its dealings in such a manner that it trades with or against its clients, acting as the principal” and was operating outside the ambit of its licence. But Paulsen said in his papers JP Markets’ lawyers had sent FCSA lawyers a list of eight companies operating on the same business model as the firm, under the same licence.

“For reasons best known to the [FCSA], it has chosen to single out [JP Markets] for such treatment, and, in addition, to seek [JP Market’s] winding-up. I respectfully say that in seeking to do so it is abusing its powers.”

– bernadettew@citizen.co.za

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