Veracity Markets suspension update

Veracity Markets as of the 1st of July has been ordered to cease all trading activities by the FSCA. The South African broker with over 400000 clients is currently under investigation by the Financial Sector Conduct Authority due to Veracity Markets not adhering to certification regulations.

For the duration of the investigation Veracity has been authorized to only give out withdrawals for its current clients who were still holding money within their accounts. The broker is no longer allowed to take in deposits or allow any opening of trading positions for their clients until these the investigation by the FSCA concludes.

The FSCA issued the suspension as their investigations revealed that Veracity Markets was conducting OTC (over the counter) derivatives which were unauthorized and they believe that the broker also breached a number of other financial laws in place. This suspension comes down from the FSCAs attempt to effectively regulate the local forex industry. The investigation featured 16 online brokers with Veracity Markets being the first to be have their business activities ceased.

Although Veracity Markets has been operating under the Nirvesh Financial Services jurisdiction as a category one financial services provider license, the broker did not have an ODP license, which is required when a South African broker offers CFD products.

Contracts for difference (CFDs) refers to a derivative type of product where the trader is able to benefit or lose from price movements of a chosen/offered assets without actually owning the assets. For many years CFDs where not regulated in South Africa until 2018 when the FSCA was founded. South African brokers were given till June 2019 to obtain the ODP license, but Veracity Markets did not obtain this necessary license hence their current suspension.

In a released statement by Brandon Topham, the FSCA divisional head of enforcement, he warned traders to check if the brokers they used are registered to provide “ financial advisory and intermediary services” as well as the category they are registered under, as some financial service providers are only registered as basic advisory services, as did Veracity Markets.

Under the suspension the broker has been ordered to

· Cease all actions as a OTC derivatives provider, this includes marketing them self as a OTC derivatives provider until they have been approved by the FSCA

· Cease all OTC business activities in the present and foreseeable future until the FSCA says otherwise after the investigation is finished

· Close all OTC open positions by clients effectively immediately from the 1st of July

· Pay out withdrawals as requested by clients within 7 business days

Tapham confirm that Veracity Markets has been cooperating with the investigation. He added that the broker did reach the satisfactory levels of solvency allowing them to honor the current positions of their clients, hence the ability for Veracity Markets current clients being able to withdraw their funds safely.