On MT4/5, regulatory information can now be directly accessed, which is undoubtedly good news for traders, offering them a reliable channel to check when selecting a platform. However, for media organizations that rely on providing regulatory information, this is a significant bombshell capable of overturning their current business models.
Forex Industry Chain
Since the inception of the forex industry, MetaQuotes has been a pillar company, sustaining countless upstream and downstream businesses through its ecosystem. A broker of even modest size can hardly bypass MetaQuotes (of course, this excludes giant brokers with their own R&D capabilities, such as Saxo Bank and its proprietary software SaxoTraderGO).
At its peak, MetaQuotes occupied at least 90% of the forex trading software market. Yet, due to the recent App Store delisting controversies and MetaQuotes' increasingly strict KYC policies, some of its market share has slowly been taken by other software providers (such as cTrader, MatchTrader, etc.). Nonetheless, MetaQuotes remains unquestionably the leading company in the forex industry.
The Birth of Regulatory Inquiry Media
The forex industry has always been open to newcomers, but in recent years, the term "forex" has been tarnished by some criminal elements. They operate under the guise of "forex," but their activities have little to do with actual forex trading. This is largely because "forex margin trading" is an over-the-counter (OTC) model, whose opacity and susceptibility to manipulation have been exploited for illegal activities, resulting in a mixed market where traders cannot distinguish between reliable platforms and fraudulent ones.
It is worth mentioning (forex margin trading has never been legalized in China, anyone claiming to offer legal forex trading within the country is committing fraud).
In such an environment, some media have stepped forward, offering regulatory inquiry services to help traders differentiate the legitimacy of a platform. To some extent, this functionality is quite useful. Any somewhat significant company will want to flaunt a few highly recognized licenses for promotion, such as the UK's FCA, US's NFA, Australia's ASIC, etc. (referring to licenses that genuinely permit retail forex trading, not those company registration licenses or AR licenses masquerading as regulation).
Regulatory inquiry media indeed help traders screen for relatively reliable brokers, as obtaining a high-profile forex license costs millions, indicating a certain degree of strength and lower risk of absconding compared to brokers without licenses.
However, it must be reiterated that forex trading is not open in China, and even if these companies hold FCA or ASIC licenses, they cannot guarantee the interests of domestic investors. Platforms intending to abscond will still do so.
The Impact of MetaQuotes' New Feature on Regulatory Inquiry Media
As private institutions, media organizations need to sustain themselves. In any industry, apart from promoting their own brand reputation, interacting with the media for more exposure or favorable reviews is essential. With increasing credibility, more brokers are spending money on regulatory inquiry media to buy positive reviews, which sales reps proudly display during marketing to acquire customers.
However, brokers with significant regulatory licenses are in the minority. How can the media earn from those brokers with poorer qualifications? Some so-called forex licenses without regulatory functions have become the preferred choice for these lower-quality platforms, such as a few years ago with Canada's Fintrac MSB, US's Fincen MsB, Australia's ASIC AR license, and even going as far as using NFA's non-member registration for regulatory advertising.
Experienced traders in the forex industry might deeply relate to this, with the combination of ASIC AR, Canadian MSB, and US NFA licenses being quite common a couple of years ago, even becoming a standard set for scam companies.
The Ins and Outs of Regulatory Licenses
The cost of processing these licenses is also extremely cheap. Taking ASIC as an example, the cheapest Australian AR license could go as low as $4,000 on the market, with only a few thousand dollars in monthly fees required for application. The conditions for application are also minimal, needing only a company name, with the licensing agent taking care of the rest.
The Canadian MSB is even more common, with no monthly fees; it used to cost only $2,000 to obtain. However, due to recent actions by Canadian Fintrac officials recognizing that many illegal enterprises have been utilizing Fintrac MSB for unlawful promotional activities, the application requirements have been relatively increased.
Regulatory inquiry media precisely exploit the general investors' lack of knowledge about these nuances, charging low-quality platforms advertising fees and endorsing them. "Regulatory searchable" + "media endorsement" thus becomes the standard marketing package for these illegal platforms.
The Longer-term Effects of MetaQuotes' Move
As mentioned earlier, regulatory inquiry media have become well-known precisely because they offer a tool that’s difficult for the average investor to access or understand due to language barriers. However, MetaQuotes' move allows traders to directly check the regulatory compliance of their brokers on the MT software, without having to go through third-party websites.
This is equivalent to MetaQuotes directly integrating the core function of regulatory inquiry media into the MT4/5 software. With the authority of MetaQuotes much higher than that of any third-party media, this move essentially overturns the tables of countless regulatory inquiry media. Could media ever be more authoritative than MetaQuotes?
It is believed that as more traders become familiar with MetaQuotes' inquiry function, most unscrupulous platforms will gradually be eliminated. After all, the regulatory information provided by MetaQuotes is not something that low-quality traders can alter with just money.
The Regulatory Inquiry Process on MT5
Some users might still be unclear about how to check regulatory information on MT5, so let us introduce the process:
1. Open MT5, select “Manage Accounts”, then click the "+" icon in the top right corner to enter the broker search interface
2. Enter the name of the broker you wish to inquire about in the search bar
3. Click the exclamation mark behind the broker’s name to open their info and see if the broker is regulated and in which country they are regulated.
TraderKnows wishes for a healthier market and prioritizes the safety of investors’ funds above all.
