Information for customers of AFX Markets Limited

On 27 August 2019, the High Court of Justice of England and Wales appointed special administrators to AFX Markets Limited following an application for a special administration order made by the FCA.

AFX Markets Limited (AFX Markets) is a UK registered company that has been authorised by us since May 2012. AFX Markets acted as broker for customers trading on its online trading platforms (ww.afxgroup.com and www.stofs.co.uk), principally in foreign exchange and contracts for difference products. According to figures provided by the firm to the us, it has approximately 1,200 customers and is responsible for the safekeeping of approximately £7.5m of client money.

AFX Markets acted as an intermediary and trades placed were contractually executed by AFX Capital Markets Limited (AFX Capital). One consequence of this is that the majority of client money, in the form of margin to secure open positions or to cover obligations, was held with AFX Capital. AFX Capital is AFX Markets’ parent and is based in Cyprus – its license with Cyprus Securities and Exchange Commission (CySEC), the Cypriot regulator, has been suspended since 19 July 2019.  

On 31 July 2019, as a result of concerns over AFX Markets’ financial position and its arrangements for safeguarding monies held on behalf of its clients, we required AFX Markets to cease conducting any regulated activities, except solely for the purpose of closing trading positions, and freezing all its assets.  

Subsequently, we made an application to the High Court to appoint special administrators under the Investment Bank Special Administration Regulations 2011. The application was made to protect the interests of the customers of AFX Markets by ensuring that a responsible official with lawful authority is appointed to take control of the affairs of the company. The special administrators will attempt to reconcile and distribute the client monies as quickly as practicable.

The special administration order was made by the High Court on 27 August 2019, appointing insolvency practitioners from CG Recovery Limited (CG Recovery) (which also trades as CG&Co) as special administrators of AFX Markets.

For further information on the special administration of AFX Markets, please email [email protected].

What is the Special Administration Regime (SAR)?

The SAR, introduced by the government in 2011, helps sort out situations where investment firms, which hold clients’ money and/or safeguard assets under our CASS rules, fail. The SAR process has a number of objectives, but one of these is to ensure clients’ money and assets are returned to customers as soon as is reasonably practicable.

Why did the FCA make an application for the special administration of AFX Markets?

We made this application because we considered that AFX Markets was either unable to pay its debts or would likely to become unable to pay its debts; and on the basis that it was fair for AFX Markets to be put into special administration in order to protect client money and facilitate the return of client money as soon as reasonably practicable.

Why did the High Court make the special administration order?

The special administration application was heard in court on Tuesday 27 August and was supported by witness statements and other documents compiled by us. Having considered the evidence of AFX Markets’ potential insolvency and the evidence related to fairness, the court granted the order appointing officers from CG Recovery as special administrators.

Who are the special administrators?

Jonathan Avery-Gee and Daniel Richardson from CG Recovery have been appointed as the joint Special Administrators. They can be contacted by email: [email protected] or by phone: 0330 995 1241.  

We will provide links to the AFX Markets websites and the CG Recovery website once these have been updated.

Is there any client money missing?

Client money will have arisen over time in the form of margin to secure open positions or to cover obligations. The special administrators will assess the client money position of AFX Markets as part of their work. Once the special administrators have carried out this assessment, whether there is any client money missing will become clearer. Trades placed are ultimately executed by AFX Capital and because of this the majority of client money is held with this company in Cyprus. The initial view in the early stages is that there is likely to be a deficit in the client money.

Will I get my money back?

The special administrators will return as much client money to clients as possible, as quickly as possible.

Do I have to pay to get my money back?

There are costs associated with distributing client money back to clients, including the special administrators’ fees.  Under the legislation, these costs will be deducted from the client money. Please see below regarding Financial Services Compensation Scheme (FSCS) coverage for these costs. 

What is the FSCS and will they cover any losses?

The FSCS protects consumers when financial services firms fail. It is the compensation scheme for customers of UK authorised financial services firms. It has eligibility criteria both in respect of the people and businesses who are covered.

The FSCS will cover client money shortfalls, including the costs associated with their distribution back to clients, for eligible clients up to £85,000.

The Special Administrators will work with the FSCS to determine the position and will provide further updates. 

Further information about the FSCS

How many customers are affected?

According to figures provided by the firm to us, AFX Markets has approximately 1,200 customers. Most of these are owed a return of client money. 

Who should I contact to find out more?

You should contact the special administrators to understand more about how this situation might affect you personally. They can be contacted by email: [email protected] or by phone:  0330 995 1241. We will provide links to the AFX Markets websites and the CG Recovery website once these have been updated.

Do I need to use a claims management company?

You should proceed with caution if you are approached by a claims management company (CMC).

For the majority of clients, there is no benefit in involving a third party in reclaiming your client money. 

If you use a CMC to assist in the return of your client money, the CMC is likely to seek a fee which may reduce what you get back.

If you are considering using a CMC to assist with the return of your client money, we suggest that before you decide to proceed with this route you first discuss this with the Special Administrators using the contact details provided on their website.

What should I do if I am contacted from someone claiming to be from AFX Markets or CG Recovery Limited?

All customers should remain alert to the possibility of fraud. If you are cold called by someone claiming to be from AFX Markets or CG Recovery please end the call and call them back using the number above. 

Is the FCA overseeing the administration?

AFX Markets is still authorised by us and remains subject to supervisory oversight and our rules. The Special Administrators are officers of the Court and need to comply with all insolvency law. The individuals appointed are authorised to act as licensed insolvency practitioners by the Institute of Chartered Accountants in England & Wales (ICAEW) or the Insolvency Practitioners Association (IPA). We are liaising closely with the Special Administrators.