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Screenshot of a breaking news alert e-mail from Q2 2017
LeapRate Exclusive… LeapRate has learned that social trading platform provider ZuluTrade has decided to withdraw its status as an NFA licensed introducing broker (IB), and exit the US retail forex market.
ZuluTrade has been an NFA member since 2008, when it was one of the early entrants in the social and copy trading space. ZuluTrade’s NFA membership was terminated as of July 14, 2016, as well as its status as a ‘Forex Firm’ and an Introducing Broker.
The decision by ZuluTrade follows charges brought against ZuluTrade by the NFA earlier this year involving minimum net capital, anti-money laundering (AML) and supervision failures. ZuluTrade has settled those charges with the NFA, agreeing to a $30,000 fine. A settlement that small probably means that there wasn’t much to the charges, other than minor administrative issues.
So why did ZuluTrade decide to terminate operations in the US?
LeapRate spoke with ZuluTrade founder and CEO Leon Yohai, who provided LeapRate with the following explanation:
Our revenue from the US market was so small and was declining year over year, while non US revenue was increasing. Our US legal costs this year were higher than the US revenue. And since the NFA could not understand all these years that we are not an IB, we are a platform, we have applied for an exception numerous times and it was ignored. So we took the decision to withdraw our registration with the NFA. Also only FXCM and GAIN had remained in business, so it was just not worth it anymore. The US market for Retail Forex is very small and is not growing, after Dodd Frank plus increasing margin requirements.