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Following their announcement of zero-commission stocks to customers in the Asia-Pacific, eToro has been declared unauthorized by the Securities Commission Malaysia. The brokerage remains active and open elsewhere, and is known for its popular copy trading feature.
eToro has officially been added to the Malaysian financial regulator’s list of unauthorized entities. This comes after the firm announced an extension of their commission-free stocks offering to clients in Asia-Pacific. In their announcement, they had seen a 200% increase in Malaysians using the platform for the first time and stated that 11% of their users in the region were from Malaysia.
The statement brought up questions regarding eToro’s legal status with regards to trading in Malaysia. The response from eToro was that they were able to operate as a result of their Australian Securities and Investments Commission (ASIC) license, which enables eToro to operate as one of the most popular forex trading platforms in Australia.
Following eToro’s claim, a representative for the Securities Commission Malaysia confirmed that they are not licensed or registered to carry out any regulated activities in Malaysia. Furthermore, any individual found to be carrying out any unauthorized regulated activity within Malaysia is subject to a RM10 million fine or up to ten years imprisonment. Malaysian security laws also do not protect anyone who deals with unlicensed entities.
As of press time, eToro is listed on the Securities Commission Malaysia website list of unauthorized websites, investment products, companies, and individuals. In their remarks, eToro is noted as carrying out capital market activities without a license and operating without authorization from the SC.
As at the time that this announcement was made, eToro was working towards zero-commission stock offerings for clients in the Asia-Pacific. The goal of this was to reduce entry costs for smaller investors and allow for the purchasing of fractions of shares from as little as $50. This included stocks traded on Nasdaq and NYSE exchanges with a goal towards creating a more inclusive financial ecosystem.
This approach to inclusivity appears to be paying off as eToro recently recorded 13 million users worldwide. There has also been a 427% increase in primary deposits in the first quarter of 2020 compared to last year.
This is not the only major move they have made in recent times as in March 2019, eToro acquired Firmo. The company in question deals with the creation of smart contracts. The idea behind the acquisition is to enable the tokenization of all assets on the eToro platform.
eToro is widely considered a very innovative platform at the forefront of fintech and investing. One of eToro’s most popular features is the ‘Copytrader’, which allows users to automatically copy the investment decisions of top traders on the platform. With this new development, however, their future in the Asia-Pacific could be at risk.
Do you think eToro being added to the unauthorized entities list will harm them in the long-run? Will zero-commission trades drive engagement? Let us know your thoughts below.