Is Sway Markets Safe? -

This article provides an in-depth analysis of Sway Markets’ background, false regulatory claims, leverage risks, spread and commission issues, to help investors better assess the platform’s safety and investment risks.

I. Background of Sway Markets

Sway Markets is a forex broker registered in Australia on November 18, 2022, offering global traders various financial services, including forex, stocks, commodities, futures, and indices. The company is known for its high leverage and wide range of tradable instruments, attracting many speculative traders. However, the platform’s short history and regulatory issues call for caution among investors.
Sway Markets’ official website is https://swaymarkets.com/, and its services are primarily offered in English. While Sway Markets claims not to provide services in countries or regions where doing so would violate local laws or regulations, its unclear regulatory status and potential risks require investors to exercise caution when using the platform.

II. Domain and Registration Information

Sway Markets registers in Australia under the entity Sway Markets Pty Ltd, with an address in MIAMI QLD 4220, Australia, and ABN number 16 663 928 158. Additionally, Sway Markets Pty Ltd serves as an authorized representative of Pulse Markets Pty Ltd, which holds ABN number 91 665 910 538. The CAR license number for Sway Markets Pty Ltd is 001300469. The company states that it does not offer over-the-counter (OTC) derivatives or act as a market maker or principal in such products.

Interestingly, Sway Markets also registered a company with the same name in Saint Vincent and the Grenadines on February 8, 2023, with registration number 1661 and an address at Euro House, Richmond Hill Road, Kingstown, P.O. Box 2897. This indicates that Sway Markets has multiple registered entities in different regions, but these registrations fail to address its regulatory concerns effectively.

III. False Regulatory Claims

Although Sway Markets claims to comply with local regulations and lists its registration information in Australia and Saint Vincent and the Grenadines, the platform is not subject to any strict financial regulation.

In Australia, Sway Markets acts as an authorized representative of Pulse Markets Pty Ltd, but this does not grant full regulation by the Australian Securities and Investments Commission (ASIC). It is only authorized to offer financial services to wholesale clients, leaving retail investors without protection under this authorization, and ASIC does not directly oversee the platform’s financial products.

More concerning is that Sway Markets’ registration in Saint Vincent and the Grenadines offers no real protection for forex trading. The Financial Services Authority (FSRA) of Saint Vincent and the Grenadines clearly states that it does not regulate forex trading or brokerage services, leaving Sway Markets’ operations in this region effectively unregulated. This lack of legitimate oversight across multiple jurisdictions poses significant risks to investors’ funds.

IV. Risks of High Leverage

Sway Markets offers leverage of up to 1:500 for all its trading accounts. While such high leverage provides traders with the potential for amplified profits, it significantly increases the risks, especially in volatile markets.

Leverage in financial markets is a “double-edged sword.” When the market moves in the trader’s favor, leverage can result in huge profits. However, in the case of adverse market movements, high leverage will magnify losses. According to market statistics, high leverage is one of the leading causes of losses among forex traders. Without proper risk management, many traders can quickly suffer margin calls and account wipeouts due to leverage.

In most regulated markets worldwide, leverage limits are strictly imposed to protect retail traders. For example, the European Securities and Markets Authority (ESMA) limits retail forex leverage to 1:30, while the Australian Securities and Investments Commission (ASIC) sets a limit of 1:30 to 1:50. In contrast, Sway Markets’ 1:500 leverage far exceeds the safety standards in international markets, so traders must remain vigilant about the risks.

V. Doubts About Spreads and Commissions

Sway Markets offers four different account types: VIP Account, ECN Account, NO COMMISSION Account, and ISLAMIC Account. All accounts offer leverage up to 1:500 with different spreads and commission structures:

VIP Account: Spreads starting from 0.0 pips, minimum deposit of $100,000, and commissions starting from $3.5 per lot.
ECN Account: Spreads starting from 0.0 pips, with commissions from $7 per lot.
NO COMMISSION Account: Spreads starting from 1.2 pips, with no commission charges.
ISLAMIC Account: Spreads starting from 0.0 pips, commissions from $7 per lot, with no overnight interest charges.

On the surface, the 0.0 pip spread and high commissions for VIP and ECN accounts seem to offer good conditions for high-net-worth traders. However, the NO COMMISSION account, despite having no commission, has spreads starting at 1.2 pips, which results in higher trading costs. Although zero commissions may seem appealing, the wider spreads translate to hidden costs, especially for frequent traders.

Additionally, the 0.0 pip spread may come with its own risks. Such ultra-low spreads typically cater to professional or high-risk tolerance traders, and average traders may struggle to benefit fully from them, often encountering higher trading costs from market volatility or slippage.Investors should carefully weigh the relationship between spreads and commissions and consider their actual trading needs when selecting an account.

VI. Regulatory Leverage Standards in Financial Markets

As mentioned earlier, most well-regulated financial markets impose clear limits on leverage ratios, such as:

Europe (ESMA): Leverage limit of 1:30
Australia (ASIC): Leverage limit of 1:30 to 1:50
United States (CFTC/NFA): Leverage limit of 1:50

These restrictions aim to protect retail traders from the significant risks posed by high leverage. In highly volatile markets, appropriate leverage ratios help traders manage risk and avoid quickly depleting their account funds due to market fluctuations. In contrast, Sway Markets’ 1:500 leverage significantly exceeds the safety standards set by most international regulators, requiring investors to be extra cautious.

VII.

In conclusion, although Sway Markets is an emerging forex broker that offers a wide range of trading products and multiple account options, its lack of transparent regulatory oversight, the potential risks of high leverage, and hidden costs in its spread and commission structure are all factors that investors should carefully consider. The platform’s misleading regulatory claims and high-risk trading conditions make it a less secure and reliable investment choice. Investors should exercise caution when considering Sway Markets, particularly due to the lack of clear platform compliance and fund safety guarantees.

FAQ

Is Sway Markets strictly regulated?
Although Sway Markets is registered in Australia and Saint Vincent and the Grenadines, its regulatory information is unclear, and the platform is not subject to strict financial regulation.
What leverage does Sway Markets offer?
Sway Markets offers leverage of up to 1:500, which far exceeds the safe leverage levels in most regulated markets worldwide.
Does a 0.0 pip spread mean lower trading costs?
Although a 0.0 pip spread appears favorable, actual trading costs may still come from commissions or other hidden fees. Investors should thoroughly assess the overall trading conditions.
What are the risks of Sway Markets’ zero-commission account?
Zero-commission accounts often come with wider spreads, meaning actual trading costs may be higher, especially for frequent traders.
Is Sway Markets suitable for beginner traders?
The platform’s high leverage and complex spread structure create significant risks, making it unsuitable for beginner traders.
How can I assess the safety of Sway Markets?
Investors should verify the platform’s legitimate regulatory status and avoid trading with platforms that have unclear or non-existent regulatory oversight.