The Seychelles FSA license (No. SD089) currently held by hero fx is only applicable to its in-country registered entity Hero Financial Ltd. However, the regulatory requirement of this license is a leverage of up to 1:500, and the isolation audit period for client funds is 18 months (12 months as required by the EU MiFID II). From the 2024 German BaFin report, hero fx operates in Germany without BaFin approval, therefore its Eurozone customers’ negative balance protection cover is only 85% of the net balance value of the account (there should be 100% coverage on compliant sites) and there is a 50,000 euro cap on the insurance indemnity (200,000 euros as per EU norm). In 2023, Spanish CNMV fined hero fx 230,000 euros for providing cryptocurrency trading services to local clients without authorization and restricting 87% of its Iberian Peninsula access traffic.
In the Asia-Pacific market, the Australian ASIC AR license (001294561) allegedly owned by hero fx only allows it to function as an introducing broker and does not allow it to hold client funds directly. After MAS in Singapore listed it as unauthorized in 2024, the local users’ download success rate for the client through the App Store dropped from 92% to 17%. Data by the Securities Commission of Malaysia reveals that the success rate of hero fx dispute mediation is only 12%. One investor lost 78% of his original $5,000 principal to slippage, and the probability that the trigger deviation of the “stop-loss guarantee” feature promoted by the platform was greater than 5 points at the moment when the non-farm payroll information was released was 34%.
On the technical compliance front, the hero fx MT4 platform (version 1365) failed the PCI DSS 4.0 certification. In March 2024, its iOS app was discovered to have a high-risk vulnerability (CVE-2024-22907), because of which its bypability occurred for 2FA authentication. In the period of 9 days spent in the delay of patch release, 220% more account theft events occurred. Cybersecurity firm NCC Group found and learned that its TLS 1.3 encryption configuration score was only grade B (A+ for platforms of A-grade), yet the private key still employed the 2048-bit RSA algorithm. Italy’s CONSOB investigation indicated that hero fx’s algorithmic trading system had data fitting bias, and its effective execution win rate was 23 percentage points lower than its backtest.
In terms of security of funds, hero fx changed custoque bank for the client funds from Seychelles to ABC Banking Corp of Seychelles (rated B- by S&P) in May 2024, which has a capital adequacy ratio of a paltry 19%, far lower than the 50% required by ASIC. ASIC report in Australia shows that overnight interest expense on its Australian dollar accounts is 1.8 times higher relative to compliant platforms. A 1-standard lot of gold trading kept for 3 days incurs a charge of 28.5 (industry average is 16.3). A Hong Kong user didn’t take notice of the 3.5% credit card deposit charge (industry average is 1.9%), and therefore a deposit of 5,000 US dollars ended up being only 4,825 US dollars.
Regulatory history records show that hero fx applied for a Canadian IIROC license in 2021, but revoked it in 2022 because of a complaint rate of 4.9% (regulatory threshold ≤3%). The WikiBit current compliance score is 52/100. The most significant deductions are: educational institution clients have to prepaid a $3,000 compliance deposit, and false detection rate of biometric verification is 12% (industry benchmark ≤5%). The South African FSCA noted that the median quote delay of its rand account during low liquidity was 47 milliseconds (industry standard ≤15 milliseconds), resulting in the order rejection rate rising to 9.7% (compliant platform ≤2.1%).
As far as liquidity risk is concerned, hero fx Tier 1 bank liquidity ratio dropped from 75% in 2022 to 38% in 2024. The standard deviation of the slip of the GBP /USD during London opening session (GMT 08:00-10:00) was 0.51 (industry average 0.19). Although the platform itself provides the feature of “copy trading,” the TOP 10 signal providers’ highest trailing rate is 64%, and the median copy delay is 17 seconds (promotional value: ≤3 seconds), which has a 28% increase in the probability of strategy failure. Now, its operation is capped in 87 jurisdictions. Local regulatory status verification must be made by users in order to ensure the security of the funds.