E-Forex_UK_April

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He adds: “Of course, there are jurisdictions, world in respect of regulation of retail forex
especially within the EU, where FX brokerage brokerage businesses that are not an integral
is more adequately regulated than others.There element of larger organisations, such as banks.
are jurisdictions in which part of the FX business
is regulated whilst part of the business is not. While in such countries there has been a
Within these regions there are also jurisdictions statutory requirement for compliance under
where this business is regulated as an investment regulatory supervision for anti-money
trading product, and where in others as a laundering purposes since 2004, it is only
transaction leading to delivery of currency. recently that legislation handed down from the
At the same time, given the developments in EU in Brussels has led to stand alone ﬁ rms of
the sector, I have no doubt that we are, today, this sort becoming subject to a new ‘conduct of
on a long and difﬁcult path towards a more business’ style of regulation.
harmonised regulation globally.”
Peter Brown, senior consultant atThe CCL
Pressures for change Partnership, a consultancy and training ﬁ rm
that has been guiding companies throughOn what issues are creating pressure for
FSA compliance for regulation for over 20changing the existing regulatory compliance
years, comments: “In the UK, stand alonerequirements of forex brokerage ﬁ rms within
ﬁrms had to be registered or authorised by theAsia, Alex Duperouzel, managing director of
UK ﬁnancial services regulator, the Financialthe Hong Kong ofﬁce at ComplianceAsia, a
Services Authority (FSA) by 1 Novemberconsultancy ﬁrm that specialises in providing
2009 unless they qualiﬁed for transitionalregulatory and compliance consulting services
arrangements.to ﬁnancial institutions in Asia Paciﬁc,
comments: “For ﬁrms in leveraged forex in
“The terms ‘registered’ and ‘authorised’Asia, the biggest driver is the extent of the
distinguish between two different levels of FSAuntapped marketplace.
supervision; registered ﬁrms operate solely in
the UK and also have lower maximum turnover“Middle class Asian investors are relatively
ﬁ gures, reﬂecting the values of transactions dealt.forex savvy compared to their US and
Authorised ﬁrms have no upper limit on theEuropean counterparts, and there have been
aggregate value of transactions dealt and theya number of new entrants into the retail and
may also choose to rely on the EU law provisionshigh net worth leveraged forex space in Asia
for ‘passporting’ their activities into other EUover the last three years.
countries,” adds Brown.
“Regulators in the region are faced with
Have passport will traveltwo key issues; ﬁrstly removing the less than
optimal and sometimes fraudulent smaller “So far, passporting out of the UK into
players, and ensuring that the current drive other EU countries is seen as simple and
to attract a larger client base is not going straightforward, as it is intended to be. However,
to result in miss-selling or breaches of the there are reports of it being much harder, and in
rules regarding holding client securities,” some cases not yet possible, to passport out of
Duperouzel continues. some other EU jurisdictions,” continues Brown.
“Indeed, some ﬁrms established elsewhere in theEuropean regulation
EU are seriously contemplating establishing UK
It is perceived that ﬁrms in EU member subsidiaries so that authorisation can be gained
countries are set aside from all other jurisdictions. in the UK together with the beneﬁts of relatively
Asian and North American jurisdictions may easy passporting out.
move to follow the EU example, but it is a time
for bedding down the effects of the new EU “As a general rule, the home state regulator’s
legislation and seeing how well it actually works. responsibilities will prevail although, in matters
For the FSA in the UK, there are many issues such as anti-money laundering compliance,
currently unresolved, but expected to be resolved obligations born of local statutes are likely to
over time. Europe, as represented by the 27 EU prevail. In jurisdictions other than the EU
member countries, is perceived as leading the member countries, local law, regulation and
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