MARKET WATCH
markets, putting the retail investor community in the country firmly in the spotlight. If anything, it really highlighted the huge appetite for investing
and trading in China,
whilst at the same time showing that there is room for improvement in education and protection. No one wishes to see a repeat of the losses incurred by many retail investors during this stock market crash and much of it was down to lack of education, e m p l oy ing excessive leverage and over-trading. Some of the challenges we face as retail brokers is to ensure that the products and services we offer are appropriate for clients, that they understand these products and their risks and we are also duty bound to protect them as much as we can. Increased regulation is welcome, however there can come a point when too much regulation is neither in the interest of the broker nor the investor.
Over the past couple of years, the
regulatory landscape is shifting for retail CFD and FX brokers. You can say the shift commenced 2 Source: UK’s Financial Conduct Authority
as far back as 2010 when Japan’s regulator limited leverage to 50 times and then 25 times the collateral. Now there is clear coordination amongst European regulators in acting together which is another good thing to help to protect investors more
FX
to spend more on marketing to attract new customers, whilst at the same time new firms coming to market should stand by utmost transparency and act as though they are regulated.
The 2015 stock market rout highlighted the huge appetite for investing and trading in China
and even those regulators, that in the past have been considered a little more lax in their regulatory standards, are tightening their rules and application processes. It is important to weed out unscrupulous
those that are not seeking regulatory
authorisations
brokers. Usually tend
to operate with lower costs than regulated firms and thus are able
Binary option brokers are rightly b e ing c lam p e d down upon even more so than CFD and FX brokers as a whole. As in the words of the UK’s F i n a n c ia l Co nd uc t Au t ho r it y ( F C A ) “We are c o nc e r ne d that binary bets pose a risk of in v e st o r det r i me n t and raise questions as to whether
they serve a genuine investment need.”2
operators it is hard to justify how their
interests
For binary option are
aligned with
those of their clients as often it’s the case that they push the upside potential only, highlighting the possible returns whilst giving the
impression that the whole
experience of binary option trading is easy
and glamourous. FX TRADER MAGAZINE April - June 2017 51
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