MARKET REGULATIONS instruments,
Such savings include cash, stocks, trading etc.
accounts, mutual
- You work or have worked in the
financial
sector for at least one year in a professional po s i ti o n, which requires knowledge of the transactions or
services envisaged.
Recla s s i f y ing to professionals is an option for those who seek to take higher
risks,
but not all the willing
clients
will be covering the requirements. The national regulators such as the UK FCA and the French AMF are surely to be diligent when checking whether brokers are adequately screening their customers for criteria adherence.
Unintended Consequences
While the ESMA is undertaking these measures to protect consumers, there are several points which should be worrying
higher leverage will turn towards brokerages which are located in remote jurisdictions. There are numerous cases where clients from protected jurisdictions like the EU, are becoming victims of brokers which are using hot sales tactics. The number of unregulated brokerages which are targeting the region could materially increase and backfire against the ESMA which is greatly limiting consumer choice with their new regulatory framework.
exceeds €500,000. funds,
EU regulators. Starting from the unregulated part of the market, there is a valid risk that consumers who are looking to use
FX
Aside from unregulated brokers, companies located in loosely regulated offshore jurisdictions are also likely to focus their attention on European c l i e n t s . C o u n t r i e s like
Vanuatu,
M a uri t i u s , Belize, BVI and other popular tax havens have
for
been
very popular d e s t i n a t ion s for dodgy brokers
Not all brokers will survive within the new regulatory environment
years. The lack of knowledge about the p r o s p ec ti v e challenges when dealing with forex and CFDs brokers is the Achilles heel of traders which
are new to the market.
Aggressive Sales Agents are Back
Since the ESMA has announced their measures in the beginning of the year, the crusade of aggressive sales agents has returned full swing into the market. Unregulated and loosely regulated brokers are precisely the kind of firms which are heavily relying on direct unsolicited phone calls to onboard new
FX TRADER MAGAZINE July - September 2018 19
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