One of the greatest challenges facing Forex Brokers in 2016 is navigating the regulatory landscape. Recently we have seen more regulatory authorities name specific brokers that have been targeting their citizens. Depending on the regulation that the Forex Broker has this does not usually “passport” into other jurisdictions and keeping track of where to market for clients can be frustrating, to say the least.
One of the most obvious things that regulators are looking for is if the Forex Broker’s website is offered in their language and if they offer native language support as well. If the Brokers site is in French it is pretty obvious on who they are marketing too. Advertising on local websites and portals is another clear indication that the broker has targeted citizens of that particular country.
Some Forex Brokers have gotten very creative in targeting certain markets. It has been clear for the past 2 years that Japanese regulators are highly protective of their citizens and have aggressively gone after Forex Brokers that target the Japanese market. An ASIC regulated Forex Broker that had a sizeable Japanese client base were forced by Japanese regulators through ASIC to offload all of their Japanese clients. Less than one year later that same Forex Broker set up a wholly owned New Zealand broker that was taking direct transfers from the same Japanese clients and had clearly defined itself and its relationship to the ASIC broker. It did not take long for Japanese regulators to discover this and NZ regulators were quickly informed.
European regulators have been the most recent ones to go after these forex Brokers and Binary Options Brokers. It looks as if these regulators might be acting in coordination with each other as well as with the jurisdictions that brokers are regulated out of. The trend in 2016 is sure to bring more Forex Brokers adding additional regulatory jurisdictions to try and cover their bases. An unlikely but possible solution would be to allow Forex Brokers in certain jurisdictions to operate if their operating guidelines are comparable.
Trading Forex and Derivatives carries a high level of risk, including the risk of losing substantially more than your initial investment. Also, you do not own or have any rights to the underlying assets. The effect of leverage is that both gains and losses are magnified. You should only trade if you can afford to carry these risks. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary