Amid the news of clients and brokers losing funds during the recent CHF event, regulatory changes are expected as the OTC nature of forex trading is being questioned. These are Sharon Bowen's views.
The post-2008 recession led to enhanced regulations in global financial markets as central banks and governments looked to curb the factors that resulted in the crisis. A similar notion is coming to light with the current CHF crisis of January 15 raising alarm bells among financial regulators. The Commissioner of the CFTC, Sharon Bowen, has issued a statement on the matter with specific reference to the retail Forex market. More regulatory reforms on the agenda.
Banks suffered during the credit crunch and now forex brokers are suffering during the Swiss franc debacle which is creating shockwaves in an already governed marketplace. The latest issuance from the US watchdog, CFTC, is the first in what is expected to be many recommendations on how the retail forex market should be governed, with broker's capital requirements and leverage on the agenda. Two matters that have already been altered in the United States on the back of the Dodd-Frank Act.
Ms Bowen’s detailed statement examined the lightly regulated asset class in comparison to its peers, she opined: “It is ironic, that following the enactment of Dodd-Frank, the retail foreign exchange industry is the least regulated part of the derivatives industry. I am concerned that lower standards are putting this industry in a precarious position and placing retail foreign exchange investors unnecessarily at risk.
These concerns were underscored by recent unsettling events involving financial difficulties at retail foreign exchange dealers following the Swiss National Bank’s policy change regarding the Swiss franc.”
Panic arose in the growing retail foreign exchange market after industry giants, IG, FXCM and Alpari UK reported strain after the SNB’s surprise move to alter the CHF currency's affairs.
Ms Bowen added: “As I have said before, we have an obligation to prevent the establishment of “gaps” in our regulations. If we find that a part of the swaps or futures industry is so lightly regulated that investors, markets, and the public are being placed in undue risk, we have an obligation to fill that gap and establish a more efficient and effective regulatory regime. Even prior to these events, I raised the issue of whether enhanced regulation of retail foreign exchange would benefit consumers.
Therefore, in the wake of last week’s events, I believe the Commodity Futures Trading Commission has an obligation to seriously consider enhancing our regulations of retail foreign exchange dealers. Specifically, I believe we should consider establishing regulations on the retail foreign exchange industry that are at least as strong as the regulations on the rest of the derivatives industry.”
European Regulators
Authorities in the UK, Cyprus and Malta have all been actively monitoring the situation, with the UK watchdog, the FCA, taking the matter seriously and visiting firms to review their client money rules. The move comes on the back of Alpari UK's administration after the firm failed to find a lifeline.
Mazhar Manzoor, a London-based compliance consultant, welcomes the proposed regulatory reforms, however believes the authorities need to liaise with industry practitioners to ensure that the best outcome is delivered for both consumers and providers.
Brokers faced a number of issues during the turmoil with Liquidity risk being one of the severest threats and culprits of losses. The established e-trading forex space means brokers are working closely with technology and liquidity partners, Finn Jakobsen of FTT believes that the firms should assess their relationships and ensure they have recovery arrangements in place with each provider, furthermore, "the concept of one-stop-shop for technology and pricing is on fragile grounds which brokers should be cautious of."
The post-2008 recession led to enhanced regulations in global financial markets as central banks and governments looked to curb the factors that resulted in the crisis. A similar notion is coming to light with the current CHF crisis of January 15 raising alarm bells among financial regulators. The Commissioner of the CFTC, Sharon Bowen, has issued a statement on the matter with specific reference to the retail Forex market. More regulatory reforms on the agenda.
Banks suffered during the credit crunch and now forex brokers are suffering during the Swiss franc debacle which is creating shockwaves in an already governed marketplace. The latest issuance from the US watchdog, CFTC, is the first in what is expected to be many recommendations on how the retail forex market should be governed, with broker's capital requirements and leverage on the agenda. Two matters that have already been altered in the United States on the back of the Dodd-Frank Act.
Ms Bowen’s detailed statement examined the lightly regulated asset class in comparison to its peers, she opined: “It is ironic, that following the enactment of Dodd-Frank, the retail foreign exchange industry is the least regulated part of the derivatives industry. I am concerned that lower standards are putting this industry in a precarious position and placing retail foreign exchange investors unnecessarily at risk.
These concerns were underscored by recent unsettling events involving financial difficulties at retail foreign exchange dealers following the Swiss National Bank’s policy change regarding the Swiss franc.”
Panic arose in the growing retail foreign exchange market after industry giants, IG, FXCM and Alpari UK reported strain after the SNB’s surprise move to alter the CHF currency's affairs.
Ms Bowen added: “As I have said before, we have an obligation to prevent the establishment of “gaps” in our regulations. If we find that a part of the swaps or futures industry is so lightly regulated that investors, markets, and the public are being placed in undue risk, we have an obligation to fill that gap and establish a more efficient and effective regulatory regime. Even prior to these events, I raised the issue of whether enhanced regulation of retail foreign exchange would benefit consumers.
Therefore, in the wake of last week’s events, I believe the Commodity Futures Trading Commission has an obligation to seriously consider enhancing our regulations of retail foreign exchange dealers. Specifically, I believe we should consider establishing regulations on the retail foreign exchange industry that are at least as strong as the regulations on the rest of the derivatives industry.”
European Regulators
Authorities in the UK, Cyprus and Malta have all been actively monitoring the situation, with the UK watchdog, the FCA, taking the matter seriously and visiting firms to review their client money rules. The move comes on the back of Alpari UK's administration after the firm failed to find a lifeline.
Mazhar Manzoor, a London-based compliance consultant, welcomes the proposed regulatory reforms, however believes the authorities need to liaise with industry practitioners to ensure that the best outcome is delivered for both consumers and providers.
Brokers faced a number of issues during the turmoil with Liquidity risk being one of the severest threats and culprits of losses. The established e-trading forex space means brokers are working closely with technology and liquidity partners, Finn Jakobsen of FTT believes that the firms should assess their relationships and ensure they have recovery arrangements in place with each provider, furthermore, "the concept of one-stop-shop for technology and pricing is on fragile grounds which brokers should be cautious of."
Gender Gap in Online Privacy Concerns: Women More Reserved in Sharing Personal Data
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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