New retail trading regulations came into effect this Tuesday in Singapore.
Traders in the small nation-state will now have their access to leverage cut by more than half.
The new rules, which were put forward by the Monetary Authority of Singapore, mean retail investors now only have access to 20:1 leverage. Previously, traders only had to meet margin requirements of 2 percent – meaning they had leverage of 50:1.
As with the regulations put in place by the European Securities and Markets Authority in the Summer of last year, there are some ‘loopholes’ to Singapore’s latest retail trading rules.
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For instance, if you qualify as an accredited investor in Singapore, then you can still access leverage of 50:1. Like in Europe, however, becoming an accredited investor isn’t that easy.
To qualify, you must have personal assets of more than 2 million Singaporean dollars ($1.5 million). Alternatively, you can qualify by having more than 1 million Singaporean dollars in cash or by earning more than 300,000 Singaporean dollars a year.
Changes to the regulations are unlikely to have caught any brokers active in the country by surprise.
The MAS has been mulling changes to leverage for years. Like other regulators, the Singaporean financial watchdog has said that high leverage poses risks to retail traders.