No segment has been faced with as many challenges over the past year as the Forex
Forex
Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value.
Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value.
Read this Term industry. A massive regulatory overhaul from ESMA and increasingly hostile stance by payment service providers (PSPs) have managed to back many brokers into a corner.
Most alarmingly, this phenomenon has happened overnight, with PSPs choking the market and causing many brokerages to hit the panic button on their operations.
Many retail players have been forced to look offshore and even regulated entities feeling the heat, the options available seem to be shrinking by the day.
A serious problem for brokers
While initially designed to help police the FX industry, a tranche of regulations has yielded a large impact on the brokers. PSPs have been transformed into proverbial gatekeepers, with the potential to hold hostage client funds.
How and exactly why this happened is still being debated, however one thing is perfectly clear: brokers are now more hellbent than ever to find viable solutions for their operations as client patience wears dangerously thin.
For many retail brokers, the Payments
Payments
One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times.
One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times.
Read this Term landscape changed far too quickly to adapt. A duality of regulations and the introduction of new policies has necessitated a different approach to retail services.
While freshly implemented regulations tend to garner more headlines, transfers have been the Achilles heel for retail trading firms.
This came to a forefront late last year with measures levied by both Visa and Mastercard against retail brokers.
More specifically, the so-called Merchant Category Code (MCC) has been a sore subject for retail brokers since October 2018. Both VISA and Mastercard took aim at several retail services offerings, banning the use credit cards.
The result is the effective freezing of transfers, stifling retail operations. Since then, brokers have been slapped with a ‘high-risk’ label.
As such, PSPs have effectively cut them off, making it extremely difficult or not feasible to onboard alternative PSPs.
Brokers facing an existential crisis in 2019
PSPs have increasingly created myriad issues for brokers with accepting traders’ funds. Given these new entanglements, transactions are being declined for a variety of circumstances.
This ranges from a client’s bank, to their respective credit card company, or particular laws in the country of residence.
Regardless of the reason, the outcome has proven to be the same – clients cannot deposit funds in their brokerage’s account.
In a cutthroat world of retail broking, brokers are feeling the heat, recognizing that delays in this process can have enormous consequences.
Retail clients are in no mood to hear of logistical delays and confidence can quickly and irreversibly be eroded. For those clients who are able to effectively make deposits, brokers are forced to chase after PSPs for getting the requisite funds.
The above situation demonstrates a new reality for the FX industry with PSPs and banks fostering an effective freeze on the entire segment.
This outcome unfortunately has taken many brokers by surprise, with few options as a backup plan.
Brokers will be forced to look to the drawing board in H2 2019 or close up shop. The sudden ironclad stance by PSPs will test the meddle of brokers heading into years’ end as they look to find alternative payment solutions.
Disclaimer: The content of this article is sponsored and does not represent the opinions of Finance Magnates.
No segment has been faced with as many challenges over the past year as the Forex
Forex
Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value.
Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value.
Read this Term industry. A massive regulatory overhaul from ESMA and increasingly hostile stance by payment service providers (PSPs) have managed to back many brokers into a corner.
Most alarmingly, this phenomenon has happened overnight, with PSPs choking the market and causing many brokerages to hit the panic button on their operations.
Many retail players have been forced to look offshore and even regulated entities feeling the heat, the options available seem to be shrinking by the day.
A serious problem for brokers
While initially designed to help police the FX industry, a tranche of regulations has yielded a large impact on the brokers. PSPs have been transformed into proverbial gatekeepers, with the potential to hold hostage client funds.
How and exactly why this happened is still being debated, however one thing is perfectly clear: brokers are now more hellbent than ever to find viable solutions for their operations as client patience wears dangerously thin.
For many retail brokers, the Payments
Payments
One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times.
One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times.
Read this Term landscape changed far too quickly to adapt. A duality of regulations and the introduction of new policies has necessitated a different approach to retail services.
While freshly implemented regulations tend to garner more headlines, transfers have been the Achilles heel for retail trading firms.
This came to a forefront late last year with measures levied by both Visa and Mastercard against retail brokers.
More specifically, the so-called Merchant Category Code (MCC) has been a sore subject for retail brokers since October 2018. Both VISA and Mastercard took aim at several retail services offerings, banning the use credit cards.
The result is the effective freezing of transfers, stifling retail operations. Since then, brokers have been slapped with a ‘high-risk’ label.
As such, PSPs have effectively cut them off, making it extremely difficult or not feasible to onboard alternative PSPs.
Brokers facing an existential crisis in 2019
PSPs have increasingly created myriad issues for brokers with accepting traders’ funds. Given these new entanglements, transactions are being declined for a variety of circumstances.
This ranges from a client’s bank, to their respective credit card company, or particular laws in the country of residence.
Regardless of the reason, the outcome has proven to be the same – clients cannot deposit funds in their brokerage’s account.
In a cutthroat world of retail broking, brokers are feeling the heat, recognizing that delays in this process can have enormous consequences.
Retail clients are in no mood to hear of logistical delays and confidence can quickly and irreversibly be eroded. For those clients who are able to effectively make deposits, brokers are forced to chase after PSPs for getting the requisite funds.
The above situation demonstrates a new reality for the FX industry with PSPs and banks fostering an effective freeze on the entire segment.
This outcome unfortunately has taken many brokers by surprise, with few options as a backup plan.
Brokers will be forced to look to the drawing board in H2 2019 or close up shop. The sudden ironclad stance by PSPs will test the meddle of brokers heading into years’ end as they look to find alternative payment solutions.
Disclaimer: The content of this article is sponsored and does not represent the opinions of Finance Magnates.
