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The British want to limit leverage and prohibit FX bonuses

The British want to limit leverage and prohibit FX bonuses

created Paweł MosionekDecember 7, 2016

Anyone who monitors the situation on the FX FX market should not surprise the above headline. FCA, a British institution supervising financial markets and the equivalent of our KNF, issued a message with a proposal to completely limit the leverage to 1: 50, and in the case of inexperienced traders (their knowledge level will be checked by investing survey) even to 1: 25. In addition, a total ban on offering deposit bonuses will be introduced. This is another regulator who decided on similar steps. We recently informed you about CySEC decisionwhich decided to set the default leverage at 1:50 and also a similar ban on offering bonuses. 1,5 years ago, the PFSA lowered the leverage of Polish brokers to 1: 100, and at the end of September introduced a number of strict guidelines that forced brokers to significantly improve the transparency and security of trading. Japan and Australia - these are markets where the introduction of further restrictions and regulations is also planned. It is only a matter of time before the regulators inform us about the next changes that are to prevent the reduction of traders' losses (at least in theory).

A complete list of changes made by FCA:

  • Harmonization of information on risk published by brokers,
  • Publication of clients losing / earning statistics,
  • The proposal to limit the leverage to 1: 25 for traders with shorter than 1 years,
  • Proposal to limit leverage to 1: 50 for other traders,
  • It is forbidden to offer bonuses and rebates to open an account or deposit.

The changes introduced by the British regulator are justified by the fact that, according to statistics, as many as 84% ​​of clients trading on CFD instruments with British brokers lose. These are clearly more pessimistic statistics than in the case of Polish traders, where the percentage of people losing is around 60-70%. These changes will apply to all UK registered brokers with an FCA license. Changes in the reduction of the financial leverage are not yet 100% settled - there will be a reduction for sure, but the final decision will be made after consultations with brokerage companies.

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About the Author
Paweł Mosionek
An active trader on the Forex market since 2006. Editor of the Forex Nawigator portal and editor-in-chief and co-creator of the website. Speaker at the "Focus on Forex" conference at the Warsaw School of Economics, "NetVision" at the Gdańsk University of Technology and "Financial Intelligence" at the University of Gdańsk. Twice winner of "Junior Trader" - investment game for students organized by DM XTB. Addicted to travel, motorbikes and parachuting.