The Polish Financial Supervision Authority publishes a guide entitled "Profit and risk in the Forex market"

The Polish Financial Supervision Authority has issued an educational guide that extensively covers the risks associated with investing in the Forex market. According to the Polish Financial Supervision Authority, the brochure is to be a useful and accessible base of the most important information on the currency market and derivatives for beginners. In May this year, another educational document describing the phenomenon of price slippage appeared (article available here).

"Profit and risk in the Forex market"

This is the title of the guide prepared by the KNF. It's up to 58 pages devoted to the issues of the currency market. The authors of the guide are Maciej Kurzajewski and Dorota Nowalińska, mainly those responsible for the regulatory activities of the Forex market in Poland.

The guide consists of four sections:

• The basic principles of investing in the Forex market,
• A high degree of investment risk associated with investing in derivative instruments on the Forex market,
• Client's relationship with the investment company - from advertising services to enforcement of claims,
• Good and bad practices of entities operating in the Forex market.

While reading the booklet, we find in it a lot of key and basic information, which everyone who starts his adventure with investing in the Forex market should know about about leveraged instruments or the most important words, concepts and principles. A lot of space has been devoted to the conscious choice of an appropriately regulated investment firm as a partner, as well as a description of the practices used by Forex brokers.

source: KNF guide

Nevertheless, delving deeper into the text places, one can clearly feel the defensive attitude of the Commission to the Forex market. There are references to the casino and gambling (in the second chapter there is a subtitle "Is the Forex market a casino and your trading is a gamble?") and the possibility of fraudulently unconscious customer (for unknown reasons, there are no WSE and possible frauds in the form of eg manipulation of the course 🙂).

Some people may pick up some parts of the guide as very discouraging, which to some extent disturbs the overall objectivity.

Be sure to read: NBP and KNF warn against "virtual" currencies

Education and not bans?

This is another educational campaign on the part of the Commission, which should please retail market participants. Providing basic knowledge and raising investment awareness is a much more effective solution to problems faced by investors than introducing further restrictions and prohibitions.

At the beginning of the guide, we read:

"The publication is to be a kind of guide that will help investors, especially non-professional, in assessing the essence of investments in the Forex market. It will also allow identifying types of entities offering services on the Forex market, and thus - the manner and scope of supervision exercised over these entities. The brochure will also present the most important obligations for investment companies operating in the Forex sphere and the most important rights for retail clients " 

In the last few years, the Polish Financial Supervision Authority has set to work hard, with the goal of "civilizing" the Forex market in Poland. The result of this are more and more frequent educational activities, but not only. The list of warnings with suspicious entities from the industry has grown very quickly (although the traders themselves also contributed to informing the KNF about illegal practices), and the investors themselves gained access to more data - we know the results achieved by Polish traders regularly, and in some cases also information on order execution and the scale of slippage (the results of traders for the last quarter are available in a separate article).

There was also a dialogue - before introducing key changes, public consultations with industry representatives and investors are organized. This was also the case in July when it was organized debate on, among others introduction of reduction of leverage in Poland.

There is also the other side of the coin. The introduction of a number of new guidelines, i.e. new restrictions and obligations for brokers, resulted in a reduction in the competitiveness of Polish DMs. Consequently, three successful FX brokers decided to withdraw from the market. Also traders felt radical changes - limitation of leverage, much less interesting promotions and contests, as well as the specter of further restrictions.