The European Forex market is waiting for changes, but only in 2018.

The European Forex market is facing further tightening of the regulatory screw, but not until next year. ESMA, the European Securities and Markets Authority, has today published a statement on its preparatory work. They include the amendment of legal acts in the field of CFDs, binary options and other financial and derivative instruments considered to be highly speculative. The British financial supervision - FCA also presented its position.

The Forex market can catch your breath

This news should be surprising, albeit not because of the scope of the actions, but in time to take them. The changes taking place in the Forex market in Europe in the last two years were in the express mode. We even dealt with a domino effect, where one regulator "pushed" another to introduce further (often stricter) restrictions. Subsequent changes are new obligations for brokers who have to work on their rapid implementation and adaptation of their marketing and investment plans. So is it time to catch your breath and rethink your next strategy?

ESMA wants even better consumer protection

For more than two years, ESMA's vision has turned strongly towards the Forex and CFD instruments. Numerous public discussions with market representatives (both brokers and retail investors), warnings issued as well as the introduction of restrictive decisions (e.g. no bonuses) are the main actions taken by the Office to modernize and increase trade security.

However, according to the information in the latest statement, according to the supervisor, it is still too little to achieve this goal and the introduced changes still do not guarantee an appropriate level of security for traders. ESMA considers the changes introduced so far by European regulators to be sufficient, such as reduction of leverage, protection against negative balances and the prohibition of aggressive marketing. That would mean no further restrictions. But… At the moment, it's just a discussion.

The Office does not give more details in the announcement, however, the summary may contain information on the need to introduce potential changes to the 3 January 2018 year, i.e. when the MiFID II Directive will come into force. This will give ESMA new opportunities such as introducing a temporary ban or restricting the advertising, distribution and sale of selected financial instruments and derivatives.

The British will wait for ESMA

In December 2016, the British regulatory authority, FCA, published information about the start of the discussion panel on changes on the Forex and CFD market. Above all, it was about limiting leverage (the British can still enjoy the leverage of 1: 500) and marketing activities. The decisions were to be made in the spring of this year. however, FCA changed its mind and now wait with the introduction of its own changes to the provisions of the European office.

If, however, the whole procedure was to drag on in time, the FCA is considering presenting the proposed changes in the middle of the year 2018. Then the vision becomes very real 10 times reducing the leverage to 1:50 and limiting marketing activities, especially the prohibition of granting any bonuses.