Belgium sets a ban on CFDs and FX
Recently the financial regulator in Belgium has set a total ban on derivative financial instruments – Contracts for Differences. Next to this, the regulator has also set a ban on online currency trading and binary options. Even though Belgium is not the main market for the most of online brokers, it is one of the main countries for taking regulative decisions in Europe. Hence, it puts all of the markets in the risks. This makes Belgium the first country in EU to take such harsh measures related to financial trading. Even though other countries have restricted marginal financial trading in some certain way, mostly by setting a limit on the leverage, so far a total ban has never been seen before. There has been no action taken to restrict activities related to using Forex trading bonus promotions. Unlike Belgium, USA, Israel and Japanese financial regulators have restricted the maximum leverage anywhere between 25:1 and 50:1. This is certainly a controversial update.
From the positive side
Over-the-counter trading is a type of a marginal trading that is actually very risky. A total ban on such activities would certainly result in the overall improved financial health of the country. Next to this, there are quite a few unregulated brokers that have conducted illegal activities. However, does a total prohibition on this type of financial trading really works and is it really needed?
From the negative side
Imagine that you have read tons of books from Forex-Library.com, visited hundreds of webinars and generally invested lots of time to become an FX trader that is doing day trading for a living. You have removed yourself from the regular 9 to 5 job long time ago and, at the moment, day trading is your only income. One day it is all gone. Well, not like it is completely gone, but it is gone as long as you reside or, at least, pay taxes in Belgium. Even though the activity is harmful for many, it does not mean there are no people benefiting from it.
In addition to this, a total ban would definitely remove all of the regulated companies from the market. The reason for this is simple, they don’t want to lose their regulation. However, unregulated brokers that do not have any authority overseeing their activities will just stay on the market – they have nothing to lose.
The final thought
While the Financial Conduct Authority in the UK is certainly doing a great job eliminating harmful brokers and other major European Regulator, CySEC, seem to restrain and fine quite a few brokers, some countries still might decide to go for a full ban. It is questionable whether such a practice is useful for harmful, yet one thing is for certain – a greater control will never benefit everyone.