FXTM information and reviews
FXTM
95%
OctaFX information and reviews
OctaFX
94%
XM information and reviews
XM
93%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
91%
HFM information and reviews
HFM
89%

How Forex moves to non-EU based brokers


3 February 2020

The financial landscape in Europe is heavily governed with numerous restrictions telling brokers and traders what they can and can’t do. Forex has been hard-hit by an ESMA leverage clampdown in recent years, but does this explain why the FX industry is moving to non-EU based brokers? And what exactly are the benefits of avoiding the EU’s clutches?

Traders move to non-EU brokers as ESMA bites


For many traders, moving to a non-EU broker has extensive appeal, especially due to the new ESMA regulations introduced back in 2019. In a move to cap leverage across Europe, ESMA introduced very strict new rules which state that:

While ESMA has put a focus on trader safety, the new rules make it more difficult than ever for traders to benefit from high leverage and potentially gain from small market moves. At times of low volatility, high leverage is often used in order to maximise gains with just a few pip movements. This can potentially result in breath-taking returns.

Of course, trading comes with risks and intelligent risk management strategies are needed in order to reduce losses. But traders who appreciate making their own calculated decisions are now looking for alternatives outside of the EU.

Essentially, ESMA regulations will weed traders with small capital from the European ecosystem. But as the new rules can’t supress a trader’s need to monitor the market, they will simply move to other jurisdictions where high leverage is still provided.

A way out of the quagmire


Since the introduction of ESMA, the financial landscape has started to change considerably. Not only are traders looking for new alternatives far from EU restrictions, but brokers are also moving offshore and applying for licenses outside of the EU.

Why? Well it enables them to continue offering the services traders are used to including a combination of tight spreads and high levels of leverage. Brokers looking to retain clients and reduce revenue shortfalls are branching outside of the EU and are transferring those looking for flexible leverage options to their non-EU branches in countries such as the Cook Islands, Mauritius, Australia, the Seychelles, Vanuatu and other offshore locations.

Essentially, EU trading is more focussed on big players with large amounts of capital who perhaps don’t need to take advantage of high leverage as those with less capital in their accounts. This is an obvious shift, which is why brokers are moving trade away from EU-based regulations in order to stay afloat. Similarly, traders looking for a way out of the EU quagmire are also driving the FX industry outside of the European Union and this is facilitated by forward-thinking companies that want to maintain service standards.

When researching brokers, it’s essential to think about your goals, risk tolerance and leverage options as well as the regulations each broker is subjected to.

One such broker that may tick a lot of a trader's needs is 4xcube.com who have successfully obtained one of the first licensed brokerages on the Cook Islands offering a 20,000 euro compensation fund for traders.

#source

Share: Tweet this or Share on Facebook


Related

OctaFX Fraud notice January 2023
OctaFX Fraud notice January 2023

Every trader looks for a high level of security. Unfortunately, this request is not groundless. New fraud schemes appear every day, and not everyone can protect themselves...

20 Jan 2023

OctaFX collects the Best Online Broker Global 2022 accolade
OctaFX collects the Best Online Broker Global 2022 accolade

The international broker OctaFX received yet another 2022 distinction. The esteemed global media publication World Business Outlook awarded the company its "Best Online Broker Global 2022" award...

19 Jan 2023

Six evident and less obvious improvements that we are proud of in 2022
Six evident and less obvious improvements that we are proud of in 2022

2022 was a year of unprecedented changes and struggles in the financial markets. For us at OctaFX, it was a year full of hard work that helped achieve several important milestones...

13 Jan 2023

AMarkets will participate at iFX EXPO 2023
AMarkets will participate at iFX EXPO 2023

AMarkets invites you to visit booth number 92, where you will have the opportunity to meet AMarkets’ top managers, exchange experiences and participate in our prize draw...

12 Jan 2023

Dividend announcement for stock derivatives in January 2023
Dividend announcement for stock derivatives in January 2023

When a company pays dividends to shareholders, it reduces the company's value by the dividend amount. The dividend payout leads to the share price reduction..

9 Jan 2023

AMarkets Copy Trading service changes
AMarkets Copy Trading service changes

On February 1, 2023, changes in the Copy Trading service will come into force. They will affect all traders and investors, regardless of when they started copying strategies...

6 Jan 2023


Editors' Picks

FXCM information and reviews
FXCM
87%
ActivTrades information and reviews
ActivTrades
86%
RoboForex information and reviews
RoboForex
85%
MultiBank Group information and reviews
MultiBank Group
84%
Libertex information and reviews
Libertex
83%
Vantage information and reviews
Vantage
83%

© 2006-2023 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.