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China regulators kicking foreign FX brokers out of country

  • Post #1
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  • First Post: Feb 28, 2018 2:19pm Feb 28, 2018 2:19pm
  •  PoundTrader
  • Joined Sep 2010 | Status: Life Time Member | 6,685 Posts
LeapRate has learned that Chinese authorities have been approaching a number of foreign based Retail FX brokers with offices and operations in the country, demanding that they immediately shut down any physical presence in China.


The “roundup” of foreign FX brokers began about two weeks ago during the week leading up to the Chinese New Year (which was Friday February 16). The timing seems to have coincided with the two week period that many Chinese take as vacation time, right after the New Year holiday.
The representatives and management of several FX brokers on the ground in China were summarily called, one by one, to a meeting with regulators. At each meeting, they were faced with something of a show-of-force, with representatives of six Chinese regulatory and government agencies present, including the police.

We detail below in an interview with one of the people who was in one of those meetings exactly what transpired, but in brief each broker was told that it is now illegal to operate as an FX broker in China offering leveraged trading of any kind, and that they had to present a plan as to how they were going to each physically exit China within two weeks (i.e., by the time people get back to work from the Chinese New Year holiday).
We also understand that Chinese authorities are cracking down on those individuals and entities who have been linking up foreign FX brokers with Chinese IBs and money managers, whether or not those brokers have physical presence on the ground in China or not.

While no official pronouncements have yet to be made by Chinese authorities, and we believe that not all foreign FX brokers in the country have yet to be called in for a “discussion” with authorities, we believe that these incidents mark the first step of China banning leveraged trading. China has recently banned cryptocurrency trading which was becoming very popular (perhaps too popular) in the country, and it seems that hot on the heels of that decision they have decided to also ban leveraged FX and CFDs.

Here below is our conversation with BMFN CEO Luis Sanchez, as noted above one of the Retail FX managers who was summoned to and attended one of the meetings with regulators. BMFN is an ASIC and Vanuatu licensed Retail FX broker, which had built up a large presence in China over the past three years, with five offices in four Chinese cities. In less than a month, BMFN has now shut down its entire operation in China.

https://www.leaprate.com/forex/regul...f-the-country/
  • Post #2
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  • Mar 2, 2018 9:44am Mar 2, 2018 9:44am
  •  Rastus81
  • | Joined Jan 2014 | Status: Evolving | 222 Posts
Why?
Why is a Raven like a Writing Desk?
 
1
  • Post #3
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  • Edited at 11:11pm Mar 2, 2018 6:21pm | Edited at 11:11pm
  •  Forexia
  • Joined Jun 2010 | Status: Member | 3,896 Posts
Quoting PoundTrader
Disliked
LeapRate has learned that Chinese authorities have been approaching a number of foreign based Retail FX brokers with offices and operations in the country, demanding that they immediately shut down any physical presence in China. The “roundup” of foreign FX brokers began about two weeks ago during the week leading up to the Chinese New Year (which was Friday February 16). The timing seems to have coincided with the two week period that many Chinese take as vacation time, right after the New Year holiday. The representatives and management of several...
Ignored
It's about time that those casino brokers get closed down in China. The way that brokers like IronFX and their IB's has fleeced money from investors and IB's is just ridiculous. China is NOT banning leveraged trading altogether as China itself does offer leveraged trading; it's just banning casino brokers and even scam brokers (although BMFN is not) from operating in China and that is in line with what many of the regulators like FCA and SEC are doing in UK and USA respectively. Casino brokers are nothing but fraud especially with their lack of disclosure in China, it has created even more financial losses of the traders in China I am sure. If they really want to continue to operate in China, they would have to either operate in an PURE 100% agency-based or exchange model like IB or LMAX or at least with hedging against client positions to be risk neutral like Oanda. I guess the party is finally over for casino FX brokers in China. BMFN had a good run for 10 years. They should be happy with that.

I like how swiftly the Chinese regulators have clamped down these forex broker wannabe's that give retail Forex a bad name. This is obviously a very concerted and unified efforts with thorough investigation. I wish SEC had dealt with the Madoff scam with such conviction and force. It would've saved investors $Billions of losses.
Make your losses in demo. Earn your profits live.
 
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  • Post #4
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  • Last Post: Mar 3, 2018 3:53am Mar 3, 2018 3:53am
  •  PoundTrader
  • Joined Sep 2010 | Status: Life Time Member | 6,685 Posts
 
 
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