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Germany’s BaFin mulls banning margin forex and binary options

  • #1
  • First Post: Oct 10, 2016 4:08am Oct 10, 2016 4:08am
Germany considers to follow the steps of other Western European authorities and to possibly impose a ban on trading in binary options and contracts for difference (https://smnweekly.com/2016/10/04/germanys-bafin-mulls-banning-binary-options-cfd-trading-instruments/) according to Anja Schuchhardt, a press officer of the Federal Financial Supervisory Authority (BaFin) of Germany.

The German financial regulator follows suit of other reputable authorities in Europe. Belgium banned from 18 August the distribution via online channels of over-the-counter (OTC) binary options, spot forex, and CFDs with leverage. France also announced recently that it is in the process of developing a bill that would prohibit online advertising of “highly speculative and risky financial contracts”, such as binary options, forex and CFDs with a leverage greater than 1:5. Meanwhile, the Netherlands has also announced that it considers ban on the advertising of such instruments, calling them “toxic investment products for consumers”.
  • #2
  • Oct 10, 2016 6:33am Oct 10, 2016 6:33am
Quoting mlawson71
Germany considers to follow the steps of other Western European authorities and to possibly impose a ban on trading in binary options and contracts for difference (https://smnweekly.com/2016/10/04/germanys-bafin-mulls-banning-binary-options-cfd-trading-instruments/) according to Anja Schuchhardt, a press officer of the Federal Financial Supervisory Authority (BaFin) of Germany. The German financial regulator follows suit of other reputable authorities in Europe. Belgium banned from 18 August the distribution via online channels of over-the-counter...
The biggest question is if they forbid CFD/forex trading if it's still possible to trade with an overseas broker.
  • #3
  • Oct 10, 2016 6:38am Oct 10, 2016 6:38am
In the end i only think it will be advertising that will be banned.
MY SITTING, NEVER MY THINKING!
  • #4
  • Oct 10, 2016 7:31am Oct 10, 2016 7:31am
Quoting MCFly
{quote} The biggest question is if they forbid CFD/forex trading if it's still possible to trade with an overseas broker.
Well, the actual question is more like "Will overseas brokers ignore that they're not allowed to sell their product to you?" and will BaFin choose to ignore their misconduct. You may, of course, classify yourself as a professional trader or trade via an off-shore structure.
  • #5
  • Oct 10, 2016 7:35am Oct 10, 2016 7:35am
Quoting merrygold
In the end i only think it will be advertising that will be banned.
Not sure about that but I think when they firstly bann bucket shop advertising the second step is to bann trading the insturments.

They say their motivation is to "protect" the retail trader of toxic instruments but more likely they are searching for ways that EU traders can not avoid taxes especially with regard of the (potietially) financial transaction tax. France for example noticed that after introducing the transaction tax on stocks the traded stock volume decreased and the volume of traded stock cfds increased considerably.
  • #6
  • Edited 9:24am Oct 10, 2016 7:44am | Edited 9:24am
Quoting MCFly
{quote} Not sure about that but I think when they firstly bann bucket shop advertising the second step is to bann trading the insturments. They say their motivation is to "protect" the retail trader of toxic instruments but more likely they are searching for ways that EU traders can not avoid taxes especially with regard of the (potietially) financial transaction tax. France for example noticed that after introducing the transaction tax on stocks the traded stock volume decreased and the volume of traded stock cfds increased considerably.
Even IF they were to introduce that financial transaction tax (unlikely if you ask me, support for that is crumbling), there won't be any on currencies because it would contradict EU rules - the ECB stated that a while ago.
  • #7
  • Oct 10, 2016 9:30am Oct 10, 2016 9:30am
Quoting JensG
{quote} Even IF they introduce that financial transaction tax (unlikely if you ask me, support for that is crumbling), there won't any on currencies because it would contradict EU rules - the ECB stated that a while ago.
You forget that for example France and Italy already have a transaction tax. That's not the Tobin Tax they orginally dreamed of but it's still a mess. The plan could be to force the retailers into the stock market in order to introduce a tax like they did in France and Italy. The advantages are the they can guide the retailers from non regulated markets to regulated markets (easier to observe/montior) and you can't escape the tax.
  • #8
  • Oct 10, 2016 9:48am Oct 10, 2016 9:48am
Quoting MCFly
{quote} You forget that for example France and Italy already have a transaction tax. That's not the Tobin Tax they orginally dreamed of but it's still a mess. The plan could be to force the retailers into the stock market in order to introduce a tax like they did in France and Italy. The advantages are the they can guide the retailers from non regulated markets to regulated markets (easier to observe/montior) and you can't escape the tax.
Most retailers have way to little deposit for the stocks market - there will be no move for retail. Professional classified traders, and it's really not hard to achieve that, will not be affected by what ever the BaFin comes up with.
It's much more likely that all that fuss about retail forex ban is in fact about leverage in retail forex. I'm sorry to break it to you but especially Germans really like to complain that the state doesn't protect them, guess what they most probably did after the SNB debacle? After all there's reason that some of us call the chancellor "Mutti". Mama, the financial market was mean to me!
Look through the comments here. I'd wish people were different and aware of what they're doing but in the end they aren't and they won't. A sensible approach would be to enforce brokers a "no loss can exceed your deposit" rule on retail accounts - that could be implemented with the help of an insurer and by monitoring overall market risk and reducing leverage if it seems appropriate. Some brokers already do that.
  • #9
  • Oct 10, 2016 11:13am Oct 10, 2016 11:13am
IMO!!

The real toxic of this is the advertising problem of forex brokers, trading system etc. - The main reason for the advertising is to suck 'normal' people with zero to very little market understanding into the rabit hole, and spit them out again with their pockets empty.

A experienced trader will not be fooled by advertising, they know exactly what they want & what they look for. When i moved up to multiple std lot trading my experience level for trading & broker understanding was big enough that i called a broker with a mixed reputation to hear them what they could offer.

Some think that leverage is the root to all evil. I simply believe that they dont understand leverage that much. Leverage is not dangerous if used with common sense.
I also believe that there is NOTHING dangerous with trading forex, the only thing needed is to people to handle it as the serious market it is & threat it like a business, not a playground for kids!
To make this more serious i think it would be good if the average deposit is set to a much higher number, this way its harder to attract newbies.

95% of all complaints made to the different regulations are people who got screwed over by that social-follow-worlds-best-trader-and-get-rich-in-2-weeks & buy a robot and suck pinacolada under a palmtree the rest of the life with 100mil in the bank account.


NOTE: I think its great that many new traders a comming up all over the world, and i live to help other fellow traders, but i still think that the deposit should be higher, so newbies will think it over before entering thuis market.

Sorry for my english, i read PA much better than typing english
MY SITTING, NEVER MY THINKING!
  • #10
  • Oct 10, 2016 12:44pm Oct 10, 2016 12:44pm
Quoting merrygold
IMO!! The real toxic of this is the advertising problem of forex brokers, trading system etc. - The main reason for the advertising is to suck 'normal' people with zero to very little market understanding into the rabit hole, and spit them out again with their pockets empty. A experienced trader will not be fooled by advertising, they know exactly what they want & what they look for. When i moved up to multiple std lot trading my experience level for trading & broker understanding was big enough that i called a broker with a mixed reputation to...
  • #11
  • Oct 10, 2016 1:05pm Oct 10, 2016 1:05pm
Perfect, instead of bringing money in, let it out.
  • #12
  • Oct 10, 2016 4:45pm Oct 10, 2016 4:45pm
Instead of banning online gambling, banning forex options? Hah

meanwhile offshore brokers
WaBaS Where are Buyers and Sellers
  • #13
  • Oct 13, 2016 3:58am Oct 13, 2016 3:58am
It looks like even Russia will be adding some sort of binary options regulation. The Central Bank of Russia (CBR) intends to come up with a stance on the regulation of binary options trading (https://smnweekly.com/2016/10/06/russian-c-bank-to-address-binary-option-regulation-by-end-2017/) in the country, according to an action plan of the bank for the financial markets in 2016-2018 published recently. The central bank plans to “prepare proposals related to determining the Bank of Russia’s position on binary option trading” by the end of 2017.
The move is part of the CBR’s strategy for “improving mechanisms for countering bad faith actions of professional securities market participants.”
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