In August, the Belgian regulator introduced the ban aimed at Forex and Binary Options Brokers. Now, the regulator is experiencing the adverse effect of it. Why Belgium Binary Options Ban fails?
6 October, AtoZForex – The ban implemented by the Financial Services and Markets Authority (FSMA) against leveraged Forex, CFDs and Binary Options attempting to protect Belgian clients has had the opposite effect so far. Since the number of unregulated Forex and Binary Options Brokers targeting Belgian traders has increased.
Why Belgium Binary Options Ban fails?
The regulator informed about the ban in the middle of August, providing brokers that served local residents with a couple of weeks to cease contacts with their Belgian clients and to return their money. The act undertaken by the FSMA was accompanied by the commentaries of government officials who tried to take credit for the FSMA’s ban.
As a result, regulated brokers have closed accounts belonging to Belgian traders. It gave space to smaller unregulated brokers who spotted the opportunity. Now, the number of ads from offshore Binary Options and from unregulated Forex Brokers targeting Belgian traders has raised. As these brokers are not registered in Europe and, thus, are not concerned about the ban. What particularly drew the attention of offshore brokerages to Belgian clients is that the latter ones are currently getting refunds of their account equity from regulated brokers. So unregulated brokers attempt to seize those funds.
Taking into account that Belgium has high GDP per capita and the size of the Forex market is relatively big, there is a potential for significant revenues for brokers who succeed to attract Belgian clients.
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Outcomes of the ban
Hence, Belgian traders will most probably continue trading Forex, CFDs, and binary options products. However, they will be less protected as they will refer to brokers that most probably do not use segregated accounts and are not regulated.
Although the FSMA intended to protect Belgian investors while introducing the ban, the prohibition had an opposite effect, harming consumers. Therefore, instead of taking drastic measures it is reasonable for regulators to supervise the brokers and ensure that investors trade with licensed and well-capitalized brokers.
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