After forex and binary option brokers got the card, now it is social trading and forex adverts turn to be disciplined.

Regulators in UK and France recently are putting more effort in tightening rules of game for businesses in online forex trading industry. After forex and binary option brokers got the card, now it is social trading and forex adverts turn to be disciplined.

regulations

 

Social Trading Regulations

Social trading is a part of modern forex trading that took on the concept of investment newsletters into the age of social media. In the old days, successful investors sent out investment advices through periodical newsletters to their subscribers. Their subscribers then tried to apply those advices so they can obtain financial gain. Nowadays, social trading enable those subscribers to follow successful traders and copy their advices much more easily.

Social trading is built on a kind of network that consist of successful traders and their followers. Market brands on the field include UK-based eToro, US-headquartered ZuluTrade, FxStat's Tradebook, Leverate's SIRIX, and others. Since their emergence, social trading platforms continue to improve their facilities to increase traders' involvement with forex trading. Competition and innovation on this market is no less fierce than that in social media industry.

However, so far both the platform providers and its participants has not yet touched by any regulations. But now financial regulators' zeal in overseeing online trading industry ensures that people can't simply gives advices and follow advices. Last Wednesday (12/3), leaprate reported that UK's financial market regulator, FCA (Financial Conduct Authority) have dispatched letters on the subject to companies offering copy trading services to retail forex traders. The letters apprise them of FCA's intention to classify those companies as investment managers.

This could be good and bad news. On one hand, regulation on social trading could minimize the number of people tricked by bad advisors and duped by fake proofs. On the other, it surely will raise the cost of bonafide advisors. We shall see how it is applied in UK's social trading environment.

 

Forex Ads With Tobacco-esque Warning?

In neighboring country, France, advertising and marketing authority have laid a set of new rules for financial products adverts, including forex. ARPP (Autorite de Regulation Professionnelle de la Publicite) stated several measures to define what kind of adverts displayed in the media which will be in effect by 23 April 2014. Financial products ads have to be specifically stated as advertisement, clearly show rates and pricing, comprehensible, socially responsible (no misleading info), not targeting minors, and clearly mentioned warning about the risks of dealing with such products.

Russia have already looked into regulating forex adverts, although it is not yet official. It is still unclear what kind of restriction will be put on forex ads in the country apart from what was said by an official, that is Forex ads will probably have to insert a warning as in Tobacco-related adverts.

It must be noted that several forex brokers and forex-related service providers, even some that was not operated and regulated in Russia and UK, have already displayed such precautionary steps on their ads and websites. The effort shows goodwill on their parts, but it does not seem discourage rookies from challenging forex trading risky environments.