Poland tightens requirements for forex brokers as 80% of retail traders lose money

Poland tightens requirements for forex brokers as 80% of retail traders lose money

Do not invest more money than you can afford to lose.


Nearly 80% of the Polish retail forex traders have lost money in 2016, while approximately 20.7% have actually made a profit, shows a report of the country’s Financial Supervision Authority (KNF).

The report is based on data submitted to KNF by the brokerage houses operating in Poland and the results are much similar to those in other European countries. The methodology is based on the customer’s balance at the end of the year and covers all classes of derivatives. In its statement, the regulator notes that the data covering shorter periods – quarters, to be precise – shows a higher percentage of profit-generating customers, but in the long run – for the entire year – the clients who lost is 79.3%.

Meanwhile, another publication on the regulator’s site indicates that the KNF is on course to take measures for better protection for the retail investors. The proposal was presented by the chairman of the Financial Supervision Commission, Marek Chrzanowski. Its main goal is to strengthen the Commission’s powers to prevent the provision of financial services through the use of various types of Internet platforms by unauthorized entities. The main focus, according to the KNF document is the retail forex market, but it will also offer better protection of non-professional financial market participants in all sectors of the market monitored by the Commission.

The measures include stricter requirements for the forex brokers operating in Poland, the introduction of a domain register with an alert list and heavier fines for unauthorized companies.

Under the proposed legal amendments to the Financial Market Supervision Act expected to come into effect on April 29, 2017, the companies operating as forex brokerages in Poland, must either have an authorization as an investment company in the country or as an investment company agent.

The KNF would gain the right to run an alert list of unauthorized companies. The entry of the Internet domain name of the violator would prompt the Polish ISPs to block the access to the site. A similar measure has been implemented in Poland’s Gambling Act.

Another major measure would be doubling of fines for unregulated companies. According to the current legislation the fine now is up to PLN 5 million (nearly USD 1.3 million), but the KFN proposes tightening of the criminal liability and categorizing the violation as criminal offense if the detriment to the property of the injured party is significant. In those cases the fine would be up to PLN 10 million.

Currently the only form of protection for the retail forex traders in Poland is the leverage cap, set to 1:100 in the summer of 2015. At the same time, other national regulators in the EU have taken or are considering taking different measures to protect the retail investors from unscrupulous forex, CFD and binary options brokers.

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