It Is the Beginning of the End for Forex Brokers in China

Forex brokers in China who have a foreign background are facing tough times. This is after the authorities decided to go after any forex broker who has been offering leveraged products to clients in the market. The entities targeted are not just those that operate inside China but also those who indirectly do business with local operatives. The Chinese authorities have of late adopted a tough stance against a wide array of financial entities. The digital sector that facilitates cryptocurrency trading has, for instance, been totally banned. The turn of events not only presents challenges to foreign firms operating in China but also to local entities.

The forex traders have been meeting with a body of separate government agencies since the pronouncement was first made. The meetings have not particularly been about the resolution of issues but merely a display of power on the part of the Chinese authorities. The government’s position on the current situation is not known as no formal statements have been made. Various financial sectors in China have been facing a lot of scrutiny from the authorities in recent times. The financial trade sector as a whole is thus in a precarious situation at the moment.

Foreign firms started investing in the retail market in China due to the high prospects that the market had. Indeed, this market experienced a very encouraging growth over several successive years during the decade. The businesses that ventured into China nevertheless had to endure with the dynamic policies in China that shift every now and then. There was no investor, however, who expected that the curtain would finally fall on the business as a whole.

After a series of crackdowns and pressure, many businesses that operated in digital financial sectors had to go underground. This is the same situation that will finally befall the forex business in China. Forex traders have been given a directive to simply end their business in China as soon as possible.

The new directive has been imminent for quite a while now. While nobody knew how serious the situation would be, information about the resolutions made in 2017 was available. The regulators sat down in 2017 and made plans to end the forex business in the course of time. The specific plan was arrived at during that year and it has only been waiting to happen. As the plan rolls out, it has been observed that both local and foreign traders will be forced out of the business.

If implemented in full, the new measures will completely limit trading activities in the forex industry. This will herald a new era of confusion, uncertainty and unregulated trade. Business will ultimately shift to neighboring countries in Asia and the Chinese market will be plagued by underground operatives. The foreign brokers who are caught in the crossfire will have to make tough decisions regarding their business. It will not be easy for the local brokers and their operatives either. It appears that the authorities are not interested in regulating the business but simply want to bring it to an end.

Resource: Wie Funktioniert Forex

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