Business

Online forex trading boom looms on new regulations by CMA

Looming business boom for online trading is expected in the coming months as companies rush to comply with new regulations, even as uncertainties remain about how the rules by Capital Markets Authority (CMA) will be enforced.

EGM Securities became the first Non-Dealing Online Forex Broker to be licensed and regulated by CMA – the government agency charged with licensing and regulating the capital markets.

The move, according to Eugene Abungana, a Forex Trading strategist with Meta Capital and a director at Nairobi School of Forex, will lure more players into the industry, which has been operating without proper guidelines and regulations for online traders and investors who use online trading platforms both locally and abroad to trade on their own.

“With the new regulations now in place, I expect to see more players join the party. The new guidelines by CMA this year will also help trigger trust and faith to those willing to venture into online trading,” said Mr. Abungana in an interview, during the first online FOREX trading conference held last week in Nairobi.

The new set of rules by CMA include risk management policies that are expected to give investor the exact outlook of how risky an investment is, while at the same time leveraging a set at 1:100, the ratio of money set aside from the total investment aimed at cushioning the investor from losses. The regulations also include the registration of online foreign exchange dealers.

Available industry data suggest that there are currently more than 80,000 investors trading online, 80 per cent of whom are based in the UK with the rest spread out in Mauritius and Australia. Shares are traded online through both local and international brokers who are members of the over the counter (OTC) forex market that they trade in.

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