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The forex market in Africa has surged with more brokers welcoming traders from African countries. However, a lot of forex trading in these African countries has, for many years, gone unregulated and illegitimate brokers, or scam brokers, have taken many chances at ensnaring unsuspecting traders in elaborate scams.
Forex trading is legal in Kenya and the country has its own regulatory body, the Capital Markets Authority , which oversees brokers based in, and operating from, Kenya itself. Numerous brokers around the world have the required regulations and authorization to offer their services and solutions to Kenyan traders.
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These brokers have increased in recent times due to competitiveness present in the industry along with obtaining requisite regulation to offer trading. This means that more Kenyan traders can trade forex from small amounts of capital, allowing them to benefit from the profits which can be made from forex trading. Legal environment Subscribe to Our Newsletter Subscribe to our newsletter and stay updated on the latest developments and special offers! Due to the number of unregulated brokers who try to entice traders into registering a live trading account and depositing capital, the CMA has cautioned traders investing online.
Furthermore, the CMA has also stated that traders may be at risk of losing legal protection should they deal with unlicensed providers.
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The only entities permitted to engage in foreign currency dealing in Kenya are those licensed under both the Banking Act and the Central Bank of Kenya. Brokers who are interested in applying for a license with CMA must have a minimum capital of Sh50 million, which must be maintained at all times along with 5 per cent of liabilities owed to forex customers more than Sh50 million. Along with this, the applicant must ensure that Sh40 million, or 80 per cent, of its capital, or whichever is the highest, is in the form of cash as well as cash equivalents in financial instruments at all times.
Applicants, subsequently licencees, must hire a chief executive who is fit to serve in the position. Besides, the chief executive must have experience of no less than five years in the business of buying, selling, or dealing in forex, forex futures, or futures contracts. Applicants who operate as a subsidiary, or a branch, of a regulated foreign forex firm, are required to provide proof of the existing relationship. Forex firms who are regulated in other jurisdictions must provide the appropriate letters from regulators - confirming both the licensing and good standing.
The legal framework for online forex trading will ensure potential traders are provided with a safer trading environment. The CMA has imposed a limit on the amount of leverage that licensed brokers may offer to Kenyan traders. Leverage should not exceed ten times the deposit of the client for trading in forex pairs between the Kenya shilling, any hard currency, or any other Eastern African Community currency. In the case where two hard currencies are traded, leverage must be capped at 20 times the deposit amount of the trader.
Top five countries for Forex traders
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Go to the Finance Magnates Intelligence page. One of the biggest retail forex markets by its own right, Japan remains an island onto itself with regulated online brokerage groups targeting traders in neighboring Asian countries based on Australian, Hong Kongese and even UK licences.
Forex Trading Regulations Around the World – the Full Breakdown
Despite a growing focus on developing markets recently, Europe remains the leading region in terms of the number of markets welcoming forex brokers while ensuring trader safety. A European license is often the most sought after by firms that operate in markets where a local legal framework is not available.
A number of national regulators in Europe have also recently issued specific guidelines for conducting business under their jurisdictions. These include additional client protection measures in Spain , an advertising ban in France , a distribution ban in Belgium , a CFDs advertising ban in the Netherlands and a new minimum deposit and maximum leverage requirements in Turkey. Where does your jurisdiction stand regarding CFD trading? Finance Magnates Intelligence has mapped this out too. The maps offer a snapshot of the market as it is in March, Compared to the stock market and other markets, foreign exchange forex is unregulated in many countries.
In many countries, forex trading is seen as the same as stock trading. With advances in technology, there are major changes compared to the Forex market a few decades ago. With the increase in internet usage and new technology development, there is more flexibility in Forex trading. Now it is possible to trade in forex comfortably from home. Using the internet, high-speed electronic communication has made trading online possible.
Legal environment tightens for forex trading in Kenya - The Standard
Is forex trading illegal? Forex trading is a legal business like futures, stocks, or commodities trading. However, forex brokers need to be regulated in the countries where their jurisdiction is. Since Forex trading is a risky business and can cause great losses, some countries have made Forex trading illegal for unregulated brokers.
Other countries have imposed major restrictions on Forex trading. Hence many people interested in Forex trading ask the question in which country is forex trading legal? While many developed countries allow citizens to make money trading in Forex, some countries have many restrictions. Trading in Forex is not safe and can cause losses.
Data indicates that the Forex market is among the riskiest retail traders, with new traders most likely to lose. The statistic indicates that a majority of traders fail in Forex trading. This proves that the market is hazardous. However, some traders can make massive profits if they have good skills for managing risk and a clear strategy for trading.
Hence many countries have made Forex trading illegal, while others have imposed restrictions on trading in Forex. Due to the high losses in Forex trading, many countries would not want their citizens to invest their hard-earned money in Forex and mostly lose it.
Hence, many countries regulate forex trading and formulating new rules and regulations for trading. The restrictions are mainly imposed because it is precarious. Forex trading risk is considered similar to gambling risk, hence to protect their citizens, prevent financial losses, restrictions are imposed. Traders often have the illusion that they are in control since leverage is allowed in the Forex market.
Traders can use leverage to trade in Forex without having to invest the money.