Belgium’s Forex and Binary Options ban backfires as unregulated brokers and fraudsters fill the void
Belgium’s ban on Forex, CFD’s and binary options trading, a ban made with the intent of
protecting Belgium citizens, has effectively backfired.
This should be a surprise to no one.
Belgium’s financial regulator, the FMSA, announced the complete ban of these trading instruments in mid-August. Brokers were given a few short weeks to refund Belgium clients their money and cut off all ties. The FMSA’s hasty actions appear to be spearheaded by high level government officials like the Minister of Employment, Economy, and Consumer Affairs Kris Peeters and Minister of Finance Johan Van Overtveldt.
Weeks prior France took a more reasonable approach, rather than banning the use of trading these financial instruments completely, France banned only the advertising of Forex, CFD’s and binary options. Several other European countries are taking a similar approach.
So getting back to the meat of the story, there are several reasons why Belgium’s complete ban of these trading products is backfiring and will continue to backfire for the foreseeable future. As Belgium traders receive their refunds from the regulated brokers, the unregulated brokers, wherever they may be located, see the huge opportunity. More clients, more money.
With this, it should be no surprise that there’s a ton of these guys displaying advertisements targeted towards Belgium citizens. Not all of these brokers are complete scams, I personally use Trader’s Way for higher leverage, for example, and trust them with my money. But there’s bound to be a flurry of new overnight Forex and binary options scams geared towards Belgium citizens.
According to LeapRate, the Belgium retail Forex market is worth around $16 million per day, so it’s definitely an attractive market for those looking to take advantage.
It seems that Belgium citizens will continue to trade Forex, binary options and CFD’s with brokers who aren’t strangled by a regulatory body. Similar to U.S. retail traders, Belgium traders have limited options with who and what they can trade.
Trading with an extra layer of risk is better than not trading at all.
Belgium’s Government may have enacted the ban with good intentions in trying to protect its consumers, but like most government action that attempts to exert control, or in this case ban certain markets, they usually backfire and just bring more damage. Belgium has essentially put further harm onto the people they were trying to protect.
So what can be learned?
As long as there’s the internet, there will be online trading. It will not be going away any time soon. This should serve as a warning to other countries, that regulators should exert control, maintain and regulate these products rather than ban them altogether.
Banning a financial product just leaves more opportunity for the fraudsters, scam artists and gurus.