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#1 19-01-2020 20:46:25

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2703
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Will the FCA ban traders' use of credit cards (deposits/withdrawals)?

Will the FCA ban traders' use of credit cards to make deposits/withdrawals?


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A new development in the UK gaming industry could also lead to big changes in the forex trading industry. This is what Rod Martenstein - CEO of OSS Consult Ltd - believes.

Last week, the Games Commission said that starting 13 April, people will be prohibited from using credit cards to place bets in Britain in an attempt to curb excessive gambling.

While this is an evolution in the gambling sector, the UK's forex trading industry is linked to it, which has led some to anticipate that the Financial Conduct Authority (FCA) may soon do the same.

Debt shouldn't lead to more debt

In fact, people like Martenstein are surprised that the British regulator has not already imposed restrictions on credit cards, because "debt shouldn't lead to more debt for individual consumers".

So when can we expect these changes to come into play? According to Martenstein, it would not be surprising if such a ban were imposed by the end of 2020. However, the FCA has been publicly criticised and injured in the London Capital & Finance mini-bond scandal, and has focused more on the mini-bond sector in the past year. Furthermore, it remains to be seen how the FCA's new chief's approach will affect the foreign exchange and trading industry in the UK, once current incumbent, Andrew Bailey, assumes his new role as Governor of the Bank of England in March of this year.

2 years ago, the foreign exchange and CFD industry for retail investors changed radically when the European Financial Markets Authority (ESMA) implemented temporary intervention measures on CFDs, which have now become permanent.

These regulations had a harsh impact on the trading sector: lower volumes, the departure of brokers, many of those who remained had to diversify their product offer and/or migrate abroad to avoid regulatory restrictions.

Is additional intervention really necessary?

Other restrictions, such as a ban on credit cards, could also have a big impact on the sector, as they would likely drive out even more retail traders, which would lead to lower volumes and therefore lower trading income of brokers who are already experiencing difficulties in this new regulatory environment.

When asked if this type of regulation is necessary for the trading industry, Martenstein replied that in his opinion people should only be able to play/trade what they can afford to lose all of their invested funds. If they don't have the money to play/trade without taking out a loan to do so, then they shouldn't.

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