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#1 18-06-2020 21:47:33

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2886
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How will regulations be affected by the virus situation?

How will regulations be affected by the virus situation?


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The virus situation has had a far-reaching impact on how we trade. In fact, there are few aspects of life that the Covid19 has not influenced in one way or another.

The effects are also clearly visible on the markets. Indeed, the virus situation brought a wave of market volatility, the most intense period having taken place in at the end of the 1st quarter.

The increased volatility has made the forex more attractive than ever, and a new wave of traders has flocked to brokers. They are both novice and dormant operators with a renewed interest in trading.

How forex regulation will be affected

All of this raises the following question: how will regulation be influenced by this virus situation? With the arrival of new traders, will regulators around the world strengthen the protection of trading for retail investors?

In a recent speech, Megan Botler, executive director of supervision at the FCA (Financial Conduct Authority) says that regulators must adapt in times like this.

"We will learn from this virus situation in terms of timeliness. But we also need to look at our whole system, from the data and information we collect, the way we decide which brokers and which traders must be allowed to invest and how we supervise them, to the way we ensure that unacceptable brokers and individuals are sanctioned and removed from the regulated industry as quickly as possible," adds Botler.

ESMA to focus on business resilience

Alexandre Constantin, director of MAP S.Platis says: "While ESMA and other regulators have decided to delay some future reporting obligations or have proposed amendments to future regulations take into account the economic uncertainty and commercial disruption, there is no evidence that additional regulation is being proposed in response to the virus situation."

"ESMA acknowledges in its publication "Quarterly Dashboard" that the trading activity induced by the virus situation did not have a significant impact on infrastructures while it exacerbated the problems system security, especially for online trading, attempts to infiltrate trading systems by hackers remain high."

"Based on the above, the attention of regulators is to focus on business resilience, risk management and compliance with the principles of MiFID II rather than introduce new regulations. However, we hope that after the end of the virus situation, regulators will learn and adapt the existing regulatory framework."

Australia's regulator remains focused on CFDs

In Aussie territory, forex players are waiting impatiently. The ASIC (Australian Securities and Investments Commission) has published a document which proposes to ban binary options and limit leverage.

Since then, the ASIC has received a broad response and has yet to implement the proposed changes, even though several months have passed. In recent weeks, the agency has readjusted its priorities following the virus situation, adding that it would postpone some of its plans to focus on the issues that require its immediate attention.

However, as Sophie Gerber, director of the law firm Sophie Grace, pointed out, ASIC forgot to mention her consultation document on CFD restrictions. Also, the agency released a reportlast month that pointed out that individual traders posted a net loss of 229 million AUD in the third week of March.

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