A new development in the United Kingdom’s gambling industry could also lead to some big changes in the foreign exchange (forex) space. That’s according to Rod Martenstyn, the CEO & Founder at OSS Consult Ltd.
Recently, the Gambling Commission said that as of the 14th of April people will be banned from using credit cards to place bets in Britain, in an attempt to curb problem gambling.
Although this was a development in the gambling sector, the UK’s retail forex and contracts for difference (CFD) trading sectors are linked, which has led to some people forecasting that the (FCA) might soon do the same.
Debt shouldn’t be creating more debt
In fact, people such as Martenstyn are surprised that the British regulator hasn’t already imposed restrictions on credit cards already, as “Debt shouldn’t be creating more debt for the retail consumer.”
So when could we expect these changes to come into play? Well, according to Martenstyn it would not be a surprise if such a ban was imposed within the next 12 months. However, continues Rod, the FCA has been publicly slammed and hurt as a result of the London Capital & Finance mini-bond scandal, and has focused more on the mini-bond sector in the last year. In addition, it remains to be seen how the approach of the new Chief Executive of the FCA will impact the retail fx/cfd sector in the UK, once the current incumbent, Andrew Bailey, moves on to his new role as governor of the Bank of England in March 2020.
In 2018 the retail FX and CFD industry changed dramatically when the (ESMA) implemented its temporary product intervention measures on CFDs in August, which have now become permanent.
This regulation had a huge impact on the retail trading sector – lower volumes, brokers going out business, many of those who have remained have needed to diversify their product offering and an offshore migration to avoid the regulatory restrictions.
Is further FCA intervention necessary?
Further restrictions such as banning credit cards could also have a large impact on the industry, as it would likely drive away even more retail investors, resulting in lower volumes and therefore, lowing trading revenues on brokers who are already struggling in the new regulatory environment.
When asked if this type of regulation is needed for the retail trading industry, Mr Martenstyn said that in his own view people should only be able to gamble/trade with what they can directly afford to lose. If they don’t have the money to gamble/trade without taking a loan out to do so, then they shouldn’t be trading/gambling.
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