moronic FSA regulations

[andrewmooton]

Does anyone know why in the UK you are not allowed to open an account with an FX broker unless you have at least 6 months FX trading exerience?

I think this is completely stupid because:

1. You can just go and open one with a US based broker anyway.

2. You can open a spreadbetting account without any experience and just do basically the same thing.

Doesnt the FSA think people have enough intelligence to decide for themselves whats appropriate for them?

I find it really annoying that I am having it dictated to me what I can and cant do with my own money, and also extremely stupid for the reasons stated above.

[Mburdge]

Why would you want to open an account with an FX broker?
Just open a spreadbet account, get the same spread and save 40% tax!
(There really are no drawbacks to spreadbettting)
CMC are good.

[andrewmooton]

Yes I have an account with cmc spreadbet, and I relise that its probably going to be more profitable with the tax situation but I still find it annoying all the same.

[united46]

Doesnt the FSA think people have enough intelligence to decide for themselves whats appropriate for them?


Andrew

The simple ( and obvious) answer is no. I've been invloved in the financial services business for 11 years and I can tell you that the rules are aimed at 2 classes of people.

1. The dimmest and most stupid people in our society. These people need protection because they believe the adverts that say you can make ££££'s easily. All FSA rule are aimed at the lowest common denominator.

2. Unscrupulous financial institutions who would happily take class 1 people's cash.

As Gordon Gecko said, " a fool and his money are lucky to get together in the first place".

Spreadbetting is accepted because it is seen as exactly that, betting. Most accounts are opened with less than £1k and maybe this is deemed an acceptable amount to lose. CFD's, forex however are seen as investing/trading and for some reason ( although the underlying is the same, or can be) you need to have experience.

Stupid I know, but haven't you noticed the increase in red tape over the last 10 years??????

Regards

UNited

[neilcharlton1]

Just lie on your application form , they never check !
They are so under staffed at the FSA they couldn't give an ar*e
its just a ticky box excerise

[Wallace]

The requirement comes from the CFTC the US futures and fx regulators, futures trading, and the need to for traders to understand the inherent risk of futures trading — 'overloss' is the situation where a losing futures trade is losing more money than the trader has in their account, which doesn’t happen when trading fx: http://www.fxcm.com/forex-vs-futures.html

" Margin/Risk Management
For the purpose of risk management, traders must have position limits. This number is set relative to the money in a trader’’s account. Risk is minimized in the Spot FX market because the online capabilities of the trading platform will automatically generate a margin call if the required margin amount exceeds the dollar value of the account as a result of trading losses. All open positions will be closed immediately regardless of the size or the nature of positions held within the account. If the futures market moves against you, your position may be liquidated at a loss and you will be liable for any resulting deficit in the account. "

Brokers need to protect themselves against clients who don’t know what they’re doing and clients need to be protected against unscrupulous brokers who might otherwise 'bucket' their trades – not place the trade on the 'floor' expecting it will be a losing trade thereby collecting the loss plus commission.