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PBOC Promises Stricter Regulations On Online Forex Market

Chinese authorities are looking to roll out new measures that will result in a stricter regime for forex trading platforms. An official from the People’s Bank of China (PBOC) recently opened up on how local authorities are paying more attention to the online finance market.

With China’s strict laws on capital outflow, officials are vowing to take further steps to protect the Chinese financial system and be a lot more stringent with companies offering online trading platforms. The PBOC has already met with the Ministry of Public Security and the two regulators have promised to cooperate with each other to ensure that the Chinese financial markets will be safeguarded from threats.

This is a sign of yet another crackdown on a variety of threats that can shake the stability of the Chinese economy. This includes forex trading platforms, Internet finance and shadow banks.

China has been clamping down on capital outflows for a couple of years now to combat the weakening of the yuan and a lower forex reserve. Those measures have been mostly successful, but there are still some methods that Chinese residents are using to move money out of the country. Forex trading allows Chinese residents to convert their yuan to foreign money to be spent overseas, which pose concerns for Chinese officials.

Hong Kong: Safe Haven For Forex Traders

Fortunately for forex traders, Hong Kong has become a sort of safe haven from these tighter capital controls. Many forex brokers have moved their operations to the island. The ability to trade with the Chinese market is becoming more important for global forex traders as the new European regulations are starting to be implemented.

The European Securities and Markets Authority (ESMA) recently approved new regulations that impose strict regulations on contracts for differences (CFDs) and a ban on binary options. These new regulations will hurt thousands of forex traders across the EU and impact a number of financial firms. Some of these firms are looking at taking their operations outside the EU and moving into Asian markets such as China to continue their business. Most of these EU based forex firms tend to partner with domestic Asian firms to expand their presence into new markets.

However, it appears that China might be taking a leaf out of ESMA’s book and turning up the heat on online forex firms in the country. They will most likely now focus on Hong Kong to set up new operations.


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