Published On: Mon, Apr 2nd, 2018

Foreign Forex Brokers Being Ejected From China

Recent news indicates that foreign retail forex brokers have been the target of Chinese authorities. This is according to news being disseminated by prominent entities who have been involved in the trade in China for a while. Apparently, the Chinese authorities started the campaign to eject these traders from the country just after the Chinese New Year celebrations. There have not been any official statements that explicitly state the direction the government is taking. The state of affairs, however, seems to foretell the bleak future that a foreign forex broker will have to contend with in China.

photo/ screenshot YouTube

This is not the first time that a financial industry is facing imminent calamity in China. It is has not been long since the same country did away with cryptocurrency trading. The forex retail market has been recently growing in leaps and bounds mostly due to the collapse of related sectors in recent years. Since China started targeting some financial sectors, business has constantly been moving to the retail side and particularly to the forex market. Due to the recent encroachment of the government to this last ground, however, the odds do not look good for the trade.

The Chinese authorities do not seem to have any reasonable basis for their actions. Many of the foreign companies involved in the trade are big firms that have been previously given a clean bill of health by the same authorities. The issue of compliance with local regulations thus does not seem to be in contention. Some authorities have even confirmed that there were no issues of compliance after they were challenged by legally registered forex firms in the country. The only basis of eviction that has been cited by authorities is the changing nature of policies by the financial bodies in the country.

The authorities have been demanding that foreign firms prepare plans to exit the Chinese market by terminating their operations. Most of the firms have operated in the country for several years and have had a huge impact on the local economy.

This new development supposedly comes a year after foundations of the process were laid down. Apparently, the Chinese authorities have been working on a plan to end the Forex business in China since mid-2017. This plan came into being after the authorities learned about the grip that the local and foreign companies had on the trade. Regarding the future of the business in China, it might as well go under just like most other businesses that the government decided to interfere with.

The exact manner in which the Chinese authorities intend to handle the industry is not clear yet. The only thing that is certain is that all the stakeholders who will be forced out of the trade will either shift their business to the underground or take it to other areas including digital platforms. The local traders will definitely find it easier to go underground as the local dynamics are not suitable for any other option. The foreign forex traders will, however, have to find other means of transferring funds outside the country.

Author: Andrew Cioffi

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