Vedat Akgiray, President of Turkey’s Capital Markets Board, discussed the risks of unregulated forex trading with an Anatolian news agency on Tuesday. “The forex market is attractive since it promises high rates of profit for less money. Many investors are influenced by Internet ads and allocate their resources to this sector, resulting in huge losses. Even if they make profits, forex companies have a variety of reasons for not distributing this money, as these companies are not regulated,” he warned.
Currently, the Turkish retail forex market it unregulated. Turkish investors may purchase currency on leverage, and as with any leveraged transaction, risk losing even more than they borrow should the market head against them. Though financial institutions and knowledgeable investors should be able to adequately asses that risk, retail investors are often new to the field and vulnerable to simple miscalculations.
Akgiray is not the first regulator to warn of the perils of retail forex. Earlier this year, the SEC released an educational bulletin explaining some deceptive practices used in the forex market. The Capital Market Board President urged would-be forex moguls to invest with caution: “Forex transactions require extensive knowledge and expertise of currency markets because many factors influence the movement of a single currency. Since these transactions are done through company platforms, which are not regulated, the investor cannot claim his money in case of a problem. I warn all people to be careful with these transactions.” However, he did not announce any plans to apply stricter regulations to the forex market.
Read more about this statement by the Turkish Capital Market Board President.
|photo credit: Kıvanç Niş|