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Regulator issues first online forex trade permit to UK firm

Online forex trading is potentially lucrative. file photo | nmg
Online forex trading is potentially lucrative. file photo | nmg 

The capital markets regulator has issued an online foreign exchange licence to Execution Point Limited, the first such authorisation under new regulations that came into force late last year.

Execution Point, which is a local subsidiary of British firm Davisa UK Limited, has been granted a non-dealing online foreign exchange broker licence, the Capital Markets Authority (CMA) said on Wednesday.

The firm will “link” clients to markets by providing a platform to trade in foreign exchange, though the firm is not allowed to engage in selling and buying of currency.

Non-dealing foreign exchange brokers are required to have a minimum paid-up capital of Sh30 million, money managers must have a paid up capital of Sh10 million while dealing online brokers face the highest capital requirement of Sh50 million.

Online forex trading is potentially lucrative but highly volatile, which puts inexperienced investors at the risk of incurring massive losses.

“Non-dealing online forex brokers do not offer client advice or trade on behalf of their clients… the trader (client) is responsible for executing trades— buying and selling of any product on the platform and the requisite risk assessments are undertaken to determine the suitability of clients to participate in online forex trading,” said the CMA.

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