Unlike established markets like the US, Europe, Australia, and the UK, most of the emerging markets are still trying to find their place in the global FX ecosystem. Amid rising interest, markets in Asia, Africa, and Latin America provide huge growth opportunities to FX players around the world.
However, most of the leading companies in the forex sector faced challenges in the past few years in emerging markets because of regulatory barriers and the lack of clear FX regulatory frameworks.
While things have changed significantly in the past few years as financial brokers like Equiti, Windsor Brokers, easyMarkets, and Plus500 acquired licenses in emerging markets across Africa and the Middle East, a combination of innovation-driven approach and financial education will help regulatory authorities introduce frameworks that will not only increase the adoption of technology-based FX products but will also enhance consumer protection.
Collaborative Approach
It is generally agreed upon that a collaborative effort will help regulators in emerging markets understand the dynamics of the FX industry.
In the emerging markets, the best way of striking this balance is for progressive regulators to work closely with industry players to understand the business model fully and to get input on intended or existing license requirements.
Education
Due to the nature of the emerging markets, where understanding of financial and investment products is lesser compared to the established markets, regulators face several challenges. All stakeholders in the emerging markets, including brokers must come together to help improve financial literacy.
FX regulations are extremely important in emerging markets as regulations act in the best interest of users in a particular jurisdiction. It is important for people in emerging markets to educate themselves for two main reasons. Firstly, for the identification of risks and opportunities in the market. Secondly, for the understanding of regulatory frameworks in the industry.
Regulations enhance the transparency of financial platforms, as well as of the financial markets, improving trader protection through better business conduct,
Regulatory frameworks based on innovative technologies, focus on education, and appropriate tools for consumer protection, will play an important role in the adoption of FX products in emerging markets over the coming years.
