The AMF is an independent body, responsible for safeguarding investments in financial instruments and all other savings and investments.
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As the popularity of Forex trading in France grows, so does the amount of complaints leveled at the brokers.
Use our well-researched list to discover who are the best brokers to trade with if you are located in France. While Forex trading has been gaining popularity in France, so too have the number of complaints about French forex brokers. As a result of the increased level of complaints, the French authorities have taken a hard line stance against high-risk investments by banning all electronic advertisements of such products.
Nevertheless, it is legal to trade forex in France although as a French trader, you need to conduct your own due diligence to find the best French forex brokers to work with. The French financial regulator AMF Autorité des Marchés Financiers has always maintained a strong stance against financial fraud of any kind. It has always tried to encourage its citizens to invest in more conservative investments such as stocks.
To protect its citizens from being lured into investing in high risks investment products, the AMF has totally banned all electronic advertisements of forex products due to the belief that most of the forex brokers in the industry have downplayed the risks involved in forex trading. Consequently, the AMF has now maintained an official list of forex brokers that are unauthorized and unsafe to invest with. Because of the strict monitoring and actions taken by the AMF, most of the unauthorized brokers have moved their operations outside the reach of the AMF or have switched to other products.
Established in under the Financial Security Act, Autorité des Marchés Financiers AMF is the main agency in France that is responsible for safeguarding the stability of the French financial markets.
The majority of the French forex brokers are actually local branches of forex brokerage firms that obtained their authorization from the Cyprus Securities Exchange Commission CySEC.
As the target markets of these brokerage firms are clients from all over the world, these brokers usually adopt the trading platforms that have the widest appeal. The most popular being the MetaTrader platform. Other trading platforms that are normally adopted by the forex brokers in France are the cTrader and the Sirix WebTrader.
It is the forex industry standard practice not to charge traders any commissions on the trades that they make. In lieu of commission charges, what forex brokers do is widen the spreads which traders have to pay on the assets that they are trading. These spreads can be fixed or floating and typically range from 0.
The use of derivatives is growing in many emerging economies. The growth of electronic execution and the diverse selection of execution venues has lowered transaction costs, increased market liquidity, and attracted greater participation from many customer types. In particular, electronic trading via online portals has made it easier for retail traders to trade in the foreign exchange market. Retail foreign exchange traders. The biggest geographic trading center is the United Kingdom, primarily London.
According to TheCityUK , it is estimated that London increased its share of global turnover in traditional transactions from Due to London's dominance in the market, a particular currency's quoted price is usually the London market price. For instance, when the International Monetary Fund calculates the value of its special drawing rights every day, they use the London market prices at noon that day.
Unlike a stock market, the foreign exchange market is divided into levels of access. At the top is the interbank foreign exchange market , which is made up of the largest commercial banks and securities dealers.
Within the interbank market, spreads, which are the difference between the bid and ask prices, are razor sharp and not known to players outside the inner circle. The difference between the bid and ask prices widens for example from 0 to 1 pip to 1—2 pips for currencies such as the EUR as you go down the levels of access. This is due to volume.
If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the "line" the amount of money with which they are trading. An important part of the foreign exchange market comes from the financial activities of companies seeking foreign exchange to pay for goods or services.
Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short-term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational corporations MNCs can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants. National central banks play an important role in the foreign exchange markets.
They can use their often substantial foreign exchange reserves to stabilize the market. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would. There is also no convincing evidence that they actually make a profit from trading. Foreign exchange fixing is the daily monetary exchange rate fixed by the national bank of each country.
The idea is that central banks use the fixing time and exchange rate to evaluate the behavior of their currency. Fixing exchange rates reflect the real value of equilibrium in the market. Banks, dealers and traders use fixing rates as a market trend indicator. The mere expectation or rumor of a central bank foreign exchange intervention might be enough to stabilize a currency.
However, aggressive intervention might be used several times each year in countries with a dirty float currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank. Investment management firms who typically manage large accounts on behalf of customers such as pension funds and endowments use the foreign exchange market to facilitate transactions in foreign securities. For example, an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases.
Some investment management firms also have more speculative specialist currency overlay operations, which manage clients' currency exposures with the aim of generating profits as well as limiting risk. While the number of this type of specialist firms is quite small, many have a large value of assets under management and can therefore generate large trades. Individual retail speculative traders constitute a growing segment of this market.
Currently, they participate indirectly through brokers or banks. Retail brokers, while largely controlled and regulated in the USA by the Commodity Futures Trading Commission and National Futures Association , have previously been subjected to periodic foreign exchange fraud.
Those NFA members that would traditionally be subject to minimum net capital requirements, FCMs and IBs, are subject to greater minimum net capital requirements if they deal in Forex. A number of the foreign exchange brokers operate from the UK under Financial Services Authority regulations where foreign exchange trading using margin is part of the wider over-the-counter derivatives trading industry that includes contracts for difference and financial spread betting.
There are two main types of retail FX brokers offering the opportunity for speculative currency trading: Brokers serve as an agent of the customer in the broader FX market, by seeking the best price in the market for a retail order and dealing on behalf of the retail customer. They charge a commission or "mark-up" in addition to the price obtained in the market. Dealers or market makers , by contrast, typically act as principals in the transaction versus the retail customer, and quote a price they are willing to deal at.
Non-bank foreign exchange companies offer currency exchange and international payments to private individuals and companies. These are also known as "foreign exchange brokers" but are distinct in that they do not offer speculative trading but rather currency exchange with payments i. The volume of transactions done through Foreign Exchange Companies in India amounts to about USD 2 billion  per day This does not compete favorably with any well developed foreign exchange market of international repute, but with the entry of online Foreign Exchange Companies the market is steadily growing.
These are typically located at airports and stations or at tourist locations and allow physical notes to be exchanged from one currency to another.
They access the foreign exchange markets via banks or non bank foreign exchange companies. There is no unified or centrally cleared market for the majority of trades, and there is very little cross-border regulation. Due to the over-the-counter OTC nature of currency markets, there are rather a number of interconnected marketplaces, where different currencies instruments are traded.
This implies that there is not a single exchange rate but rather a number of different rates prices , depending on what bank or market maker is trading, and where it is. In practice, the rates are quite close due to arbitrage. A joint venture of the Chicago Mercantile Exchange and Reuters , called Fxmarketspace opened in and aspired but failed to the role of a central market clearing mechanism. Banks throughout the world participate. Currency trading happens continuously throughout the day; as the Asian trading session ends, the European session begins, followed by the North American session and then back to the Asian session.
Fluctuations in exchange rates are usually caused by actual monetary flows as well as by expectations of changes in monetary flows. Major news is released publicly, often on scheduled dates, so many people have access to the same news at the same time.
However, the large banks have an important advantage; they can see their customers' order flow. Currencies are traded against one another in pairs. The first currency XXX is the base currency that is quoted relative to the second currency YYY , called the counter currency or quote currency. The market convention is to quote most exchange rates against the USD with the US dollar as the base currency e.
On the spot market, according to the Triennial Survey, the most heavily traded bilateral currency pairs were:. Trading in the euro has grown considerably since the currency's creation in January , and how long the foreign exchange market will remain dollar-centered is open to debate.
Until recently, trading the euro versus a non-European currency ZZZ would have usually involved two trades: The following theories explain the fluctuations in exchange rates in a floating exchange rate regime In a fixed exchange rate regime, rates are decided by its government:.
None of the models developed so far succeed to explain exchange rates and volatility in the longer time frames. For shorter time frames less than a few days , algorithms can be devised to predict prices.
It is understood from the above models that many macroeconomic factors affect the exchange rates and in the end currency prices are a result of dual forces of demand and supply. The world's currency markets can be viewed as a huge melting pot: No other market encompasses and distills as much of what is going on in the world at any given time as foreign exchange. Supply and demand for any given currency, and thus its value, are not influenced by any single element, but rather by several.
These elements generally fall into three categories: Internal, regional, and international political conditions and events can have a profound effect on currency markets. This list is not static and is constantly updated. Presently, 25 forex brokerage companies have been placed in the AMF blacklist, with the AMF maintaining its conservative stance on financial investments in forex.
This list also includes companies listed as offering financial intermediary services, or introducing brokerage services. But are there any forex brokers licensed to do business in France? AMF has adduced reasons for its action. In a report filed in the third quarter of , AMF presented data which showed that French forex traders covering the entire spectrum from novice to experienced trader, lost a total of million Euros over a 5 year period.
Anyone who knows the nature of the forex market will understand that this is a form of capital flight from the country, as money lost by a trader in one country is money gained by traders in other countries in the globalized forex arena.
Most of the losses are attributed to the unscrupulous practices of brokers who are located outside the shores of France and out of reach of the AMF in response to numerous complaints of these infractions made to it by victims. In the light of the information provided above, we can therefore see that it is going to be very difficult for brokerage firms to get licensing to do forex brokerage business in France.
With what could be viewed as a biased mindset of the AMF towards the business of forex, many forex firms would not waste their time and efforts to try to get licensed in France, but would rather move to places like the UK, Cyprus and Germany where they would more easily get their business registered.
Forex traders in France will therefore have to seek other options abroad with licensed companies. The maintenance of the blacklist by the AMF is not entirely a bad thing, as our review has shown that there are several forex brokers on that list which deserve to be there as a result of nebulous regulatory disclosures on their websites. Going forward, the AMF would be better served by making known to traders in very clear terms, the reasoning behind the listing of some of the companies in the blacklist.
It should not be left to traders to have to start combing the internet searching for reasons for the blacklisting of brokers.