SHANGHAI/SINGAPORE - Lured by hopes that China’s retail investors could become major players in global currency markets, foreign brokers are brazenly chasing business in a gray area of the country’s online trading sector, even as Beijing vows to wipe out such activities.
In Shanghai last month, Australian firm Cardiff Global Markets pitched its “1,000 people, 1,000 cities” vision, a plan to sign up a million clients to its offshore forex trading platform. Javier Paz, founder of advisory firm ForexDatasource.com, says that if deregulated, China’s retail forex market would dwarf Japan to become the world’s largest, “given the appetite for speculative trading in the population”. He estimates Japan has about 7-8 million retail traders, of whom at least 700,000 are active.
Overseas forex brokers, however, have been active in China since the 1980s, offering leverage of up to 400-times, thanks to lax enforcement. SAFE said regulators are cleaning up online forex trading platforms and strengthening international regulatory cooperation, having shut down more than 600 illegal forex platforms by the end of 2018.While this regulatory sweep has forced some firms to shutter onshore offices, others are less fazed.