French Forex Brokers

French Forex Brokers: Rules and Regulations

FranceRegulation of the forex market in France is carried out by the Autorité des Marchés Financiers (AMF). This regulator issues guidelines under which operators in the financial markets do business in France.

Understanding Regulation of Forex in France

In France, the AMF has what can best be described as an anti-forex stance. The AMF has traditionally been an organization which prefers to push French citizens towards investments with relatively lower risk profile such as the stock market, while having a hostile stance towards high-risk investment vehicles such as forex trading. The AMF claims to provide added protection to investors by alerting them to advertising campaigns which seem to overpromise on the returns that can be attained from forex trading. AMF is convinced that for the most part, many of the forex brokers operating in the market downplay risks in forex trading as a means of luring French citizens to part with their hard earned money.

Consequently, the AMF now maintains an official blacklist of forex companies, which it says are not licensed to do forex business in France and therefore not safe for French citizens to invest in. 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?

Top 3 French Forex Brokers:

Rank
Broker
Special Offer
Min Deposit
Spreads From
Rating
Max Leverage
Regulations
Support
Start Trading
1
No commissions
$50
0.8 PIPs
30:1
CIMA, NFA, CFTC, FCA, IIROC, ASIC, FFA Japan, MAS, SFC of Hong Kong
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1
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Max Leverage 30:1
Min Deposit $50
2
Rapid Crypto Transactions
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0.8 PIPs
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Max Leverage 500:1
Min Deposit $10
3
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$250
0.1 PIPs
30:1
CFTC
3
Spreads From 0.1 PIPs
Max Leverage 30:1
Min Deposit $250
4
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$10
1.2 PIPs
500:1
4
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Max Leverage 500:1
Min Deposit $10
5
EUR/USD from 0.5 pips
$200
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CySEC, FCA
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5
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Max Leverage 30:1
Min Deposit $200

Status of Forex Trading in France

AMF has adduced reasons for its action. In a report filed in the third quarter of 2014, AMF presented data which showed that French forex traders covering the entire spectrum from novice to experienced trader, lost a total of 161 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.

The report also presents other data which are sobering:

  • 9 out of every 10 traders lose money in forex
  • Average losses are about 10,900 Euros between 2009 and 2012.

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.

AMF has therefore come out with a position.

  1. Block the websites of these companies from appearing on France cyberspace. A court judgment from the Court of First Instance in Paris has been obtained to this end.
  2. Use satirical pop-ups to ridicule the ads of blacklisted brokers if they are able to evade the first step.

french forex brokers

So while the AMF has not banned forex trading in France, it has come out with a position which is exemplified by the comments of Natalie Lemaire of the Retail Investors Relations Directorate of the AMF:

“foreign exchange trading is a market that individual investors should avoid. This is our conviction and the purpose of our efforts today”.

Implications for Forex Traders in France

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 Future of Forex Regulation in France

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. Newbie traders do not have the knowledge or the experience to start sifting information as to why a broker is blacklisted or not. By making the reasons known to all, some contribution to knowledge can be made for the benefit of new traders, who can then tap into this resource when searching for brokers to do business with.

One thing the AMF has done rightly is the new arrangement it has with the Financial Conduct Authority (FCA) in the UK, and CONSOB in Italy on the disclosure of brokers who advertise for clients and claim to be regulated in these other climes when they are actually not licensed to do so. Such disclosure has the potential to save many traders from falling into the hands of these scam brokers.

It is our opinion however, that the AMF should drop its hardline stance against forex trading as a whole, and focus instead on sanitizing the sector. We use the knife to draw an analogy in this regard. A knife is a tool. In the hands of a chef, a knife would be useful in cutting up ingredients which would make for great recipes. In the hands of a killer, a knife is an agent of death. But would the approach be to throw the knife away simply because it can cause harm? Imagine a world without the knife.

Imagine a world without forex trading. AMF would be better served refocusing and repackaging its forex regulatory function.

Adam

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Adam is an experienced financial trader who writes about Forex trading, binary options, technical analysis and more.

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