PFSA Forex Brokers in Poland

Poland is a sizeable country in the European Union that has a healthy population interested in trading the Forex markets. Forex trading is immensely popular in the country; however, the rising number of broker scams and the risks of the market due to high leverage have forced the Polish Government to intervene through several regulatory measures. Poland seems to be one of the very few countries in the world that are aimed at reducing the risks of its investors through proactive means, and it is not a surprise that Poland continues to be the focus of attention for both local as well as foreign brokers. Poland has a single public regulatory authority that is responsible for the regulation of all financial companies in the country.

The Komisja Nadzoru Finansowego (KNF), more popularly known as the Polish Financial Supervision Authority (PFSA), oversees the job of regulating financial entities dealing in sectors. PFSA supervises firms in disciplines ranging from banking, securities trading, insurance, pensions, electronic money transfer, fund management, payments, and other financial industries that come directly under the Polish financial markets. The PFSA is considered to be relatively new to the industry, having only been established in 2006, but the PFSA grew in authority and stature to become the country’s top financial watchdog for a multitude of financial industries. PFSA regulated brokers were primarily governed by the Securities and Exchange Commission (SEC) of Poland until 2006.

However, with the changes in regulatory frameworks and the Financial Supervision Act of 2006 gave complete authority to the PFSA to monitor the activities of all financial institutions apart from the banking sector. Further down the road, a change in Government policies in 2008 saw the merger of all existing financial regulatory agencies into a single organization, thereby providing the PFSA with the ultimate power of authority over all financial institutions, including banks and other allied entities. The PFSA played a significant role in maintaining the stability of the Polish financial markets during the volatility of global economic meltdown in 2008 and had been attributed as one of the most efficient regulatory agencies in the entire EU.

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Governing Policies & Framework For PFSA Forex Brokers

PFSA regulated brokers are constantly under surveillance by the PFSA, and the regulatory agency routinely creates new policies and guidelines to ensure that Forex brokers in Poland offer a safe and secure environment for its FX traders. The primary job of the PFSA is to ensure that all regulated businesses in Poland adhere to the strict guidelines imposed by the Polish authorities for a safe and smooth operation of the Polish financial markets. The PFSA ensures a high level of competitiveness and transparency to ascertain a positive development of the Polish economy, which in turn helps in safeguarding the integrity of the overall financial stability of the country.

As a public regulatory organization that works directly under the legislation, the PFSA is responsible for drafting new laws, acts, and policies for the safe supervision of financial firms. The standard code of conduct is continually reviewed and updated according to input from Polish authorities, financial experts, and the European MiFID to ensure that the existing framework is sufficient to restrict the number of financial scams and abuse happening within the retail FX brokerage industry. 2014 saw a significant shift in momentum for Polish traders after the PFSA performed a detailed study on the conduct of FX brokers and the performance of investors in the market.

The extensive research organized in 2013 led to the finding that 81% of the customers had large losses in their trading accounts, and the primary reason for such a drastic percentage of losses was found to be the higher leverage on offer. After lengthy deliberations, the PFSA altered its policies in 2015 to reduce the leverage available to Polish FX traders. The initial consensus was to reduce the maximum leverage to 1:50, similar to the leverage adopted by the CFTC from the US, but input from industry experts and resident traders forced the PFSA to raise the limit to 1:100.

The maximum leverage for all PFSA Forex brokers

Under the new laws, all Forex brokers in Poland should have a minimum margin requirement of 1%, effectively reducing the freedom to enjoy a high leverage that is currently available at a whopping 1:3000 with several FX brokers. Interestingly, Poland is only one of the very few countries that restrict the amount of leverage available for FX trading, as European Forex brokers are known to be highly liberal in their approach by avoiding imposing any restrictions on the trader. The maximum 1:100 leverage is currently in force among all PFSA Forex brokers, and it is currently illegal for FX traders in Poland to use any amount of higher leverage than the stipulated amount.

Several international brokers pounced on the opportunity to attract traders with a high-leverage trading account with lower minimum margin requirements; however, the PFSA was quick to ban and penalize all unauthorized brokers that offered their services to Polish investors without a valid PFSA license. Nevertheless, Poland is still a part of the EU and is bound by the European Economic Area (EEA) Agreement. Therefore, all EU Forex brokers are free to offer their services to Polish investors without obtaining a PFSA license. To counter the problem of high leverage that most EU brokers offer, the PFSA has collaborated with the MiFID and other European regulatory authorities to ensure that any broker offering their services to Polish traders should lower the maximum leverage to 1:100.

As a result, a majority of EU brokers have complied with the PFSA’s acute requirements by imposing a maximum leverage on all trading accounts offered to Polish investors. Unfortunately, even though PFSA regulated brokers are free to offer their services to the entire EU, most traders might feel restricted by the higher margin requirements. Due to the trading restrictions imposed by the PFSA, a majority of traders in the EU will move towards more mainstream brokers in other jurisdictions that do not enforce any restrictions on trading. The PFSA regulations, on the other hand, provides excellent incentives for Forex brokers to set up a representative branch office in Poland to offer custom-tailored FX products and brokerage accounts according to the specific requirements of Forex traders from Poland. The relatively large population also enables brokers to cater to wider audience and enjoy more profits, which entirely justifies the cost of setting up individual brokerage houses.

The PFSA issues public warnings and notices about impending financial scams or penalties levied on PFSA regulated companies. The organization aims to educate its consumers through different avenues, and even offer arbitration services to resolve disputes between businesses and investors. Poland has an incredibly effective regulatory framework, which allows Forex traders to be assured of high-quality services and safety of trading funds.

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