Online forex brokers are facing a paradigm shift as the Treasury introduces a groundbreaking regulatory fee, ushering in a new era of oversight in the dynamic landscape of forex trading.
Treasury Cabinet Secretary Njuguna Ndung’u recently announced the amendment of the Capital Markets (Online Forex Exchange Trading) Regulations, 2017, to include a mandatory annual fee for brokers, marking a significant move to enhance regulatory control and boost revenue for the Capital Market Authority (CMA).
“The Capital Markets (Online Forex Exchange Trading) Regulations, 2017, hereinafter referred to as the 'principal Regulations,' are amended by inserting the following new regulation immediately after regulation 25,” Prof Ndung’u declared.
“An online forex broker shall pay to the Authority an annual fee based on the gross trading revenue which shall include the commissions and rebates from third-party related service providers for that year, at the rate specific in the Third Schedule.”
Under these revised regulations, both dealing and non-dealing online forex brokers are now required to remit an annual fee to the CMA, equivalent to three per cent of their gross revenue, encompassing commissions and rebates.
This strategic measure aims to provide the CMA with an additional revenue stream while fostering financial transparency and regulatory compliance within the burgeoning online forex trading sector.
A dealing forex broker, often referred to as a market maker, plays a vital role by actively participating in trades.
This involvement includes setting bid and ask prices, facilitating transactions, and taking the opposing position to clients.
This move comes at a juncture when the forex market is experiencing increased popularity and heightened participation.
The introduction of an annual fee structure not only provides the CMA with a dedicated revenue stream but also aligns with international standards for overseeing financial markets.
As the regulatory landscape undergoes transformation, online forex brokers find themselves at the forefront of change.