A desire to monopolize the Lebanese forex market?

by Thomas Schellen November 2, 2016

written by Thomas Schellen November 2, 2016

One issue has emerged as a stumbling block in the relations between the Capital Markets Authority (CMA) and parts of the financial industry in recent months. The concerned sub-sector of the financial industry is a group of companies specializing in digital currency trade, also known as forex platforms or, fx companies. The Lebanese problem with currency trading is based on a new regulation limiting CMA-regulated traders from opening small accounts of $1,000 and on requirements for minimum margins to be boosted from two or five percent to 20 percent, thus reducing leverage possibilities from 20 or 50 times to five times the amount held in an investor’s account with the fx company. These two regulatory hurdles from the CMA have caused outrage among fx companies in Beirut, which claimed that a requirement for a 20 percent margin would drive their customers away and ruin their business. Letters of complaint were

Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years. Send mail

2 comments

investor December 25, 2016 - 8:32 PM

Very well written article. I’ve traded Forex for 2 year with one of the companies mentioned in the article, they cold called me, sent me a demo account, and agreed to open an account for 1001$. Loosing 1000$ trading is your tuition fee. Contrary to the general get rich quick perception, it’s quite difficult to make a living from forex trading. Brokers & Market Makers are the ones cashing in. Lebanon is plagued by poor execution, high latency internet connections and entry level platforms. When you’re up against HFTs, you either position trade or don’t. And to position trade you need at least 10k, In other words, from what i understand, CMA is actually protecting the amateur investor from loosing their money in a blink, and brokers form taking advantage of the ignorant.

Omar Joumaa October 27, 2017 - 3:07 PM

With all respect, the investor who lost and Mr. Saffiedine are amateurs. It is not the 10004 or the 10000$ or a million dollars. It is the trading strategy and the risk exposure that the client is taking. You could have a balance of 100000$ and trade 5 contracts as the CMA is proposing by 20% MARGIN. Mr. Saffiedine took the example of the Swiss franc shock that happened in January 2015.
Well with 5 contracts and an equity of 100000$, during that shock the trader would have found himself with a negative balance of 25000 USD at least and the trader should pay them. Neither these regulations would have protected him, because no margin liquidation level or stop loss level would have been respected during that shock. It is a slippage that can not be controlled.
What the CMA should focus on are:
1- Company regulations towards negative balance protection.
2- Company’s effort in teaching the clients risk management, for the client to be able to understand and calculate his exposure.
3- Most importantly, the client who wants to open an account should pass an exam.

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A desire to monopolize the Lebanese forex market?

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