Forex trading is to have strict rules in China. The country's financial regulator has come up with some fresh guidelines to curb fraud, abuses and market manipulation in Forex trading. It is believed the new rules may help in better regulation of the market and simultaneously promote efficient, orderly, fair and honest market operations.
Market participants may not be allowed henceforth to manipulate the closing currency prices. They will be barred to abuse their dominant positions in the market which may turn up to influence the currency prices. They will further be barred from using secret information that may move the market in Forex trading. They will be barred from using the information as advice to others and thereafter encourage to trade.
Apart from all these, the guidelines mentioned the market participants are asked to conduct appropriate trading, adjust the demand and supply, help to keep the native currency stable and provide market liquidity.
Meanwhile, the financial regulatory body has asked the commercial banks to keep a cap on the size of proprietary trading accounts. This means the speculation of financial institutions on the yuan would be under a specific limit.
Forex is a global marketplace for currency trading and it is the largest financial market in the world with a daily turnover of more than $6 trillion. It is a 24-hour marketplace from Monday to Friday, based on the various time zones. It is the most liquid and most volatile market in the world. It is one of the best ways to earn money along with day jobs for retail customers.
Chinese citizens are legally allowed to trade currency pairs in the country but under strict guidelines of the government. Retail customers are allowed to trade Forex and other financial products including stocks under an annual cap.