Singapore's new retail trading regulation cuts FX Leverage to 20:1

Singapore’s retail traders will no longer have access to 50:1 leverage. If previously traders only had to meet margin requirements of 2 percent, new retail trading regulations that came into effect this week cut FX leverage by more than half. The Monetary Authority of Singapore issued new regulations that imply that retail investors now only have access to 20:1 leverage. Nevertheless, as with the recent ESMA’s regulations, there are also some loopholes in Singapore’s retail trading rules. For example, having a special status of an accredited investor would still allow to access 50:1 leverage. However, obtaining the status of a professional investor is clearly difficult.

To become an accredited investor under Singaporean financial regulation laws it is required to:

• have assets of more than 2 million Singaporean dollars at personal disposal or,

• have more than 1 million Singaporean dollars in cash or,

• earn more than 300 000 Singaporean dollars annually.

Newly introduced changes in leverage are no surprise since many financial regulators strongly believe that high leverage represents a risk to retail investors. The Monetary Authority of Singapore has been raising concerns for many years and now it believes that new retail trading regulation will help Singapore to maintain its position as one of the largest FX Centres globally.

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