Why was the popularity of FX trading so heavily boosted in Kenya?
The popularity of FX trading was given a boost by the introduction of regulation by the capital markets authority. The entrance of the first local forex provider into the market generated a lot of media buzz. This first brokerage was not a 100% indigenous brokerage, but a subsidiary of a Cyprus-based brokerage carrying a CIF license. A second player has since entered the local market, but they are doing so at a time when offshore brokers have had more of a foothold in Kenya than the local ones.
This article highlights what the rest of 2020 has in store for Kenyans in online forex trading. So what lies ahead?
- More Broker Scrutiny
At the heart of the institution of forex authorization and licensing by the Capital Markets Authority in Kenya is regulation. Kenya is coming from an era where many local traders lost their money to fly-by-night operators. Many of these were shadowy companies with unclear regulation or licensing, and worked with local partners, some of who were also doing things on their own without the consent or knowledge of their principals.
For instance, it was not unusual to see an individual claiming to be a representative of an offshore broker, and offering to manage funds for clients without track record or without any form of regulation. Cases of such persons absconding with the money of their clients were rampant. At this time, the Capital Markets Authority was in existence, but only regulated the Kenyan Stock Exchange and brokers offering trading in local stocks.
With traders suffering such mishaps in the past and the CMA stepping up with regulation, Kenyans can be sure that unregulated forex brokers will not have a field day in the country. Even offshore brokers who step into the market know they have to get their licensing sorted out before they come or they will get nowhere.
- Quest for Greater Forex Education
With greater forex trading awareness has come the clamour for forex education. Forex brokers now know that forex education is no longer an optional bonus but a necessity for getting and engaging new clients. Competition in providing comprehensive forex education means that Kenyans who want to start online trading will now be able to get access to top quality forex education content that can make a difference for them.
- More Robust FX Market Due to COVID-19
The world is at a critical juncture and like it or not, the COVID-19 pandemic has created immense trading opportunities in the financial markets. Many currency pairs are trading in price ranges that have not been witnessed before. To put it in another way, if the EURUSD was giving you a daily trading range of 100 to 200 pips a day. All the forex market is asking is this: do Kenyan forex traders have the skills and strategies to take their own share of the COVID-19 opportunities in the forex market?
COVID-19 looks like it will be with the world for several months ahead. This means that there will be lots of opportunities. Many brokers are already reporting increases in new registrations as offline jobs and opportunities dry up. Online opportunities such as forex trading will continue to be around for a lifetime. Therefore, Kenyans need to use this window of opportunity that the increased volatility in the FX market has brought their way to make money from the market.
- Local Brokers Will Run Alongside Foreign Brokers
It is true that CMA has regulated forex trading, but it cannot prevent Kenyans from trading with offshore brokers. So Kenyans will see a situation in 2020 where regulated offshore brokers will operate alongside the two locally-based forex broker brands. So you still have a choice of what brokers to use. Whatever your choice is, ensure the broker is regulated and has a good track record. Considering that the oldest of the local brokers in Kenya is only 2 years old, there are those Kenyans who would still choose experience and track records over location.
These are some of the things that 2020 has in store for Kenyans in online forex trading. Are you ready for them? Hope you are.