OTC derivatives marketing debacle: Poland, of all places, pre-empted all the regulators on new ruling proposals

Much wrangling has occurred with regard to the new rulings in many jurisdictions on how FX products can be marketed, however in Poland, a country with a very small FX industry, the regulator took this action back in May last year. We speak to one of Poland’s largest IBs and educational portal owners, and can speculate that Poland’s market may grow more than other European counterparts

Poland is not known for its participation in the OTC derivatives markets, and is indeed a fringe entity on the global stage.

With the exception of DOM Maklerski and XTB, there are very few contenders, and the entire industry does not speak of Poland in the same sentence as it does Cyprus, North America, Britain or Australia.

Interestingly, however, despite its diminutive FX industry, Poland is more prominent than Western mainland European nations, France, Germany, Italy and Spain having no domestic participation whatsoever, leaving British electronic trading giants IG Group and CMC Markets to serve those markets alongside Saxo Bank and FXCM, all of which of course are in a different league to the two Polish firms, but are intrinsically not native to the mainland European markets.

Ireneusz Pukin

This demonstrates that whilst most of mainland Europe is a technological and financial void, and bears as much resemblance to modern financial markets infrastructure as a Tesla Model S does to a horse and cart and is therefore reliant on British and American business acumen and modernity to satisfy its retail client base, Poland does it in-house.

Along with this is the regulatory authority, KNF, which is an acronym for the Polish moniker that translates into Polish Financial Supervision Authority, which has an understanding of the environment over which it presides to the point of being one of the very first of the European regulators to apply strict rulings on the means by which OTC derivatives companies can advertise their products in Poland.

Speaking today to Ireneusz Pukin, CEO & Founder at FX Invest Group, one of Poland’s largest introducing brokers and owner of one of the country’s largest educational portals Akademiaforex.com, FinanceFeeds was made aware that back in May 2016 the KNF began to rule on the means by which retail OTC derivatives products are provided, not only in terms of the marketing materials, but also that brokerages should not remunerate their staff on deposit values, client losses or on preventing withdrawal of funds.

Mr. Pukin explained “On May 24, 2016 Poland’s Financial Supervision Commission presented guidelines for the way that brokerages provide OTC derivatives to a retail client base, with the guidelines to be implemented by brokerages by the end of September 2016.”

“Our understanding i that the KNF wished to eliminate abuses perpetrated by certain brokerage firms which used aggressive and intrusive marketing, along with, interestingly, operational aspects that are an obvious conflict of interest, for example making the salaries of sales staff dependent on the sum of deposits made by customers and the sum of withdrawals” he said.

“Among the sixteen specific guidelines put forward by the KNF, the scope included the role of the investment companies within the organizational structure of the brokerage sector, as well as the means by which companies actually onboard customers and acquire new business, and a strict clampdown on how brokerage firms which offer managed portfolio services that include one or more financial instruments are provided” concluded Mr. Pukin.

The Australian Securities and Investments Commission (ASIC) was among the first non-bank financial markets regulators to take a good look at marketing and client acquisition practices in the FX industry, and as long ago as three years ago – a lifetime in terms of retail FX regulatory evolution – began closing down companies and winding up their businesses altogether for misleading marketing practices, and in some cases prosecuting their directors.

Britain’s FCA followed suit, and now CySec is implementing new rulings with regard to how products can be sold and marketed, however it is interesting that Poland, with such a small market size, went into this over six months ago in such detail.

Recently, specialist consultancies have been established in Poland in order to provide services to brokerages wishing to establish there, and with these new rulings, perhaps the financial markets sector for retail customers is developing in such a way that it may be a new ground for expansion of the retail FX business.

Read this next

Institutional FX

CLS FX volume continues downward trend in August

Total daily traded volume submitted to CLS for settlement took yet another step back in August.

Digital Assets

Huobi taps AstroPay to facilitate fiat-to-crypto payment in Latin America

Huobi, the world’s sixth-largest crypto exchange by trading volume, has recently partnered with payment solution provider AstroPay to launch local currency account deposits and withdrawals in Latin America.

Digital Assets

Crypto exchange FTX to raise $1 billion at flat valuation of $32 billion

FTX is reportedly in discussions with a clutch of heavyweights from traditional finance to raise up to $1 billion in fresh funding to fuel more deal-making.

Digital Assets

Revolut US launches trading on Avalanche, Solana, and Dogecoin

British fintech and banking firm Revolut has further expanded its cryptocurrency offering in the US with the addition of 29 new tokens.

Digital Assets

Bahrain greenlights eazyPay to launch Binance Pay

The Central Bank of Bahrain has blessed a new partnership inked by Binance with Eazy Financial Services ‘eazyPay’, a local POS and online payment service provider. The greenlight enables EazyPayto to launch Bitcoin and cryptocurrency payments in the region.

Digital Assets

Coinbase approved to offer crypto for Dutch users

Nasdaq-listed crypto exchange operator Coinbase has been handed regulatory approval to operate as a crypto service provider in the Netherlands.

Metaverse Gaming NFT

AC Milan partners with Solana-based NFT football game MonkeyLeague

“Partnering with champions like AC Milan, an absolute iconic Club throughout footballs history, is another testament to what we are building and where we are headed as a game and game studio. It also represents a key step in our plans to bridge the Web2 and Web3 worlds.”

Digital Assets

Shariah-compliant Islamic Coin to support SDG-compliant ventures, green projects, and philanthropy

Shariah-compliant Islamic Coin has recently launched a collaboration with the World Green Growth Organization and the International Youth Conference 6, taking place on September 22-25th and September 30th-October 1st, 2022, in New York. 

Market News

Week ahead: US core PCE and eurozone CPI 

We heard from a range of central banks last week and the update sparked big moves in the markets, and the bulk of the volatility was in currencies.

<