Russian retail Forex traders are broadly unsupportive of the leverage cap of 1:50, outlined in the Forex law, a recent survey has shown.
In December 2014, Russia’s “Centre for Regulation in OTC Financial Instruments and Technologies” (CRFIN) conducted a survey amid retail Forex traders in the country, asking them to voice their opinion on the maximum leverage limit set by the lawmakers. The list of questions covered matters like who should be responsible for determining leverage limits and what should the optimal cap be. The results of the survey became known earlier today, with the overwhelming majority of respondents viewing a cap on leverage of 1:50 as too strict and, instead, supporting way higher levels of up to 1:500.
Meager 6% of those surveyed said they approved a maximum leverage limit of 1:50. The bulk of respondents supported more generous leverage. The optimal maximum leverage should be at 1:100, according to 25% of respondents, and at 1:200, according to 26% of the respondents. The favorite maximum leverage level for 30% of those surveyed is 1:500.
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At least 38% of the respondents disapproved of the narrowing of the current level of leverage they use. These percentage of respondents claimed that such a move would have a negative effect on their trading results. And yet they do not expect that a leverage cut would lead to a massive outflow of participants from the Forex market.
The survey also showed that Russian FX traders seek as much freedom as possible when it comes to trading conditions. Whole 47% believe that the maximum leverage level should not be stipulated in a law or by a regulator, and that instead traders should determine the leverage cap they need. A more humble portion of the respondents – 27%, approved the idea that the law should determine the leverage cap. Only 17% said the self-regulatory organization should set the leverage limit, while 9% said this right should be given to Forex companies.
Approximately 1,500 traders took part in the survey.
The chapter of the Russian Forex law that imposes a leverage cap of 1:50 on Forex trading comes into force on October 1, 2015. The Bank of Russia is allowed to raise that level to 1:100 when it sees fit.
You can find the detailed report by CRFIN on the survey (in Russian only) here.