It’s been almost three months since ESMA mandated its new regulations across the EU. While traders are moving to offshore jurisdictions en masse, a country in the heart of the continent is still a safe haven.
Known as a reliable spot for private banking, the retail broking industry in Switzerland turns out to be a healthy alternative for EU traders as the country's brokers are still out of reach of the jurisdiction of the pan-European regulator.
There are at present two major brokers who are accepting retail clients from Europe: Dukascopy and Swissquote.
Aside from Dukascopy and Swissquote, IG Group and Saxo Bank also have a local presence with offices. There is no official information on whether an EU client can open a Swiss account with these subsidiaries.
Advertising Ban and the Sickness of the ESMA’s Regulation
While the EU regulations are not forbidding Swiss brokers to service European customers, they are preventing them from advertising in the EU. In the meantime, unregulated brokers are advertising freely via dodgy affiliate websites.
As we have identified in the past, there are several strategies which affiliates are using when fishing for retail clients. The author of this piece recently stumbled upon a piece explaining how Ronaldo made millions trading binary options to pay for his taxes. A catchy story considering the fact that not just one or two football stars have had problems with tax authorities.
During the past several months yours humbly saw advertisements of popular stories about famous footballers, rich kids driving fast cars, and poor working class dads making their families prosperous. This approach is anything but honest, but it is apparently legal, and ESMA doesn’t seem to be able to do anything about it even if it works.
Leverage Is King (For a Day)
Just like in business, leverage is a double-edged sword - ask Elon Musk or Lehman Brothers. Any person with basic knowledge of financial markets knows that it works both ways. Sometimes you win, sometimes you lose, leverage is just like life.
European regulators decided that they know better than the average retail trader, who admittedly doesn’t realize the devious ways in which leverage plays with the human psyche. Limiting the availability of the drug will not cure those addicted to risk. Ask any base jumping aficionado or professional skier.
Just a disclaimer: this article is in no way promoting the services of Swiss brokers, but merely pointing out that there are many alternatives out there. Australian firms are still accepting retail clients too for example. It is also doubtful that Hong Kong or Singapore brokers are turning down EU clients.
