European securities regulators Monday issued a warning to retail investors about trading in foreign exchange products.
In its first-ever warning to retail investors, the European Securities and Markets Authority says that it has noticed an increase in some European Union countries in unauthorized firms offering transactions, or platforms to trade, in currency derivatives in the forex market, such as ‘contracts for difference’, ‘FX forwards’, and ‘rolling spot contracts’.
“There has been evidence in a few European Union countries that some retail investors suffered substantial losses in this market,” it says.
The ESMA warns investors against dealing with unauthorized firms offering foreign exchange investment; and is alerting retail investors to the main risks involved in forex trading, including complexity, volatility and the risks of using leverage.
It also reminds retail investors considering participating in this market, to fully understand the market, and be aware of the main risks associated with foreign exchange trading, and to make an informed decision before investing.