Europe may be the hub of Forex trading activity in the world, but not all countries in the region are active. In Finland, there is very little Forex trading carried out, and it leaves the impression that the FX industry is somewhat unpopular in the country. Indeed it is, and there are a few reasons that can explain why the world’s largest financial market is not common in Finland.
Limited number of Forex brokers
There are currently no Forex brokers who are based in Finland or regulated by the FIN-FSA. We all know that the supply pulls demand, and if you look at one of the Finnish casino listing websites like suomalaisetkasinot.online, you will quickly realise that online gambling and betting is much more popular in Finland than any type of trading or investing. Besides that, FIN-FSA is a reputable financial regulator, and it would have been a great regulator for any Forex broker who chose to set up shop in Finland. Instead, Finns do not have a Forex broker in their country they can trust and they have to rely on foreign Forex brokers. Fortunately, most Forex brokers around the world accept Finnish clients since it is a part of the EU.
In the past, FinFX was a Forex broker based in Finland, and it managed to acquire a large number of local and international clients because of its ethical operations. The broker was a favourite among US residents because it was one of the few international brokers that accept US clients. When it stopped accepting US clients in early 2015, the company lost many of its clients.
Later in 2015, FinFX was acquired by Best Choice FBC Limited which is a Cyprus regulated Forex broker. FinFX remained as a liquidity provider to BCFX and still offered its services to institutional clients. In August 2016, though, CySEC suspended the trading license for BCFX, and that effectively put an end to FinFX operations.
Notably, FinFX was never officially regulated by FIN-FSA despite operating as a Forex broker all through its existence. This was because of the lack of legislation governing Forex trading in Finland.
Lack of legislation
Even though FIN-FSA may be an effective financial regulator, they cannot regulate any financial market that is not officially recognized as such. In Finland, the FIN-FSA does not recognize the Forex market as an asset class, and can therefore not regulate the practice. As any Forex trader knows, the very presence of a regulator can help to secure the trader’s funds as well as prevent any malicious activities.
Without the regulator’s presence, many Finns subsequently do not acknowledge Forex trading as a valid investment tool. It is instead seen more as a form of gambling, which even the gambling regulations do not acknowledge. As such, Forex trading in Finland remains within a grey area where most Finns don’t dare trudge.
For those who still want to trade the Forex markets, they have to look for foreign brokers, and although there is no shortage of these, there are a lot of bad apples. This leads back to the lack of legislation which leaves aggrieved Finnish Forex traders without any recourse but to swallow their losses. In such an environment, Forex trading has become unpopular for the fear of a lacking safety net.
Lack of information
Just like in the US, most Finns do not know about Forex trading and are instead more familiar with conventional investment tools like stocks, bonds, etc. The lack of advertisement for Forex trading services has left the Forex market unpopular as a result.