FCA to change license requirements for STP forex brokers

UK’s Financial Conduct Authority (FCA) is looking into forcing the straight-through processing (STP) forex brokers to upgrade their licenses to those for full market makers.

The FCA has apparently sent a letter to a number of its charges to inform them of prospective changes to the regulatory environment. According to the document, the watchdog is planning to force the STP brokers to upgrade their licenses in order to ensure better negative balance protection from losses of their clients in case of extreme market volatility.

The main changes would be in regard to the capital requirements for the brokers and they would most likely be raised in order to be able to cover a large negative balance. Currently there are different capital requirements for the FCA-regulated brokers, depending on their trading volume and number of clients, but not less than GBP 1 million.

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