Foreign exchange trading was previously a preserve of a few. But the internet and electronic devices such as mobile phones and Computers have revolutionised foreign exchange trading space allowing investors access local and offshore products on a platform.
Forex trading is simply the speculation of one currency price against another currency. Online foreign exchange trading allows investors into the world of buying and selling of foreign currencies.
To enable Kenyans, especially the youth, get a piece of the online forex market, the Capital Markets Authority (CMA) has allowed the setting up of regulated entities within the foreign exchange trading space such as brokers and money managers. The regulator has so far issued two non-dealing brokerages and one Money Manager licence.
These forex trading platforms play a big part in supporting Kenya’s digital workforce, popularly referred to as the gig economy.
According to a recent study by Mercy Corps, Kenya’s gig economy is estimated to be worth around £85 million, employing 36,573 gig workers.
Based on current investment levels, it is expected to grow by 33 percent over the next five years to £269 million, employing 93,875 gig workers, the research findings show.
CMA’s licensing of trading platforms means young Kenyans can engage in online forex trading in a transparent manner and lock out unscrupulous and phony players in this highly lucrative but risky market.
These trading platforms, which act as a link between the online foreign exchange market and a client, provide an avenue for young Kenyans to try their hand at trading currencies from the comfort of their phones or any other electronic device. These platforms are also available 24 hours, five days a week
With a high number of young people joining the labour market every year, the gig economy is seen as a platform to provide alternative economic opportunities to the youth.
All that is needed is for investors to deposit their investment with an account offered by the broker, and they begin trading, akin to trading in securities such as global stocks which are also available on the CMA licensed platforms.
Kenyan youth are not only ambitious, but also exploratory. There have been previous cases of young people losing the savings in online forex scams. With licensing of trading platforms, young people now have credible, regulated channels to speculate on world currencies, as a gainful activity.
Furthermore, the CMA online FX Regulations and the conduct of business regulations provide a controlled environment in which these entities offer their products, focusing on investor protection.
For instance, CMA- licensed platform, Scope Markets (SCFM Limited) has so far seen a significant increase in uptake of trading accounts set up on our platform, highlighting Kenyans’ thirst to venture into forex trading.
By offering free daily workshops, we are actively increasing the literacy levels of this growing number of interested investors and injecting informed traders into the market.
The writer is CEO, Scope Markets Kenya.
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