Retail traders in the city-state nation of Singapore will have to abide by a new forex leverage change that cuts down the previously available leverage to more than half its original size. The official regulator of the forex market in the country, the Monetary Authority of Singapore or MAS, issued this new decree this Tuesday, claiming that the higher the leverage is, the riskier the situation becomes to retail traders. This move was long awaited by the majority of Singapore based brokerage firms, as the regulator has been playing around with the idea for some time.
Investors will now have to cope with a maxed out 1:20 leverage, quite the reduction from the previous 1:50 value.
Nevertheless, certain users can take advantage of the so called “loopholes” purposefully left open by MAS, similar to the ones found in the EU’s ESMA leverage rulings. For one, traders can qualify as accredited investors, or professional clients as certain brokers call them, and can take advantage of the full 1:50. However, and this is a big but, the requirements backing said endeavor are rigorous. For one, would be professional users need to have more than SGD 2 million ($1.5 million) in personal capital, or more than SGD 1 million in cash. Alternatively, clients must hold a job paying more than SGD 300K per annum.
As of writing this, the standing leverage situation in the global forex world is as follows:
In the European Union (including Cyprus) and The United Kingdom the leverage has been capped at 1:30.
In the United States the leverage is 1:50 for major currency pairs and 1:20 for minor pairs.
In Japan the leverage is maxed at 1:25.
Australia, Switzerland, South Africa and Canada have not imposed a limit on forex leverages.