CFDs Market in Chile, a Utopia for Brokers and Hell for Investors


Considering the massive FX industry worldwide, it is imaginable that the regulation is not uniformly everywhere on this colossal globe. Such is the case for the CFDs market in Chile, where there is no regulation at all, compared to the strict markets such as in the US or Europe.

Having such market conditions, where any business can offer CFDs, it leaves an abundance of opportunities for malpractices of a different order.

For instance, Chilean unauthorized brokers employ dozens of salespeople, who phone up prospects for the offering of CFDs, and financial derivatives, pledging that the potential ROI is somewhat 20% or on other occasions up to a staggering 40%.

This given fact is mind-boggling, as in any high-regulated country financial entities are off-limited to perform such activities without proper licenses. In the estimation of the remarkable business it has been reported that on a monthly basis it could add up to $14 bln in leveraged trades, still, the figures could be higher as these are only inaccurate measures.

It seems like a horrid way of conducting business for outsiders, but for the Chilean business and investors, it is part of any everyday life. Even the Superintendencia de Valores y Seguros, Chile’s securities regulator commented that these practices fall outside the legal compliance of the regulator, simply because of the fact that the contracts for difference are no securities.

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Most retail investors are used to highly regulated restrictions and protection from the reputed financial regulatory bodies, which provide them with necessary aid when needed. However in a world without such, Chilean investors are exposed to tremendous risks. On top of this evident fact, the investors in Chile are eligible to the utilization of unheard-of high leverage levels, adding extra concerns to the case.

Pressure for regulation from all parties

Not only are the retail investors urging for the enactment of respectable regulations for the market, it has been reported that the B2B sector also has been lobbying for transparency and a regulated market in Chile.

For the retail investors, it is evident, why they are demanding such a system, as the investor protections will be significantly improved. Evidently, the financial entities will be restricted from aggressive tactics and fraudulent practices. Overall, it would reduce the current number of scams, whilst protecting the everyday investor from misleading claims.

Surprisingly, there have been forthright opinions and appeals made by the business segment of the market upon the enactment of a regulated market. Reasoning’s behind these overtures is of genuine nature, and claims that proper compliance will notably enhance the Investor confidence, whilst encouraging righteous competition.

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