For many years, Cyprus and the UK have been Europe’s Forex trading powerhouses thanks to their strong regulatory environments and key geographical position but, as Central European markets continue to expand and mature, Hungary is seeing a growing number of traders and attracts more foreign investors.
According to a 2018 BrokerNotes study, the popularity of Forex trading has skyrocketed in Hungary, going from approximately 22,000 online traders in 2017 to 44,000 in 2018. This places Hungary #17 in Europe, but experts point out the market is quickly maturing and will continue to grow. There are several factors behind the evolution of the Forex market in Hungary, starting from the role played by the National Bank of Hungary to the shift in public perception and the changing profile of the average online trader.
How the Government’s MNB act has created a secure trading environment
A stable, secure, customer-centric regulatory environment is the primary requirement for any online trading market. Without it, customers can easily fall victims to scams, which is why so many people avoid creating accounts on platforms that don’t guarantee secure transactions. The Hungarian government has understood this need for security, which is why the government released the MBN act to regulate the activity of all companies and individuals in the financial sectors.
The Magyar Nemzeti Bank (MNB) is Hungary’s Central bank, but unlike most other European countries, it also serves as an independent regulatory body. This automatically creates more trust among traders, because all the dealers, regulated brokers and financial institutions operating in the country abide by the framework created by the MNB under the MiFID derivatives issued by the EU. Since the main regulatory entity is also the Central Bank, every financial irregularity is treated with great attention to detail, which gives traders the peace of mind that their funds are taken care of. Apart from being an independent regulatory body, The Magyar Nemzeti Bank, which was established in 1924, maintains Forex reserves and CFDs offered by brokers.
MNB has taken extensive measures to ensure that all Forex traders are protected and that the companies which have engaged in fraudulent activities are swiftly punished. For example, the bank has a close partnership with the independent PBT Financial Arbitration Board (PBT (Pénzügyi Békéltető Testület) to help customers solve disputes with regulated brokers. Thus. If a customer believes their rights were infringed or that a certain Forex broker didn’t abide by the best rules and practices, the PBT will provide affordable arbitration so that the two parties can come to an understanding without settling the matter in court.
All of these factors make the MNB one of the most reliable Forex regulatory bodies in Europe and experts forecast that in the years to come even more brokers will come to Hungary thanks to its secure trading environment.
What regulated Forex brokers can traders find in Hungary?
Hungary is quickly becoming a competitive Forex market and the diligent way in which the Central Bank regulates brokers has facilitated the development of a healthy and diverse trading ecosystem. In Hungary, Forex enthusiasts can benefit from full-fledged Forex trading options. There are CFD Forex brokers, Forex social trading brokers, crypto Forex brokers, and binary options brokers, and the abundance of platforms make it easy for traders to find exactly what meets their needs and goals.
Also, it’s worth pointing out that, thanks to the role that Hungary has in the European economy, many European brokers have set their headquarters in Hungary. However, since there is no common regulatory entity to impose the same requirements for all European countries, each broker may choose to adapt their guidelines and protocols depending on national regulations. For example, a broker that operates in several European countries can have one set of rules for Hungarian traders, and another one for traders in Cyprus and the UK. Ultimately, it is up to each individual trader to decide which broker matches their long-term interest, but, as long as this broker is MNB-approved, they can rest assured their finances are safe from scams and unscrupulous practices.
Foreign investments and public perception of Forex trading
Hungary’s growing influence on the Forex market is also tied with the rapid development of the tech sector and the number of foreign investors the country has attracted. Thanks to the financial stability and the long-term potential of the Hungarian market, more and more companies and investors are coming here. Also, Hungarians themselves are starting to consider Forex trading as a way of diversifying their portfolio and making long-term investments. In this regard, Hungary aligns to the trends in Western Europe, where trading is an activity that appeals to the tech-savvy youth. As opposed to the United States, where the average trader is in his 40s and has a background in finance, in the UK and Western Europe more and more traders are young people in their 20s who know who to take advantage of technology. For example, many Forex brokers in Hungary have free demo accounts and extensive libraries with trading information, so that beginners can learn the basics and practice Forex trading without losing any money.