In a landmark move, Rwanda has introduced regulations for leveraged foreign exchange trading, commonly known as online forex trading, marking the country’s first foray into regulating this sector. The Capital Market Authority of Rwanda (CMA Rwanda) announced the new rules on February 26, 2024, with their publication following in the Official Gazette a day later.
The introduction of these regulations is a response to the growing interest in leveraged forex trading in Rwanda, especially among the youth. This form of trading, conducted Over the Counter (OTC) via the internet, allows traders to bet on currency price movements with a fraction of the trade’s full value, potentially magnifying gains or losses.
CMA Rwanda has set the maximum leverage ratio at 100:1, meaning traders can control a $100 position for every dollar in their account. Jerome Ndayambaje, CMA’s Information Technologies Manager and Fintech Coordinator, likened leverage to a form of support or loan that increases traders’ capacity to participate in the market.
The new regulations aim to foster market development while ensuring investor protection, addressing the concerns over unlicensed foreign and local entities engaging Rwandan traders without proper oversight. They set out strict eligibility criteria for licensing, including requirements for company incorporation in Rwanda, experienced key personnel, and financial stipulations such as a minimum paid-up capital ranging from Rwf100 million to Rwf500 million, depending on the type of brokerage.
CMA has urged all interested parties to apply for the necessary licenses and encouraged potential investors to ensure they deal with licensed operators. This regulatory framework is expected to safeguard participants and enhance the integrity of Rwanda’s forex trading market.
