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Latvia is located in Northern Europe, in the Baltic region and shares borders with Estonia, Lithuania, Russia, and Belarus. Latvia has a coastline along the Baltic Sea. With a population of only a little over 1.88 million, Latvia is enjoying strong trading ties with some of the strongest economic players in the EU. Latvia’s main export is wood, closely followed by machinery, computers, beverages, vinegar, and various electronic equipment.
As Latvia adopted a more western approach and modernized its economy, more and more people started learning how to invest in Financial assets. Active trading, such as Forex and CFD trading, is popular in the country. In this guide, we’ll discuss regulatory environment in Latvia, discuss popular trading platforms, and give you our top brokers list.
A full list of top Forex brokers in Latvia
Finding a broker that you can trust and at the same time offers great trading conditions is not an easy task. Especially if you are a beginner. Traders need to take into account various factors, such as fees, customer service, account opening, and more. To make the job easier for you, we’ve assessed many different brokers and created the top list.
Forex trading regulations in Latvia
The main regulatory body in Latvia is the Financial and Capital Market Commission (FCMC). This autonomous institution has an extensive list of responsibilities, that include overseeing and enhancing the operation of Latvian banks, insurance companies, pension funds, e-money, and, of course, the FX market. Its mission is to reinforce customer support, competitiveness, and development of various financial markets by closely assessing their functions and imposing timely regulatory measures.
Below, we will address the specific measures that the FCMC that regulated Forex brokers in Latvia have to follow.
Licensing of brokers
The FCMC is responsible for licensing financial brokers in Latvia. It should also be mentioned that Latvia is an EU member state, and brokers operating in the European Union need to follow rules and guidelines set by the Markets in Financial Instruments Directive (MiFID).
Latvia is putting a special emphasis on the protection of brokers – both from the unnecessary risks and from the unforeseen circumstances that traders have little control over. Making the provision of investor compensation fund (ICF) a compulsory condition for the brokers seeking an FCMC license is one of the measures within this framework.
Another way in which the FCMC reinforces the safety of the Latvian traders is by making it mandatory for the brokerages to abide by the segregation of funds requirement. This particular measure has long proven to be that extra layer of security and the peace of mind that many traders-to-be are searching for. Segregated accounts increase the safety level, as even if the broker gets liquidated, traders will have access to their money.
The FCMC demands from brokers to submit regular audits and reports with a detailed breakdown of all financial activities and other relevant information, such as the statistics of the broker’s customer base, trader’s success rates, and many more. This is done to both make sure that the Forex trading brokers in Latvia abide by the relevant standards at all times, and, for the purpose of determining and countering any illicit activities that the brokers can potentially be involved in.
When it comes to leverage, following the regulations issued by the European Securities and Market Authority (ESMA), Latvian FCMC has reduced the maximum allowed leverage down to 30:1. Although this might seem like very little compared to the available leverage internationally, it should be mentioned that it’s much safer to use low leverage. Most beginner traders lose money because they use high leverage to trade oversized positions, which ultimately results in disaster. The rules are in place to protect the interests and safety of traders.
Ban on bonuses and promotions
Although one of the main goals that the FCMC continuously pursues is the expansion of the local FX market, it does, nevertheless, recognize that Forex trading should not be actively marketed as it can potentially become a very risky financial investment.
Bonuses and promotions are one of the brokers’ favorite marketing tools. There are two main types of bonuses that brokers offer – refill and welcome bonuses. Refill bonuses are issued periodically to the returning traders, while welcome bonuses are gifted to the newly joining clients. Such kick-starters are a great way to both expand and maintain the brokers’ customer base, and many traders seek them as the single most important deciding factor in choosing the brokerage to join. Promotions typically increase a gambling like approach to trading, which is why they are banned in the EU.
Popular trading platforms in Latvia
Choosing a trading platform is one of the main decisions beginners have to make. Many brokers offer custom-built platforms, while others use some of the most popular third party software, such as MetaTrader 4 (MT4), MetaTrader 5 (MT5) and cTrader. If you are planning to day-trade, it’s best to install a desktop version, as desktop platforms offer reliable execution. MT4, and MT5 are highly reliable, and are the most popular. MT4 and cTrader are mostly used for trading Forex, crypto derivatives, indices, and commodities, while MT5 is a multi-asset platforms. In addition to already mentioned instrument classes, MT5 gives traders access to stocks, bonds, and futures. These platforms support algorithmic trading, and enable traders to conduct technical analysis thoroughly.
Summary
Overall, Forex and CFD trading is fully legal and well regulated in Latvia. The main regulatory authority in the country is Financial and Capital Market Commission (FCMC) of Latvia. In addition, Latvia is an EU member and EU rules and guidelines increase the safety level of investors even higher. Residents of Latvia are free to open accounts with local brokers, or with international ones. Global brokers often offer better trading conditions, and after reviewing multiple brokers, we’ve created the list of international brokers with low trading fees, wide range of instruments, and great reputation. Traders should consider XM, exness, and others in our list.
FAQs on the best Forex broker in Latvia
Is Forex taxed in Latvia?
Is Forex legal in Latvia?
