Romania may not be the largest market for foreign exchange trade but with its population of over 20 million, it is among the biggest economies in Eastern Europe. Forex trading is legal and regulated and investors can rely on a wide variety of online brokers to give them access to the global markets.
Before looking into the Forex legislation in the country and the brokers that accept clients from there, traders need to understand some crucial aspects of the Romanian economy. The country joined the European Union in 2007 and since then, it has been trying to catch up with the rest of the union in terms of productivity and GDP. In the past decade, Romania has been reporting some of the fastest growth rates across Europe. Today, it is the 40th largest economy in the world, having $516.5 billion in annual output.
Although Romania is on its way to introduce the Euro, it is still using its national currency, the Romanian leu (RON). It is still among the poorest and least advanced countries in the EU but due its rapid economic growth, as well as its reputation for being an electronics, technological and mobile hub in Central and Eastern Europe, it is an attractive destination for investing and doing business. The liberal approach to financial markets, however, does not mean that authorities are not focused on strictly regulating the sector – on the contrary, several unlicensed CFD and Forex brokers were forced to close their offices in Romania following a probe into their operations and even arrests.
Romanian Forex Legislation
Trading on the foreign exchange market is completely legal in Romania as long as FX brokers are authorized to offer financial services in the country. The foreign exchange regime in Romania is set by Regulation No. 4/2005 issued by the National Bank of Romania. It determines who has access to the Forex market, the restrictions on buying and selling foreign currency, and others.
According to the legislation currently in effect, everyone has access to the foreign exchange market in Romania. However, the trade of foreign currency can be performed only by Forex market intermediaries – there are no limitations to this activity for Romanians who access Forex via exchange houses and credit institutions. To legally offer their services to residents of the country, brokers need to hold a license from the local regulatory body, the Financial Supervisory Authority or ASF (Autoritatea de Supraveghere Financiara).
As a member of the EU, Romania adheres to all financial regulation directives of the European Union as per the European MiFID financial harmonization law. This means that the country allows brokers who are registered and licensed in another EU jurisdiction to operate in Romania. For instance, brokers licensed by the Cyprus Securities and Exchange Commission, better known as CySEC, or by the Financial Conduct Authority (FCA) in the UK can legally offer their services to Romanian traders.
Also, certain restrictions set by the European Securities and Markets Authority (ESMA) apply to trading of CFDs (contracts for difference). The rules affect retail clients of online brokers and were designed to enhance investor protection. According to them, Forex brokers who operate in Romania are not allowed to offer bonuses and other incentives for trading CFDs. Brokers are also required to close out clients’ open CFDs at 50% of the minimum required margin and to offer negative balance protection, which restricts clients’ losses.
Moreover, there are several restrictions on the maximum leverage brokers can offer retail clients when trading CFDs. The leverage limit for major currency pairs is 30:1, while for minor Forex pairs, gold and major indices, it is 20:1. The maximum leverage when trading commodity CFDs is 10:1 and 5:1 for individual equities and other reference values. The limit for trading crypto CFDs is only 2:1.
Romanian Financial Regulators
The capital market is regulated by the Romanian Financial Supervisory Authority (ASF, which stands for Autoritatea de Supraveghere Financiara). This is an autonomous agency that replaced and took over the duties of the National Securities Commission (CNVM), the Insurance Supervisory Commission (CSA), and the Private Pension System Supervisory Commission (CSSPP).
The authority regulates credit rating agencies, participants in financial markets, as well as trading with all kinds of instruments. The ASF takes measures against insider dealing and market manipulation and is the country’s national authority, which is competent in enforcing EU financial regulations. It regulates the main exchanges in Romania, as well, and these are the Bucharest Stock Exchange (BVB) and the Sibiu Monetary Financial and Commodities Exchange (BMFMS), which is a specialized derivatives exchange.
The ASF is also a member of several international institutions, including the International Organization of Securities Commissions (IOSCO), the European Securities and Markets Authority (ESMA), the European Insurance and Occupational Pensions Authority (EIOPA) and the International Association of Insurance Supervisors (IAIS).
Forex Payment Methods in Romania
Traders who are looking for a suitable online Forex and CFD broker in Romania should opt for a provider who offers the Romanian leu as a basic account currency. Of course, clients can open accounts in Euro, US dollars or any other foreign currency but that would cost them extra due to the exchange fees they will be charged. Another alternative is to make deposits into their trading accounts using a card or an e-wallet in their preferred foreign currency.
When it comes to the payment methods available in Romania, Forex traders have a great choice of credit and debit cards, digital wallets, instant banking services, prepaid methods, and many more. The market is dominated by credit and debit card payments, however, and the most popular brand in the country is Visa. Brokers also offer Mastercard, Maestro, Diners Club International, and others.
Those who do not want to use their credit card for online transactions and on the websites of offshore Forex brokers can opt for a digital wallet. These are modern, convenient, and safe methods to send or receive money online. Digital wallets or e-wallets, as they are also known, facilitate fast and cost-effective transactions over the Internet and can be used for online shopping, paying bills, or trading on the foreign exchange market. Popular e-wallets include PayPal, Neteller, Skrill, WebMoney, and ecoPayz.
Online banking, however, remains one of the most preferred ways to make online payments. Although online banking transfers are often slower than transactions via e-wallets or credit cards, this type of payment is considered incredibly safe. Moreover, this is probably the most accessible option because most people already have a bank account anyway – to use online banking for their trading activity, they simply need to contact their bank and activate their online banking.
Popular Trading Software in Romania
One of the most important things to consider when choosing an online Forex broker is the trading software offered by the firm. It facilitates the trading process on the foreign exchange market and it must be fast and reliable to guarantee real-time trades and instant execution. While the performance of a trading platform is crucial, traders should also take their time to assess its functionality and overall ease of use.
To do that, investors are advised to open a demo account with the broker they have chosen. This will help them determine whether the trading platform performs well, what global markets and financial instruments they have access to, and whether the trading conditions (spreads, commissions, leverage, etc.) are good. Overall, Romanian traders can use the same platforms available to traders from all around the world.
Most brokers welcoming Romania-based clients would give access to probably the most popular type of trading software, namely MetaTrader 4. It was developed by the MetaQuotes Software, a Cyprus-based developer originally from Russia. Released 15 years ago, the software platform is widely considered the best option for Forex trading.
With its user-friendly interface and tons of advanced tools and features, it is suitable for both beginners and experienced traders. Moreover, MT4 can be installed on any Windows or Linux computer, Mac, etc. Some traders prefer the web version, which can be opened directly in the web browser rather than being downloaded. Of course, brokers also offer their clients MT4 apps for Android and iOS devices.
Another popular software platform for trading Forex is cTrader, created by Cyprus-based company Spotware Systems Ltd. The system is offered by some of the leading brokers right now and is mostly used for Forex and CFD trading. It offers a wide variety of customization options, advanced trading features, automated trading, etc. Just like MetaTrader 4, cTrader comes with a desktop and mobile version, various tutorials, and social trading.
Mobile Trading in Romania
More and more investors around the world prefer trading directly from their mobile phones. When it comes to Forex, in particular, it is essential to stay updated on currency and economic news. Mobile trading is, therefore, not only convenient but also extremely useful to every trader – you can receive notifications, track prices, and open or close positions at any time and wherever you are directly from your phone.
Romanian traders make no exception and an increasing percentage of them are now accessing trading platforms on smartphones and tablets. The majority of leading Forex and CFD brokers offer fast, intuitive mobile apps that can be downloaded for free either from the broker’s website or from Apple’s App Store and Google Play.
Traders should know, however, that not all apps are as functional and well-performing as they should be. This depends on the particular app, the trading platform that is used, as well as the condition of the mobile device. For fast performance, users should make sure their phone or tablet has the latest software updates and connects to the Internet via a stable and secure Wi-Fi or 4G/5G network.