Forex Trading in Switzerland

How popular is it?

Switzerland is one of the richest countries in the world in terms of GDP per capita and the Swiss Franc CHF is among the most popular currencies traded.

The Swiss franc has a reputation of being a safe haven during times of uncertainty and regularly ranks among most traded currencies in the world. This is mostly due to the fact that The Swiss National Bank, which is the Central Bank of Switzerland is actively involved in the forex market to stabilize CHF’s price in as tight range as possible.

More on the Swiss National Bank on Investopedia.

Switzerland’s low-tax structure, as well as ease of doing business, is attractive to both forex brokers and traders. Therefore, Switzerland has been an important player in the global forex economy for decades.

Swiss brokers have been involved in far fewer broker scam scandals when compared to other jurisdictions such as the US, UK, and Germany. The downside of this, however, is that larger minimum deposit amounts are required in addition to higher minimum margin requirements due to a much higher level of regulation.

Regulations:

Regulations about forex trading are quite strict in Switzerland. Only regulated and licensed brokers can operate in Switzerland and their activities are carefully monitored to ensure the safety of clients.

The Swiss Financial Market Supervisory Authority (FINMA) is the main regulating body and was established in 2007 to enforce stricter guidelines on broker regulation. This has led to Swiss forex brokers having to register as banks that do not have any conflict of interest with their clients.

A minimum of 1.5 million CHF has to be maintained in capital to operate as a broker. This requirement increases even further in proportion to the deposits.

Additionally, according to FINMA, investors are protected by up to 100,000 CHF.

TAX obligations:

Capital gains tax paid in Switzerland depends on whether you are categorized as a private investor or as a professional investor. Private investors do not pay any tax.

Guidelines by the Federal Tax Administration list several criteria to be considered a private investor:

Capital gains amount is less than half of your net income.
Total trading volume is not greater than 5 times the amount of the total value of your securities at the start of a tax year.
You hold securities for more than 6 months.
You use your own assets to invest

If these criteria are not met, you will be liable for tax and that will vary according to your capital gains. Amount per month. Annual tax up to 15% is liable on forex trading in Switzerland.

Popular Brokers in Switzerland:

Dukascopy:

Dukascopy, established in 2004, is considered to be one of the most reputable forex brokers in Switzerland. It is offering services as a brokerage firm in Switzerland and many other countries of the world including China, Japan, Hong Kong, Malaysia, and the United Arab Emirates.

It is regulated by the Financial Market Supervisory Authority (FINMA) in Switzerland.

Key details:

Minimum trade size of 0.01.
Minimum deposit of 100 USD
More than 40 currency pairs.
It has multiple deposit options including Bank Transfer, Maestro, and Visa options.
You can contact them any time as support is available 24/7.
You can trade on MT4 and jForex platform.
Both mobile and web applications are available for their customers.

Rating:

At the time this article is written, Dukascopy.com is rated 3.7 out of 5 based on 100+ traders reviews.

Please click here to read and contribute reviews for Dukscopy.com

SwissQuote

SwissQuote owns regional offices in Hong Kong, China, Singapore, Malta, United Arab Emirates, and the United Kingdom. It was established in 1996 and has a good reputation in the forex industry.

SwissQuote is regulated by:

Hong Kong Securities and Future Commission (HKSFC) in Hong Kong.
Financial Conduct Authority (FCA) of the United Kingdom.
Malta Financial Services Authority (MFSA) in Malta.
Monetary Authority of Singapore (MAS) in Singapore.
Financial Market Supervisory Authority (FMSA) in Switzerland.
Dubai Financial Services Authority (DFSA) in UAE.

Key details:

Minimum deposit of 1000 USD
More than 90 currency pairs.
More than 10 Cryptocurrencies
Deposit options including Bank Transfer, Maestro, and Visa.
24/7 customer support
It supports MT4 and MT5 trading platforms.
Both web application and mobile application are available.

Rating:

At the time this article is written, SwissQuote.ch is rated 2.6 out of 5 based on 10+ traders reviews.

Please click here to read and contribute reviews for SwissQuote.ch

Interesting Facts

In the period between 2011-2015, the Swiss National Bank pegged the price of CHF to EUR at a rate of 1.2 CHF per 1 EUR. However, due to high pressure in the market, the fixed peg had to be removed, therefore, causing massive volatility in the forex markets as the CHF price increased around 20-30% against other currencies in just a few minutes.

Conclusion

Switzerland is a great place for Forex trading as the brokers are strictly regulated and clients’ funds are insured. No capital gains tax makes forex trading especially attractive for those who do it part-time as an additional source of income. Several highly reputable brokers are based or have offices in Switzerland, therefore, there is plenty to choose from.

Key takeaways

Swiss Franc CHF is among the most popular currencies traded.
The Swiss franc has a reputation of being a safe haven during times of uncertainty
The Swiss National Bank is actively involved in the forex market to stabilize CHF`s price
Only regulated and licensed brokers can operate in Switzerland
The main regulating body is The Swiss Financial Market Supervisory Authority (FINMA)
Investors are protected by up to 100,000 CHF.
Private investors do not pay any capital gains tax
Switzerland is part of the European Economic Area (EEA), therefore, all Swiss-based brokers can also provide services to EU residents.

Author Profile

Fat Finger

Hello everyone!

My name is Phat Fin Ge, but most people just call me Fat Finger or Mr. Finger.

Many years ago, I was a trader on the Hong Kong Stock Exchange. I became so successful that my company moved me to their offices on Wall Street. The bull market was strong, but my trading gains always outperformed market averages, until that fateful day.

On October 28th, 1929, I tried to take some profits after Charles Whitney had propped up the prices of US Steel. I was trying to sell 10,000 shares, but my fat finger pressed an extra key twice. My sell order ended up being for 1,290,000 shares. Before I could tell anyone it was an error, everyone panicked and the whole market starting heading down. The next day was the biggest stock market crash ever. In early 1930, I was banned from trading for 85 years.

I went back to Hong Kong to work at my family's goldfish store. Please come and visit us at Phat Goldfish in Kowloon, only a 3 minute walk from the C2 MTR entrance.

I thought everyone would forget about me and planned to quietly return to trading in 2015. To my horror, any error in quantity or price which cause a problem kept getting blamed on Fat Finger, even when it was a mix up and not an extra key being pressed. For example, an error by a seller on the Tokyo Stock Exchange was to sell 610,000 shares at ¥6 instead of 6 shares at ¥610,000. That had nothing to do with me or with how fat the trader's finger was, but everyone kept yelling, "Fat Finger! Fat Finger!" In 2016, people blamed a fat finger for a 6% drop in the GBP. It really was a combination of many things, none to do with me or anyone else who had a wider than average finger.

Now that I can trade again, I'm finding forex more interesting than stocks. I've been doing some research on trading forex and other instruments and I'll be sharing it here.

If you see any typing errors, you can blame those on my fat finmgert. If you see any strange changes in price, it's not my fault.