Scott Martinez#100

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What is regulatory arbitrage in forex trading?

Regulatory arbitrage occurs when brokers or traders exploit differences between jurisdictions. For example, a broker restricted by FCA leverage caps (1:30) may open an offshore branch offering 1:1000 leverage. Institutions sometimes use arbitrage for tax efficiency, while retail traders often get lured by high-risk offers. Benefits: flexibility and global expansion. Risks: weaker investor protection and exposure to scams. Regulatory arbitrage shows how global inconsistency fuels both innovation and danger in forex. Traders must balance opportunity with security.