Definition – What does Regulatory Risk mean?
Regulatory risk refers to a potential negative impact on a trader’s account or to forex trading in general due to a change in the laws and regulations governing trading in that region.
ForexTerms explains Regulatory Risk
Forex trading is often thought of as a global business that goes beyond national borders, but governments and regulatory bodies can still impact the brokers and the traders in their area. Regulatory clampdowns can backfire, however, and drive domestic traders to overseas brokers or into gray currency markets beyond regulation.