Role Of Regulatory Brokers In Forex Markets

regulation

It is a wellknown fact that stock markets are risky and insecure if operated with indistinct knowledge and can also lead to heavy losses if not backed by a professional help. Here professional help means someone you need in advising to invest in share market, one who is qualified to do so by any licensing authority, one who meets the standards of quality prescribed for them. Here you encounter with the word regulierter Broker who are proficient enough in handling even tricky situations with care.

Forex markets operate all through the year and are busy in offering currency pairs for trading. Various factors influence its market like political decisions by the governments, news in the world, economic policies and social situations. Apart from trade news and other prospects in the market it has lot to offer aspiring investors. Huge trading opportunities attract new bees and it is incumbent on the Forex market to provide traders from any underlying insecurities. In order to make sure that these kind of irregularities are taken care it has introduced regulations to be complied by financial intermediaries to minimise risk and act as a stand by in case of losses. These people with controlled authority by the forex market and authorised agents to offer financial services are called regulierter Broker.

What is the benefit?

Many traders who invest in forex markets do not know whether their broker is a regulated one or non-regulated one. It is so important that cannot be ignored. They have to get license from the local forex board to operate and have to comply with the rules and regulations of the authority. They have to reach up to the standards of quality prescribed by the forex board of that country. So you be sure that there will not be any question of standards not being met. However, it is not the case with unregulated brokers. They are not obliged to meet any standards nor are required for certification. They are not registered under the forex board and so are not guided by any regulating authority. Here the chances of risk are high and there is no promise for security.

How does their work differ from others?

We should not underestimate the quality control part here. While dealing with this, regulated members are very careful and their work is audited on a constant basis. Their activities are also scrutinised and any misleading accounts or malpractices are not entertained. So they are bound to obey the rules and norms of the Forex regulatory authority of a specific country. The protection is so secured that they are required to maintain sufficient funds in case of bankruptcy or forex transactions. With non-regulatory brokers this kind of security is not possible as their accounts are not audited and they are not answerable to any regulatory body.Top brokers like 10 Markets ECN offer maximum leverage of 200/1with a minimum lot size of 0.01and take a minimum deposit of $10,000. It varies from one broker to another.

Some top established brokers:

Markets.com

Markets.com is regulated by Cyprus Securities and Exchange Commission (CySEC) under Safe cap Investments Limited, a Financial Services Company. It has obtained plenty of awards for its services in the recent past.

FXTM or Forex Time:

Since its inception in 2012, it has established its name as the “best newcomer” and “fastest growing forex broker” . It is controlled by IFSC and has headquarters at Cyprus.

AVA trade:

This is one of the most established brokers of all time. Its regulatory body is Central bank of Ireland and is licensed by MiFID. They offer variety of choices for traders like AVA debit card, demo account, free with drawals etc.
FXCM
:

This is a US based company with headquarters in USA and was listed as America’s fastest growing companies three years consecutively. It has offices in various other countries like UK, Australia, Italy and France each of which is separately regulated by respective countries.

Plus 500:

This is a company which is regulated by Financial conduct authority. It has its headquarters in Israel with branches in other countries like United Kingdom, Australia and Cyprus.

Apart from respective country brokers, there are world acclaimed ones controlled by IFSC. The International Finance Service Commission is situated in Belize and regulates financial markets worldwide. IFSC is comparatively not so strict with the compliances of the traders unlike other countries where the brokerage laws are very strict. FCA in the UK CFTC in the US are very rigid with respect to their laws.

  • IFSC brokers requirements:

  • IFSC-regulated brokers need to maintain certain amount of capital to provide to the clients in case of necessity.

  • All the funds of clients have to be maintained separately in different accounts.

  • They have to pass monthly statements to clients related to IFSC-regulated businesses.

  • They have to issue monthly reports which includes all details like unimpaired capital, safety accounts etc.

  • IFSC Forex brokers also have to maintain a customer complaints procedure.

In UK and US the brokerage laws a bit different and strict. The National Futures Association (NFA) is the solo independent organisation carrying reforms that safeguard the principles of forex markets in USA. The NFA, in order to safeguard the interests ofaspiring traders offers to verify the authentication of their brokers through an online verification system called BACK GROUND VERIFICATION INFORMATION CENTER where a customer can know the status of brokerage firms.

Some regulatory authorities in some popular countries:

  • UK- Financial Services Authority(FSA)

  • Australia – Australian Securities and Investments Commission (ASIC)

  • South Africa – Financial Services Board (FSB)

  • Russia – Federal Financial Markets Service (FFMS)

  • Switzerland – Swiss Federal Banking Commission (SFBC)

  • Cyprus – Cyprus Securities and Exchange Commission (CySEC)

Finally, it has to be understood that Forex market is complicated trading process which involves lot of risk and even larger losses sometimes. Whether you are a trader or broker necessary safeguarding measures have to be taken after a detailed study of the market. The prices are not transparent and SMART is the inevitable way to stay succeeded here. There were many cases in which customers fell to fraudulent rich schemes and fell on roads without a penny in hand. Fortune changes in a day here. It is the traders’ responsibility to see if they are getting a good deal for their transactions.

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