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story by: Kristina Frunze
The most reliable Forex Regulations - WHY?
04/03/2017
The most reliable Forex Regulations – WHY?

The count of fraudulent activities is largely growing across the globe. Today, we are looking into the most reliable Forex Regulations worldwide. How do countries regulate Forex market participants?

AtoZForex Trading in Forex can bring you huge benefits, as the market is available 24 hours a day, 5 days a week. However, where the traders and investors enjoy opportunities to take profit, fraudsters are looking for illegal gains.

The most reliable Forex Regulations

Particularly, Forex market is largely exposed to a number of risks. There is a number of unregulated brokerages all around the globe, where some of them are targeting investors in order to gain illicit profit. Moreover, the number of unregistered brokers is growing rapidly. Therefore, financial regulators globally are tightening the frameworks in order to protect investors’ community.

Lately, the oversight from the regulators has increased, along with stricter requirements for acquiring Forex broker license. This, many of the unregulated brokers are forced either to exit the market or get a license.
Following on this, we will discuss the most reliable Forex regulations across the globe.

Forex regulations in the US

The financial market in the United States is the largest one, where Forex trading comes only as one of its components. Yet, it also puts the strictest regulations on the financial players in the Forex world. This appears as an advantage for the US citizens, where the US government is fundamentally looking after its investors’ community.

However, these strict rules are often counterproductive, as they prevent Americans from enjoying transactions, which are available for Forex operators in other countries.

The key financial regulator in the US is the US Commodity Futures Trading Commission (CFTC). Another important US watchdog, the National Futures Association (NFA), supervises the financial standards, applied to online brokers.

Forex regulations in the UK

The United Kingdom has adopted and integrated innovative practices to manage its local Forex sector. These practices are expected to benefit both stakeholders and financial market players. The main financial regulator of the UK – the Financial Conduct Authority (FCA). The watchdog is performing regulating, supervising, investigating and enforcing activities across the region.

The UK utilizes a cost-benefit approach in setting its Forex regulation norms. Such approach is vastly based on the principle that innovations should appear as a part of the formulation process. Moreover, the UK seeks to adopt an international stance in its Forex trade. Their posture is very competitive and friendly to the offshore operators.

In addition to above mentioned, the UK government has set a guarantee fund program for up to a maximum of 50,000 Pounds as an insurance protection. Such protection is available for the impacted clients of Forex brokers who found themselves in a financial trouble.

Forex regulations in Switzerland

The banking system in Switzerland is known for its trustworthiness worldwide. Taking this fact into consideration, some would assume that Switzerland also has the most reliable standards in Forex industry. Yet, the 2009 Crown case has proved this suggestion wrong. Since this financial scandal took place, the Swiss government decided to authorize the Swiss Federal Banking Commission (SFBC) to have jurisdiction on Swiss Forex trading.

Where this is a good initiative, it also is discouraging other interested brokers and traders. Swiss regulators are requiring stringent and voluminous documentation in order to set up a brokerage firm. The process of set up of the bank accounts in retail trading has the same requirements. This is due to the fact that the processes must reflect Swiss banking standards.

Think we missed something? Let us know in the comments section below.

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