Regulation
Forex Regulations in Different Countries
Getting a good broker is crucial if you want to make a successful career in Forex trading. Foreign Currency Trade is filled with exciting opportunities as well as big monetary risks. Naturally, it makes sense to choose a good Forex broker for yourself who can provide you with the right guidance and infrastructure to be successful. While you look for a capable Forex broker, it is also essential to check whether its activities are regulated by a credible organization. Read on to know about Forex regulations in different countries.
With each passing day, more and more Forex broker firms are coming into existence. While this really places new traders in a more advantageous position, it also makes it more challenging for them to find the right broker company for them. There is no dearth of dubious organizations that pose as Forex broker firms with the sole intention of cheating new entrants into Forex trading. If a firm is backed by an authentic regulatory body, such as a government organization or some credible institution, you can be assured of getting honest services. Laws governing deals in finances tend to vary from one country to another. Since Forex happens to be an international market, you should know about the Forex regulation laws in your own country before hiring a broker.
USA
Brokers in the United States of America have to abide by the rules and regulations specified by the Commodity Future Trading Commission (CFTC). For OTC Forex brokers in USA, CFTC acts as the official regulatory body. If you find a US Forex broker to be affiliated to CFTC, you can expect it to comply with the rules and provide you with honest services. These rules include
- Conforming to the minimum capital requirements
- Complying with margin requirements
- Stringent keeping of records
- Strict book keeping practices
- Adherence to the business conduct standards mentioned by the CFTC
If you suspect your broker to have engaged in unfair means, you should get in touch with the CFTC. However, a loss of money in trading activities does not qualify as a strong reason to file a lawsuit against your broker.
Canada
In Canada, Forex trading is monitored by CSA (Canadian Securities Administrators). Until 2009, there had not been enough overseeing of the operations of Forex brokers. In February 2009, the state implemented a new structure to regulate derivatives and monitor the operations of Canadian Forex brokers. CSA is the main body that oversees financial dealings in Canada. If you plan to trade in Forex, get a broker who is regulated by CSA authorities.
UK
The safety of financial trading in the U.S is regulated through the F.S.A (Financial Services Authority). This regulatory body not only ensures safe trading but also helps UK traders benefit from strategies like hedging. It also lets traders use a higher leverage than that allowed in the United States. Where secure services are concerned, U.K is one of the best places to trade in for Forex traders. The F.S.A. ensures that the assets of clients are separated from that of the broker company. In other words, in case of a bankruptcy or fraud, the accounts of traders will not be claimed by creditors. This is contrary to what happens in many other jurisdictions. In the U.K., traders are given the maximum privilege. This is partly due to the fact that Forex trading in U.K is more advanced compared to that in many other Western countries.
New Zealand
In New Zealand, all Forex broker organizations are monitored by the New Zealand Securities Commission. It is the main authoritative organization in the country that looks into financial dealings, including futures trading and trading in commodities. While currency trading is still at a nascent stage in this country, it is full of possibilities for Forex brokers and budding Forex traders.
Australia
The Australian Securities and Investment Commission (ASIC) is the main organization that takes care of the safety and transparency of financial operations in Australia. It has enforced regulatory rules on Forex brokers to ensure the safety of consumers, creditors and investors. Most of the reputed Forex brokers in the nation are regulated by the ASIC. The organization also monitors retail Forex trading in the country. Even if you are offered attractive rates and benefits by a broker firm, you should never trade through it if it is unauthorized to provide services by the ASIC.
Hong Kong
Hong Kong jostles with Tokyo, Shanghai and Singapore to become one of the top three Asian financial centers. While the overall monetary system is regulated by the Monetary Authority of Hong Kong, Forex trading is mainly overseen by the Securities and Exchanges Commission (SEC). The SEC grants license to brokers, imposes regulations and monitors the activities of market operators. It also carries out responsibilities related to oversight and education as assigned to it by law.
India
In India, the Securities and Exchanges Board of India (SEBI) regulates Forex brokers in India. It is an independent body that has been entrusted with managing smooth operations of the brokers and stock markets of the country. The Forward Markets Commission which manages trade of financial instruments (non-exchange) regulates trading of commodities. The RBI (Reserve Bank of India) manages the Indian currency (rupee) but is not related to overseeing Forex broker operations.
Pakistan
In Pakistan, trading in retail currencies and commodities is overseen and determined by the SEC. SEC is the Securities and Exchange Commission which is located in Islamabad, Pakistan. It is responsible for overseeing exchange-based buying and selling of securities and futures. It also serves as the primary regulatory body of the insurance industry, mortgage providers, banking system, REITS and various other active financial organizations in the nation.
If possible scams and monetary losses are discouraging you to take up Forex trading, you can consider hiring broker firms that are overseen and monitored by credible regulatory bodies. This will ensure that your Forex trading activities are completely safe and do not involve any risks. To find such brokers check the broker comparison chart and etoro review