The foreign currency market operates 24/7, offers global currency pairs for trading and is determined by geopolitical events, news, the release of macroeconomic data and related events. On the one hand, such a global market offers huge trading opportunities, but, on the other hand, it is difficult to protect individual traders from any financial irregularities. Thus, the rules were introduced through an established framework that ensures that financial intermediaries, such as Forex brokers, will comply with the necessary rules that offer loss protection and a controlled exposure to risks for individual traders.
WHO ARE FOREX BROKERS
Forex brokers are intermediaries in the currency market, when buying/selling currencies. Forex brokers are offices that provide brokerage services in the Forex market.
Forex brokers automatically accept requests for the purchase of any currencies from traders and subsequently fulfill these currency orders in the Forex market. In addition, Forex brokers provide the so-called leverage provided on the security of funds deposited by the client. They also provide convenient tools for web trading - special programs that simplify working in the Forex currency market via the Internet.
All US brokers must be registered with the National Futures Association (NFA), a self-regulatory governing body that provides a regulatory framework to ensure transparency, integrity, compliance with regulatory obligations and the protection of various market participants. The NFA also offers an online verification system called the Basic Information Status Information Center, where Forex brokers can be checked for compliance and regulatory requirements.
Rules are a balancing act. Too little will lead to financial irregularities and inadequate protection for individual merchants; too much will lead to a lack of competitiveness in world markets. One of the main problems faced by US Forex regulators is that leverage is limited to 1:50, and global brokers, outside the US regulation, provide leverage up to 1:1000. Traders and investors need to exercise caution, ensuring safety first.
Rating Brokers USA – TOP 5
United Kingdom Brokers
The UK is one of the oldest countries with exchange history, which has made a huge contribution to the development of financial markets. The London Exchange is one of the oldest, and British Forex brokers are some of the most reliable in the world. The UK is famous for its conservatism, and approaches finance with particular severity. Since 2013, the regulation of British Forex brokers has been carried out by organizations subordinate to the Bank of England: FCA and PRA.
FCA (Financial Conduct Authority) - The UK Financial Conduct Authority replaced the abolished FSA (Financial Services Authority) - the Office of Financial Regulation and Supervision. FCA is responsible for organizing monitoring and control over the activities of financial sector companies, including Forex brokers.
PRA (Prudential Regulation Authority) - The UK Prudential Supervisory Authority is also subordinate to the Bank of England and is primarily responsible for overseeing the administrative and financial affairs of financial companies. FCA and PRA provide tight oversight of UK Forex brokers.
It follows that the UK brokerage companies are distinguished by the transparency of doing business and the reliability of the services provided to their customers. As a rule, UK brokers work closely with major banks both in the UK and around the world.
Such banks ensure the maintenance of liquidity in the markets, acting as suppliers of liquidity, and also ensure the safety of funds: both the company and customers. By the way, most reliable brokers offer segregated accounts for their clients - bank accounts for a trade deposit, which are stored separately from the funds of a brokerage company.
Rating Brokers United Kingdom – TOP 5
The EU contributes to the creation of free trade conditions for companies residing in any EU member state without any legal restrictions on cross-border exchange of services. Forex brokers regulated by EU regulators can operate in any other European member states under the European Economic Area (EEA) agreement, which prevents the need to establish additional branches in the other parts of the EU. This policy of economic cooperation between EU members helps companies to save a significant amount of costs and connect to the lucrative European investor market through a single EU institution. Traders from Europe also find it easier to invest in a European regulated broker without worrying about the legal consequences, as all EU brokers are required to comply with all the strict regulatory requirements imposed on companies by the European Central Bank and MiFID derivatives.
European Forex brokers are also relatively open in their approach, introducing new financial products in accordance with current market trends. Instead of restricting investors in choosing investments, European currency brokers recommend that traders try out various financial products in order to distribute their investments in other exotic financial products. Most European brokers do not impose any stringent trading conditions, which are mainly common in other countries, such as the United States and other capital markets.
The best Forex Brokers EU also offer a sense of security and peace of mind, which are two vital components necessary for successful and stress-free foreign exchange trading. Forex trading in itself is a risky enterprise, but it is complemented by the uncertainty of the security of your trading capital; The fear of the overall reliability of the Forex broker can greatly affect your trading psychology. The EU and its regulatory authorities clearly understand market risks and have developed several regulatory guidelines designed to protect their citizens from any financial fraud or abuse by consumers.
Forex brokers in the EU also offer a wide range of payment options to simplify quick, easy and secure payments through online and offline channels. Most Forex brokers from Europe allow their customers to deposit or withdraw their funds using Credit/Debit cards, Bank Transfers, Skrill, PayPal, Neteller, Western Union and a wide range of other online and offline payment methods. The central location of the EU also allows brokers to work in most time zones, thereby offering companies the ability to serve customers from all over the world without causing them any inconvenience. This is probably one of the reasons why most EU brokers offer several support channels.
EUROPEAN REGULATORS THAT ISSUE A BROKERAGE LICENSE:
CYSEC (Cyprus Securities and Exchange Commission) - The Cyprus Securities and Exchange Commission is one of the most popular and well-known regulatory companies in Europe that is registered in Cyprus. Since Cyprus has been part of the EU since 2001, it can regulate the activities of companies throughout Europe, and perform the same functional duties as others. Since in Cyprus a simplified tax system, most companies are registered in it, and therefore falls under the regulation of this commission. The regulator does not just issue licenses, but monitors the diligent work of the broker, and in case of violation can fine or even deprive the license. Advocates for the protection of customers in the event that broker acts in bad faith with them. This complaint is reviewed within a month and appropriate measures are taken.
BAFIN (Bundesanstalt für Finanzdienstleistungsaufsicht) - The Federal Financial Supervisory Authority Commission, which is considered the most difficult to obtain a certificate, has the biggest requirements. It is located in Germany, and has the full name of the Federal Office for Supervision. In case of violation of the rules and regulations, brokers receive strict sanctions, up to the liquidation of the broker.
In addition to the regulators mentioned above, the European Union has a directive (MiFID), which was created by the FCA to control the financial operations of companies in the EU. To date, 27 countries are subordinate to it. It protects the rights of investors throughout Europe. He monitors large trading operations, honesty and transparency of brokerage companies. In order to obtain a license for this regulator, it is necessary to pass a state audit, since this company is subordinate to them was created by them.