Forex Broker
Article by Forex Leo
When assessing the range of Forex brokers on offer there are a number of criteria upon which to make your decision. These might include the the brokers available trading platforms, spreads of currency pairs and available leverage on the account. With so many factors in play the decision on the broker to use can prove difficult. However the most important factor that you base your decision on should be in selecting a regulated one form a list of online Forex brokers.
Whats The Deal With Regulated Forex Brokers?
Regulated Forex brokers must have sought membership of an official regulatory body. This means that the activity of the company is monitored. They will have to adhere to a set of strict regulatory criteria outlined by the regulatory authority in order to operate their business.
To attain regulated status, a broker is required to meet and maintain a set of minimum legal requirements on an ongoing basis. These include maintaining a sufficient level of financial assets to ensure the uninterrupted operation of the company and also strict operational procedures and standards.
Regulation requires brokers to operate with complete transparency of their accounts and associated financial documentation. They are also required to submit detailed financial reports. Companies that do not can be fined or have their membership terminated if they fail to comply. Similarly if the broker does not follow the guidelines for this documentation the can also be penalised.
Why you should choose a regulated Forex broker
Regulation exists to both protect clients and ensure they receive a minimum level of service.This means that brokers are accountable to the regulatory authorities for their dealing with clients.
An important thing to note here is that client deposits are held in a different account away from the company accounts. This means that client deposits cannot be used for the broker’s operational activities which helps to ensure the safety of client money. This also helps to protect the client in the event that the broker runs into financial trouble, as funds held in the segregated client accounts cannot be used to pay back creditors.Regulatory control also applies to other aspects of the brokers operation. These include maintaining quality standards, maintaining good levels of customer support and monitoring accounts for fraud.
Checking that a Forex broker is regulated
It should be fairly simple to find out if a broker is regulated. Most Forex brokers will now provide details their regulatory status in their literature and on their website. They will also list any other financial memberships that maybe applicable.The regulatory authority that a broker is registered with will be dependent on the jurisdiction of the regulated Forex broker. Countries with specific regulatory authorities include the USA, UK, Euro Zone, Switzerland, Australia and Japan.
Examples of regulatory bodies include the National Futures Association (NFA) and Commodity Futures Trading Commission or (CFTC) for US brokers, the Financial Services Authority (FSA) for UK based brokers and MiFID and CySEC for Euro zone brokers. The full regulatory standards that these operate by can be found on their websites.A broker is only required to have membership of one authority to be considered regulated in that region.
When choosing a broker for your Forex trading it pays to make sure you select a regulated Forex broker. This can help to make sure that you get a level of service based on a set of regulated standards and also if the worst happens and your broker folds, your deposited funds will be protected.
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8 Important Aspects in Choosing a Forex Broker
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