What You Need to Know About Regulated Forex Brokers
Regulated forex brokers are brokers that have obtained authorization and oversight from reputable regulatory authorities. These regulatory authorities exist to protect traders and ensure brokers operate with transparency and fairness.
Regulated brokers are subject to regular audits, assessments, and oversight to maintain their status, making them more reliable and trustworthy than unregulated brokers.
The Benefits of Trading with Regulated Forex Brokers
Benefits of working with a regulated forex broker include:
Protection of Clients’ Funds
Regulated brokers are required to segregate their clients’ funds from their operating funds. This ensures that client funds are kept safe and secure, and are not at risk in the event of the broker’s insolvency.
A Higher Level of Transparency
Regulated brokers are required to fully disclose the range of their trading practices and pricing. This allows traders to make informed decisions about their trades, knowing that the broker is operating fairly.
In essence, you are assured that your broker is less likely to create false price spikes to take you out of your positions.
Adherence to Strict Regulations
Regulated forex brokers are required to adhere to strict regulations, which vary depending on the regulatory authority. For instance, they may be required to submit their financial statements regularly and maintain a certain amount of money as operating capital.
By adhering to these regulations, regulated brokers offer traders a greater level of protection and assurance that they are operating in a safe and ethical manner.
Access to Investor Compensation Schemes
Most regulated forex brokers are members of investor compensation schemes, which provide additional protection for traders in case a broker becomes insolvent or fails to meet its financial obligations. However, the amount of money you can recover is capped at a certain figure, depending on your jurisdiction.
It is much easier to seek legal redress if a regulated broker commits an offense than when dealing with unregulated brokers, as they may be hard to trace.
Credible Forex Brokers Regulatory Authorities
There are many regulatory authorities around the world that oversee and license forex brokers. However, any broker who is approved by any of the following regulators is almost guaranteed to be credible, as the commissions are usually thorough in their vetting:
- Financial Conduct Authority (FCA) – United Kingdom
- Australian Securities and Investments Commission (ASIC) – Australia
- Commodity Futures Trading Commission (CFTC) – United States
- Cyprus Securities and Exchange Commission (CySEC) – Cyprus
- Financial Services Commission (FSC) – British Virgin Islands
These regulatory authorities have varying levels of oversight, but all work to ensure that brokers are operating in a fair and ethical manner.
Forex trading can be an exciting and potentially lucrative activity, once you build up your analysis skills. Before you get there, you need to first choose a reliable broker to work with.
The broker will not only give you peace of mind, but also open doors for you to enjoy other amazing opportunities, like big bonuses and lower spreads.