Types of Forex Regulation

By | July 5, 2017

Forex trading is a is a global industry with brokers and traders at the heart of it. However, with so many different parties involved, it can be hard to police this industry to ensure that brokers act honestly and that traders are protected.

fca

This is where forex regulation comes in. While there isn’t a central regulatory body, there are different regulators in different jurisdictions. Each with their own requirements for broker registration and policies in place to protect traders.

However, even with those regulatory bodies, there are still many scam brokers that operate without regulation or try to pass themselves off as regulatory bodies. When you’re registering with a broker, it’s advised that you check their regulation and check that regulator’s website for confirmation.

Information on those registered with a regulatory body is available for everyone to see on their website and if a broker is in fact registered with said body, then it will be available on their site.

CySEC

One of the more popular forex regulators is the Cyprus Securities and Exchange Commission (CySEC). It’s the regulatory body for Cyprus which is thought of as a virtually offshore location. CySeC has recently reformed their rules for brokers, leading to more stringent terms that will undoubtedly change the way many brokers operate but benefit traders in the long run.

FCA

Another well-known regulator is the Financial Conduct Authority in the UK. It acts outside of the government and like CySEC has reformed its policies to have a tighter leash on brokers.

FSA

The UK Financial Service Authority is another British regulatory body. It’s an independent agency of the British government.

CFTC

The US Commodity Futures Trading Commission is a regulatory agency presiding over the United States. It’s independent agency of the United States government similar to the British FSA.

NFA

The US National Futures Association is an independent organization that governs the US derivatives market. This included forex, over the counter, and exchange traded futures derivatives and swaps. NFA has a long standing history in the forex market and has done a lot of work, setting up programs and offering services to protect the interests of traders and protect the market.

ASIC

The Australian Securities and Investment Commission is the Australian version of the British FSA and American CFTC. It regulates the financial institutions, corporations, and capital markets operating in Australia.

These are just some of the more well known regulatory bodies in forex. There are many more brokers which preside over other jurisdictions. But a good rule of thumb to follow when looking to register with a broker is to check if it is regulated and what rules it has to follow to ensure you’re protected. After all, no one can take care of your investments like you.

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