The forex market is not only the largest, but also the most liquid market in the world today. Most of the traders are relying on forex brokers to handle their trading accounts and entering their trades. For this reason, it is vital that you can depend on your broker. What you’re looking for is a broker who is honest, transparent and trustworthy. But the truth is, even if your broker is your next door neighbor, it’s impossible to know if he/she is upright, honest and worthy of your trust. The good news is that even if your broker is on the other side of the world in a different time zone, there are global trading regulations set up that forex brokers and traders must adhere to.
International Brokerage Regulations
When choosing a broker that you do not know, it’s important to pay attention to the country or continent where they are licensed. By knowing the trading regulations of your broker’s home country, you will know how strictly the market is regulated. Many of the largest forex brokers across the globe are in North America. In North America, there are strict regulations and they are monitored closely. The market is hard for brokers to enter for the reason that it is quite expensive with high fees to become approved. So if your broker is from North America, you can hope that they take adherence to regulations very seriously. A new and growing market for brokers is in Chile, in South America, where the Superintendencia de Valores y Seguros (SVS) offers licensing. South Africa’s forex brokers fall under the watchful eye of the Financial Services Board (FSB). South Africa’s forex market is one of the more advanced markets in its area. Cyprus has a popular trading market, because it’s at the crossroads of the Middle East and serves as a hub to the European market.
The European market is considered to be one of the favored regions that welcomes forex brokers. If your broker is in Europe, you can assume that you will be safely protected by its regulations. For that reason, many brokers who do not have a legal framework locally will try to enter the European market. There are also some nation-specific regulators working within Europe and setting their own standards. For instanceSpain now requires an extra layer of client protection, France has banned advertising and there is a distribution ban set forth in Belgium. Added to that is the Netherlands, which has outlawed CFDs advertising and Turkey, which now has a new minimum deposit and requirements for maximum leverage.
Choosing Licensed Brokers
The bottom line here is that regulations do vary from country to country. Since you do want to be operating under a system that is being regulated, this is something that you need to monitor closely. Regimes change and strict regulations can be voided without warning so being aware is the way to place your trades with minimal risk. Choose carefully and play it safe!
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