Regulated Forex Brokers

When it comes to making a decision as to which Forex broker to use for your trading there are many criteria on which you can base your decision. These may include such areas as the Forex trading platform that is offered, the currency spreads provided or the even the amount of available leverage on offer.

The most important of all criteria however is to ensure that you make use of one of the regulated Forex brokers available in order to both ensure you receive a quality of service and more importantly to safeguard your deposited trading capital.

What are regulated Forex brokers?

Regulated Forex brokers are distinguished by the fact that they have membership of a regulated financial authority. This means that the activity of the broker is fully monitored and audited in line with a strict set of rules and guidelines as laid out by the regulatory authority.

In order to attain regulated status, a Forex broker is required to meet and maintain a set of minimum legal requirements. While these requirements will vary slightly depending upon the authority involved, they will at minimum require the broker to maintain a sufficient level of financial assets to ensure uninterrupted service to clients. They will also require the broker to adhere to strict operational procedures and standards.

Regulation requires brokers to operate with complete transparency of their financial accounts and associated financial documentation. They are also required to submit regular financial reports to the financial regulator for scrutiny.

Non compliance with any of these standards can lead to Forex brokers being given financial penalties for their transgressions. For more serious breaches they can have their membership terminated completely.

Why it pays to look for regulatory membership

Regulation exists to both protect clients financially, in terms of their deposits and also to ensure that they receive an agreed level of service. This is achieved by making the broker accountable to the regulatory authorities for their dealing with clients.

The most important benefit for the trader is that their client deposit is held in a segregated bank account away from company funds. This deposited client money is clearly separated from the brokers capital and thus cannot be used as part of the broker’s financial activities. This not only helps to guarantee the safety of these funds is also legally the protects the trader in the event that the broker runs into financial difficulties. Deposited trading monies cannot be used to fund creditors.

Regulation also extends to other areas of the brokers operation. These areas including maintaining quality standards and levels of customer support. The brokerage is also responsible for monitoring accounts and reporting any suspected instanced of fraud or malpractice.

How to find out if a Forex Broker is regulated

Most regulated Forex brokers will display their membership of a regulatory authority on their website.

However if you are unable to find this and want to verify a broker’s status, you can also check for their membership status on the Regulators official website.

Check that your Forex Broker is regulated with at least one of the following agencies to help to ensure the security of your funds:

• Australia: ASIC,AFSL
• Canada: CIPF,OSC,BCSC
• European: MiFiD, CySEC
• Germany: BaFin
• Japan: FFAJ
• Switzerland: ARIF, FDF, GSCGI
• United Kingdom: FSA
• United States: NFA, CFTC

The full standards by which each of the regulated Forex brokers is expected to operate can be found on the official Regulators website.