The forex market is operating 24/7, therefore leaving space for potential fraud. This exists in every financial market, but it is more often to occur during forex exchange because of their wide-range coverage. That is why we have forex regulations worldwide. They are here to prevent are recognize these types of frauds.
If you are serious about their money and want to invest smart, you should know about the primary forex regulators and their offer. There are many different types of forex regulations worldwide, so we will present to you the two most important, and others available in countries that are also focal points of trading times on the forex market.
Main Forex Regulators
The FCA keeps in check the money industry in the UK. It is an institution for itself, which means it operates separately from the government. The financial markets finance them. Their focus is three things:
- Ensuring strong protection for any trader
- Enhancing the integrity of the UK’s markets while protecting their integrity making people less distrusting
- Promoting all the time so they can help UK consumers
The FCA has a significant impact when it comes to regulating the market and checking the promotion of financial services. It also has the right to investigate benefits reported as a scam, or if they can’t be found on their website (on their website, you can check whether the company is fraudulent or not).
This is a must if a company wants to comply with the FCA’s Payment Services Directive:
1. Segregated Accounts – What this means, exactly? All forex providers have to separate client’s money from business funds. This makes sure that a trader’s funds can be covered and completed in case something goes wrong.
2. Capital Requirements – Forex providers, have to prove they have enough budget to cover any regular payment services risks.
3. Bank accounts – Forex providers who have proved their value and trustworthiness usually use large banks as providers. However, serious banks will come across service only if strict regulations are met. Money transfers are processed thanks to these banks, and they ensure everything is safe and traced quickly.
Global Forex Regulation
FinCen or short for Financial crimes enforcement is the United States’ financial system for regulating forex exchange. Their main goals are:
2. Prevent and fight money laundering
They act as national security in the financial department since they collect and analyze any financial information and use it further for monetary authorities. They even have tasks such as enforcing already regulated security, making regulations stronger, protecting data, and maintaining the US access to them. As we mentioned earlier, they assist the financial intelligence unit (FIU) and do many types of research regarding the financial market.
MiFID is operating in Europe, including over 31 countries such as Iceland. MiFID’s goals are making everything in sync regarding regulation, protection, including any competition.
The main plan’s goal was to harmonize regulation, increase consumer protection, and companies’ competition. It is a smart move from them wanting to become more transparent about pricing and financial services in general, which they succeeded in. Their responsibilities are also putting clients in three different categories: counterparties, retail, and professional. They are also making sure every client has enough knowledge before going into any trading.
You might get the hint, but NZFMA operates on the New Zeland market and acts as their financial body. They are very professional, making it their motto, which is also very efficient about finances. NZFMA is a non-profit organization.
ASIC belongs to The Australian Securities, and they regulate every type of financial service, including forex. They are promoting security, collect data about companies, and manage various legalities with minimal problems and maximum efficiency, making customers more comfortable and secure.
FINMA belongs to Switzerland, and it is an independent regulator formed eleven years ago. They pay attention to security, various financial exchanges, dealers, etc. They are also in charge of regulating distributors.
7. Japan FSA
Finally, we have FSA that controls financial institutions (especially private ones) in Japan. Their main goal is to ensure that Japan’s system is safe while making transactions go smoothly and without any scam involved.
These are the main regulations you should know about. We hope you feel safer if you were skeptical about the foreign exchange market’s safety, and feel free to explore more!