There are many regulatory bodies. They differ from each other in the complexity of licensing, the frequency of audits, as well as compensation schemes. The reliability of these regulators has increased considerably in recent years. Let's learn more about them and what you should look out for.
The British Financial Conduct Authority (FCA UK)The British Financial Conduct Authority (FCA UK). This British regulator has extensive supervisory and enforcement powers, allowing it to monitor the entire UK financial sector. For ordinary traders, reliability lies in the comprehensive protection of their interests and the compensation scheme available in the event of insolvency of the Forex broker. Today, in accordance with the Financial Services Compensation Scheme (FSCS), FCA UK guarantees the safety of funds up to 85,000 GBP. At the same time, the amount of guaranteed payment can be considerably increased by insuring the funds through special programs.
The Swiss Financial Market Supervisory Authority (FINMA). The huge advantage of FINMA is that all supervised companies must have a banking license and meet all requirements of the banking institutions. It would be absurd to talk about the reliability of Swiss banks. In the event of bankruptcy, all client deposits in Swiss banks are subject to compensatory payment of up to 100 000 CHF.
US regulators — Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). The CFTC and NFA are well-known and respected regulatory bodies. It is relatively difficult to obtain a license and comply with these organization's requirements, and there are huge fines for any violations. There are several trader protection programs to provide traders peace of mind regarding the reliability of the companies licensed by these regulatory bodies.
The Cyprus Securities and Exchange Commission (CySEC). A large number of European Forex brokers are registered specifically in Cyprus. The licensing requirements have been tightened in recent years, but they remain one of the weakest compared to other regulatory authorities. The advantage of CySEC is the compensation scheme they offer to ordinary traders for up to 20,000 EUR.
Australian Securities and Investments Commission (ASIC). To obtain an ASIC license, a broker is required to have a capital in excess of A$1 million. In addition,, the regulator constantly conducts extensive checks and imposes heavy fines for violations. There is no compensation scheme in case of a broker's insolvency, which is a major drawback. But despite this, the large capital margin required of Forex companies does inspire a certain degree of reliability.
German Federal Office of Financial Supervision (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin). German meticulousness is also reflected in the regulation of its financial markets. The agency's strict supervision rules out any attempt at fraud. As for the guarantee of reimbursement in the event of a company’s bankruptcy, the compensation scheme only covers 90% of losses and no more than 20,000 EUR
There are many other regulatory bodies around the world. For example, countries such as the Republic of Seychelles, Belize, Mauritius, Saint Vincent, and the Grenadines, the British Virgin Islands (BVI), the Cayman Islands, The Republic of the Marshall Islands, the Republic of Mauritius, and the Republic of Vanuatu also have regulatory and supervisory offices. These regulators also differ from each other in the complexity of licensing, the frequency of audits, and their compensation schemes, with the reliability of these regulators having increased considerably in recent years.
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