Forex Regulations - Fraud Forex

Financial Regulators in Forex

Regulation is one of the most effective tools for the prevention of forex fraud. A number of worldwide organizations keep a watchful eye on the retail forex market to make sure consumers are treated fairly. The role of the financial regulator is to ensure that businesses with a financial license adhere to the general framework of policies created mainly to protect the public. Brokers must provide transparency in reporting day-to-day activities, maintain enough liquidity to ensure that transactions are processed and must send frequent accounting reports to the regulator. Licensed online brokers possess a higher level of credibility over unlicensed operators.

Main Regulatory Organizations:

ASIC (Review of ASIC) – Australia Securities and Investment Commission (Australia)
CySec (Review of CySec) – Cyprus Securities and Exchange Commission (Cyprus)
NFA (Review of NFA) – National Futures Association (United States)
CFTC (Review of CFTC) – Commodity and Futures Trading Commission (United States)
FCA (Review of FCA) – Financial Conduct Authority (United Kingdom)
FSP (Review of FSP) – Financial Service Providers (New Zealand)

Forex Regulation in the EU

MiFID governs a list of rules for the safety of the traders, and has done a great deal to ensure that those operating with brokerages based in the European Economic Area are treated fairly. If you live in the EU, you should only use a regulated EU trader, such as XTrade Europe.

Here are the primary regulators for financial services providers in the following countries of the European Union:

Austria – Financial Market Authority (FMA)
Belgium – Banking, Finance and Insurance Commission (CBFA)
Bulgaria – Financial Supervision Commission of Bulgaria (FSC Bulgaria)
Cyprus – Cyprus Securities and Exchange Commission CySEC
Czech Republic – Czech National Bank
Denmark – Danish Financial Supervisory Authority (Danish FSA)
Estonia – Finantsinspektsioon
France – Autorite des Marches Financiers (AMF)
Germany – Federal Financial Supervisory Authority (BaFin)
Greece – Capital Market Commission
Hungary – Hungarian Financial Supervisory Authority
Ireland – Irish Financial Services Regulatory Authority
Italy – Commissione Nazionale per le Società e la Borsa (CONSOB)
Latvia – Financial and Capital Market Commission
Lithuania – Securities Commission of the Republic of Lithuania
Luxembourg – Commission de Surveillance du Secteur Financier (CSSF)
Malta – Malta Financial Services Authority (MFSA)
Netherlands – Authority for the Financial Markets (AFM)
Poland – Polish Financial Supervision Authority (KNF)
Portugal – Portuguese Securities Market Commission (CMVM)
Romania – Romanian National Securities Commission
Slovenia – Securities Market Agency (ATVP)
Spain – Comisión Nacional del Mercado de Valores (CNMV)
Sweden – Financial Supervisory Authority of Sweden
United Kingdom – Financial Services Authority (FSA)

These three countries have also adopted the MiFID.

Iceland – Icelandic Financial Supervisory Authority
Liechtenstein – Financial Market Authority (Liechtenstein) (FMA)
Norway – Financial Supervisory Authority of Norway

Forex Regulation in the United Kingdom

U.K. Financial Services Authority, the FSA is the United Kingdom’s main regulator of the financial services industry.

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Forex Regulation in the US

Companies and individuals, without the relevant NFA and CTFC regulation, are not allowed to solicit or approach US citizens. The US regulatory board is considered one of the world’s strictest. US residents and citizens are only permitted to carry out business with CTFC and NFA regulated Foreign exchange providers.

U.S. Commodity Futures Trading Commission – the CFTC consists of an independent U.S. government agency which oversees all forex brokerage companies based and doing business in the United States. In addition to regulating U.S. commodity and futures exchanges, the agency enforces its regulations and prosecutes and punishes fraudulent conduct in the forex market.
U.S. National Futures Association – the NFA consists of a self-regulating organization for the U.S. futures industry. The NFA’s primary objective is to protect the integrity of U.S. markets and to protect investors from fraudulent activities. Basically, because spot currency transactions consist of two day delivery rather than cash, it can be treated as a futures contract. As a result, brokers executing transactions for clients in the forex market must register as a Commodity Trading Advisor, a Futures Commission Merchant, an Introducing Broker or a Commodity Pool Operator with one or more U.S. agencies in order to execute forex transactions for U.S. based customers.

Forex Regulation in Australia

In Australia, the regulation of retail Foreign exchange has been defined by ASIC (The Australian Securities and Investment Commission). Brokerages operating in Australia must hold an Australian Financial Services licence. The requirements are very tough it is generally noted that ASIC does a great job at protecting Australian clients.

Australian Securities & Investments Commission – the ASIC is the Australian version of both the CFTC and the British FSA. The Commission regulates the Australian capital markets, corporations and financial services. The ASIC combines the regulating authority of both the CFTC and its U.S. securities counterpart, the Securities and Exchange Commission or SEC.

Forex Regulation in Switzerland

The Swiss government agency which regulates and oversees financial institutions in Switzerland is known as the Swiss Federal Department of Finance. Brokerages operating in Switzerland must hold a Swiss Financial Services licence.