When you are dealing with entities online in which you will be trusting your money with, it is vital that you know that they hold the proper licenses to do so and that they are properly regulated. This gives you peace of mind that your funds are safe and that protections are in placing something happens.
There are dozens of different forex platforms in the space today, so it can be sometimes difficult to figure out which one you should go for. One of the very first things you should be looking for is who is the regulator for the forex broker. You can immediately disregard any broker that does not have a license from a respected regulator as you will be gambling that this platform will keep your money safe for you.
There are different regulatory organizations for the forex industry across the world. Sometimes when a new broker starts off, they will only receive a local license until proper investigations can be done into their company and their team.
In terms of the most recognized regulators for forex brokers, they will be the Cyprus Securities and Exchange Commission (CySEC), the Financial Services Authority in the United Kingdom and the United States Securities and Exchange Commission (SEC).
As well as these regional regulators, there will also be certain professional or governmental bodies that brokers will also become a part of. For example, in Europe a common body that financial companies join is the Markets in Financial Instruments Directive (MiFID).
This allows for a congruent regulation of the financial services sector right across the 30 states in the European Union.
You should check the website of a given broker to see what licenses they have and who they are regulated by. Usually, you will find this information in the footer of the website. They will usually also provide their specific license number in case you wished to further clarify that they are in fact regulated by that given body.
Here are some of the main regulators you will see in the forex broker space today;
Australian Securities and Investment Commission (ASIC)
ASIC has been in operation since 1998 and they have their headquarter sin Sydney, Australia. Their agenda is set out through the Australian Securities and Investments Commission Act of 2001.
Cyprus Securities and Exchange Commission (CySEC)
CySEC was formed in 2001 and their headquarters are in Nicosia, Cyprus. As they are a member of the European Union, CySEC is compliant with the rules and regulations under the MiFID European financial harmonization laws.
They are a major destination for forex brokers looking to get a license when their operations are overseas. This is because they have easy access to the entire European market.
Securities and Futures Commission (SFC)
The SFC has been in operation since 1989 and the headquarters are in Hong Kong. They are an independent body that allows for an orderly financial sector, as well as trying to promote Hong Kong as being an important financial market for China.
It was originally created to respond to the 1987 crash of the stock market. Changes to the regulatory framework came in 1997 as a result of the financial crisis that struck Asia.
Financial Services Agency of Japan (FSA Japan)
The FSA was created in 2000 and it has its headquarters in Tokyo, Japan. They oversee the financial sector in Japan, as well as ensuring that there is financial stability in the country. There is a commissioner in charge of this agency who directly reports key information to the Minister of State for Financial Services.
Monetary Authority of Singapore (MAS)
The MAS has been in operation since 1971and they act as the central bank in the country, as well as being the chief financial regulatory authority. Singapore has become a leader in the Asian finance markets in recent years and they are being well directed by MAS.
UK Financial Conduct Authority (FCA)
The FCA is one of the most reputable financial oversight bodies in the world at the moment. They were formed in 2013 and their headquarters is in London. They are an independent operator to the government in the United Kingdom.
They charge their members fees in order to fund themselves. They ensure that the financial markets in the region have their integrity protected.
They regulate both wholesale and retail financial services companies and is a successor to the FSA. Currently, there are about 58,000 businesses under the FCA’s umbrella.
US Securities and Exchanges Commission (U.S. SEC)
The SEC is a body that is independent from the federal government in the United States. It was started in 1934 and the headquarters is in Washington DC. They enforce securities laws and provide oversight for the industry as a whole. It is one of the most respected bodies of its kind in the entire globe