Find out if your forex broker is safe
There are many foreign exchange margin brokers from different countries and regions. On the surface, these brokers seem to be similar, which causes a lot of difficulties for investors who are new to the foreign exchange market when choosing. For investors who are new to the foreign exchange market, when choosing a broker, they must first investigate the broker's supervision situation, and at the same time look at its registered capital and current net assets. Usually, institutions with small capital are easy to go bankrupt; , it is best to choose a broker that separates the company's own funds from the client's funds to prevent the broker from misappropriating the client's margin at will; when actually opening an account, it is best to open an account with a small amount first, check the operation, and withdraw once after making a profit , to see the feasibility and speed of payment.
Regarding the security of depositing funds, it mainly depends on whether there is a regulatory agency in the country where the broker is located, and whether the broker is registered with the regulatory agency. Regulatory agencies usually formulate corresponding regulations to restrict the behavior of brokers to varying degrees, and at the same time try to protect the interests of customers. Investors can check the registration status of brokers, file complaints, or file complaints through their websites.
In the European and American markets where the foreign exchange margin business started in the late 1990s, due to its high risk, speculation and regulatory complexity, governments of various countries hold different attitudes. However, some European and American countries, as well as Japan and Hong Kong, have begun to accept foreign exchange margin and supervise it. Countries or regions that regulate foreign exchange margin include: the United States, the United Kingdom, Australia, Canada, Japan and Hong Kong. They have different degrees of supervision over foreign exchange margin, but the common feature is that the regulation of foreign exchange margin mainly refers to the regulations of securities or futures, rather than separate items; when necessary, special guidelines or clauses are issued to supplement, such as the United States and the United States. This is the case in Hong Kong.
Here is an overview of the regulatory agencies in these countries or regions, which are relatively safe:
United Kingdom: FCA
FCA is the UK's Financial Conduct Authority, its predecessor FSA (the Financial Services Authority) is by far the most stringent regulatory agency. The FSA formulates industry standards and requires regulated financial institutions and companies to comply with these standards. If they are violated, the FSA has the right to require the violating institution to compensate customers. In 2013, the FSA (UK Financial Services Authority) has been replaced by two new institutions: FCA (Financial Conduct Authority) and PRA (Prudential Regulation Authority).
The FCA (Financial Conduct Authority) will be responsible for supervising the behavior of financial service companies in all retail and wholesale financial markets, and will establish a new and more stringent regulatory approach based on the FSA's active consumer rights protection strategy. The new system reflects FCA's focus on protecting consumer rights, improving consumer experience and managing financial market behavior, emphasizing early and active intervention, as well as strict enforcement and more effective remedial programs.
Hong Kong SFC: SFC
The Securities and Futures Commission in Hong Kong is similar in nature to the FSA, but its responsibilities are relatively specific. The foreign exchange margin business is clearly included in the scope of regulation and is subject to the LFETO clause established by the SFC in September 1994 ( Leveraged Foreign Exchange Trading Ordinance under Securities and Futures Ordinance) This provision stipulates the capital and other aspects of foreign exchange brokers.
Australia: ASICs
Australia's regulatory agency, ASIC (Australian Securities & Investment Commission), in addition to supervising financial institutions and companies, is also responsible for handling procedures related to the opening, operation and closure of companies. There are two main measures to protect investors: All institutions operating financial products first need to apply for a license (AFS). In March 2004, ASIC also promulgated stricter standards to protect individual investors.
The standard includes: financial institutions need to obtain the necessary licenses, and must tell customers all the service content, operation methods, how to deal with complaints, etc. without reservation; in addition, institutions engaged in foreign exchange teaching, including online training, must accept certification or hold license. However, ASIC has no special provisions for foreign exchange margin business.
Canadian provincial securities commissions
The situation in Canada is slightly different, there is no unified regulatory agency, but managed separately by the Securities Commission (the Securities Commission) in several major provinces. These securities regulators have no specific regulations on foreign exchange margin, but only require those institutions and companies that conduct foreign exchange training or operate foreign exchange business to register locally. In addition, they generally hold a relatively cautious attitude towards foreign exchange margin.
Japan: Financial Services Agency
The Japanese Financial Services Agency officially promulgated the "Foreign Exchange Trading Law" on July 1, 2005, requiring institutions operating foreign exchange to register, and stipulating the capital of the company and the experience of the company's operating personnel. All foreign exchange companies must complete the registration before December 2005, and can only operate after being audited and licensed. It is still unclear what standards Japan will refer to in regulating the foreign exchange margin business, and whether there are more specific terms for foreign exchange margins.
US: CFTC and NFA
There are two regulatory agencies in the United States, the Commodity Futures Trading Commission C CFTC and the National Futures Association C NFA.
The CFTC is an independent federal agency created in 1975 by Congress under the Futures Trading Act, as amended. The main function of this institution is to supervise the operation of the futures and options market and protect the interests of customers. The CFTC is generally responsible for regulating the market, while delegating some responsibilities to the NFA and exchanges.
NFA is a self-regulatory organization of the futures industry, and its main operating funds come from membership dues. The main responsibilities are: to review relevant institutions to ensure that they meet basic financial standards; to implement professional ethics standards and customer interest protection clauses, to mediate disputes between customers and the company; to review and register personnel engaged in the futures industry; Training and assessment (such as Series 3 qualification examination) for personnel engaged in the futures industry.
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