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What is a Forex regulatory body? Which ones are considered to be the most reliable?

What is a Forex regulatory body? Which ones are considered to be the most reliable?

A Forex regulatory body is an organization that functions by protecting the trading affairs of traders, investors and individuals, ensuring that financial service providers (forex broker) operate based on set rules and regulations that safeguard client’s interest. The forex market is considered as the largest financial market in the world where all transactions are carried out over the counter. This boundless act creates room for seamless access. Due to the fact that forex trading is based on speculation, it keeps growing and gets filled up with forex brokers who engage in financial irregularities, scams, exorbitant, charges, and hidden fees. Some brokerage firms practice offering extremely high leverage options to traders being fully aware of its high-risk exposure. Others seemingly provide good trading services, but ends up not being registered even in the offshore zone. Sooner or later the site shuts down without prior notice, and the shady company escapes with traders' money. Forex regulators are there for rational reasons - to ensure these practices are avoided.

Here's a list of some well-known and highly reliable regulatory bodies:

1. CFTC (Commodity Futures Trading Commission)

CFTC is a forex regulatory body created in the year 1978 and acts as the United States independent authority that regulates commodity futures and the option trading market. This regulatory body functions by providing a competitive and efficient forex market trading system. CFTC protects traders, individuals, investors and market participants from market manipulations, investigates abusive trading practices in addition to fraud and maintains fluid processes for clearing. Without the CFTC as a forex regulator, forex traders could be subject to frauds from fake brokers/private financial service providers and in turn, lose faith in the forex market.

2. IIROC (Investment Industry Regulatory Organization of Canada)

IIROC is a forex regulatory body that oversees investment dealers, forex brokers, private financial service providers and trading activity of depth and equity markets in Canada. This regulator organization protects investors and traders found in this market. IIROC was established in the year 2008 and since then, it has a record of maintaining a fair and orderly market by regulating all securities and financial instruments related to commerce within Canada. It also regulates the sales activates of brokers, agents, and financial advisors, making sure that they abide by set rules and regulation that brings about clients satisfaction. Investment Industry Regulatory Organization of Canada has the full power to set and enforce rules/ guidelines in Canadian securities and the forex trading market. It also has the full authority to place disciplinary actions like levy fines and suspensions against firms that break the law. Its function includes:

  • Write rules, regulations, and investment industry standards and makes sure they are enforced.
  • Conducts rule compliance reviews and sets minimum capital requirement in other to make sure that financial firms have sufficient capital.
  • Conducts trading rules compliance review in other to make sure that brokers follow each procedure.

3. ACIS (Australian Securities and Investment Commission)

This regulatory body regulates the financial affairs of Australia’s market and its financial services. Australian Securities and Investment Commission make sure that Australia’s financial markets are fair and transparent. Being an independent commonwealth government body, ACIS was established by the Australian Securities and Investment Commission Act of 2001. This regulator body functions by providing laws and rules for Australian companies, financial markets, financial services organizations and other individuals who have anything to do with the forex market.

4. FCA (Financial Conduct Authority)

FCA is a forex regulatory body of the financial industry in the United Kingdom. This regulatory authority is built on the goal of ensuring that financial markets in the United Kingdom function appropriately. It functions by protecting consumers, protects and enhances the integrity of the United Kingdom financial markets and promotes good competition between forex brokers and their clients. FCA was established in the year 2013, April 1. Since its conception, the agency has ensured that traders and investors are ultimately satisfied in all trade ventures.

5. CySEC (Cyprus Security and Exchange Commission)

CySEC is a forex regulatory agency of Cyprus. This regulatory body functions by supervising and controlling the financial operations that take place in Cyprus Stock market. This authority oversees the transactions carried out in the stock exchange market, available brokerage firms, listed companies, and traders. Cyprus Security and Exchange Commission also supervises and controls licensed investment services firms, collective investment funds, mutual funds management companies, and investment consultants. Being a reliable forex regulator, it expresses disciplinary actions and penalties to brokers, investment consultants and private financial service providers who fail to abide by the set rules and regulations.

6. MAS (Monetary Authority of Singapore)

MAS is a Singapore’s central bank and financial regulator established in the year 1970. This forex regulatory body regulates and supervises the financial sector of Singapore’s market and also sustains and promote its economic growth. MAS provides strict code of conducts, laws, and rules which ensures that forex brokers and other market participants practice professionalism, integrity and fairness in all financial operations. This regulatory body oversees Singapore’s monetary policy, banking and finance, and matter relating to the insurance industry.

7. JFSA (Japan Financial service Authority)

JFSA is a financial regulatory authority that oversees banking, insurance, securities and exchange activities in Japan. This regulatory body functions by ensuring the stability of Japan’s financial system. It protects depositors, insurance policyholders and security investors. JFSA inspects and supervises the transparency of the Japanese financial system through the Securities and Exchange Surveillance Commission. Established in the year 2000, July, JFSA oversees Japan’s Certified Public Accountants and Auditing Oversight Board, handles planning and policy-making in respect to Japan financial system, supervises private sector financial institutions, develops rules and guidelines for trading in the market, develops business accounting standards, and ensures the compliance of rules and regulations by brokers and private individuals.