The name speaks for itself – regulated forex broker is under the supervision of higher regulatory authority which forces the transaction to be transparent. Regulated forex brokers are required to provide financial reports, and if they fail to do so, the regulatory authority has the right to annul their license.
The regulated Forex brokers have to answer to the authority. They have specific rules and regulations to follow. In case any dispute arises, the regulated forex broker is obliged to solve it. In case of poor performance, problems with the trading platform or bankruptcy, you can write complaints and file appeals. Forex regulatory authorities protect the traders against fraud, manipulation, and abusive trade practices.
Last month survey showed that more than 20% of forex traders don’t even know whether their broker is regulated or not. Below are the results obtained:
· Yes, my broker is regulated - 37.5%
· No, my broker is not regulated - 25%
· I have no idea! - 20.8%
· I don't care if my broker is regulated or not. - 12.5%
· What is regulated broker??!! - 4.2%
How to figure out whether the selected forex broker is regulated? Here are the steps:
1. Find out what country the broker is registered in. A good forex broker lists the address and registered country on the site. If it isn’t present, you can contact customer support, however, in my opinion, if the address is not listed, you better run away fast!
2. Keep in mind that forex regulations in each country differ. Some countries may appear more flexible then others when it comes to regulated brokers, however the local regulatory authorities are responsible for the forex brokers registered in the particular country. For example, in US the regulatory authorities are - the National Futures Association (NFA) and Commodity Futures Trading Commission or CFTC. In swiss, forex brokers are regulated by the Swiss Federal Department of Finance or FDF.
3. NFA website contains important information about a regulated forex brokers including overall performance and the history of previous serious problems associated with it. You can easily find out whether your forex broker is regulated by checking out CFTC and NFA membership status. Look for regulatory records and financial reports.
