As every beginner and experienced trader in the Forex market and other financial markets knows, a vital part of this business are the brokers. These companies function as intermediaries that place our money in the market and allow us to trade with the different financial assets.
Due to the fact that the world of financial markets and especially the foreign exchange market is so broad,and the fact that the Forex market is unregulated, the supply of brokers has increased almost exponentially in recent years and there have been some brokers that the only thing they have done is to defraud investors or affected them by highly irregular practices. In other cases, brokers are completely honest but do not offer the best conditions for traders. For these reasons here comes the million dollar question:
How can we choose an honest broker that meets our needs?
One of the criteria by which we can select a good Forex broker is through the appropriate regulation of brokers, the subject in which we focus in this article. While there are other criteria by which the trader should guide the choice of a broker, these criteria will not be discussed here because they have been carefully detailed in a previous article which you can check through the following link:
If we open an account with a properly regulated broker, we can be sure that our money and trust are deposited in a company that at least meets certain standards. Also, in case of a problem, there is a possibility however remote, to present a formal complaint with the appropriate authorithy. But in the case of an unregulated broker that operates thousands of miles away of the country where we live, there is no way to solve a problem like this formally, the only thing we can do is relying on the goodwill – if there is one – of the broker staff.
The following is a list of major financial regulatory authorities in the U.S. and Europe who control companies providing financial services such as brokers:
Financial Regulatory Agencies in United States
National Futures Association (NFA)
The National Futures Association or NFA is an organization that is responsible for the comprehensive regulation of all U.S. futures industry. This important organization is responsible for safeguarding the integrity of the market in order to protect all investors against possible fraudulent companies. It has a series of strict regulations regarding capital requirements and other conditions to ensure that the company has actual conditions to provide financial services. For brokers, this ensures that it has sufficient liquidity to allow them to cover their operations. Currently less than 30 Forex brokers and related companies that are registered with the NFA. Below is a list of brokers regulated by the NFA:
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More information about the NFA through the following link:
Commodity Futures Trading Commission
The Commodity Futures Trading Commission (CFTC) is a government agency of the United States which is responsible for the regulation of transactions that take place in the Futures market in that country. The CFTC was created in 1975 and its headquarters are located in Washington DC. It is the most important body in the country which regulates the market for options and futures and is responsible for maintaining market competitiveness and ensure the transparency and legality of all its operations. Thus, the CFTC has the function of controlling any type of fraud, manipulation and abusive trading practices that may affect investor confidence so that all processes enjoy complete clarity. The following is a list of some brokers who currently have regulations of the CFTC:
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More information about the CFTC through the following link:
Financial Regulatory Authorities in United Kingdom
Financial Conduct Authority (FCA)
The FCA is one of the most important financial regulatory authorities of United Kingdom. This organization operates independently of the government of that country and is funded entirely by the firms it regulates. It is a transparent organization that provides comprehensive information on firms, consumers and others about their policy, objectives, rules and other subjects. The FCA has great power in UK to introduce regulatory requirements, as well as inspection and enforcement powers in order to meet its objectives. Today, London is one of the largest and most diverse global financial markets and among its functions the FCA is responsible for avoiding any illegal and unethical practice in the market such as money laundering, fraud, misleading advertising, abuse or dishonest trading practices. Below is a list of brokers regulated by the FCA:
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More information about the FCA through the following link:
Financial Regulatory Authorities in Germany
Federal Financial Supervisory Authority of Germany (BaFIN)
BaFin the financial regulatory authority in Germany. Is an independent federal agency that has its headquarters in Bonn and Frankfurt and is under the supervision of the German Federal Ministry of Finance. BaFin currently oversees over 2700 banks, 800 financial services institutions and more than 700 companies that offer services such as insurance. BaFin was founded on May 1, 2002 and the primary objective of its formation was to create an integrated financial regulator that would cover all financial markets in Germany. Following is a list of brokers regulated by the BaFin:
Financial Regulatory Authorities of Spain
National Stock Market Commission (CNMV)
The CNMV is a spanish financial regulatory authorithy in charge of the supervision of financial markets of Spain and all actors involved in them. Currently, the CNMV acts according to a regulatory framework that adapts to the rules dictated by the European Union. The main goal of the CNVM is to monitor the transparency of the spanish financial markets so as to ensure the protection of investors and avoid any criminal or unfair trade practice. The actions of this authorithy are focused on any organization that provides financial services in that country. Below is a list of brokers regulated by the CNMV:
Financial Regulatory Authorities of Australia
Australian Securities&Investment Commission (ASIC)
ASIC is the Australian body responsible for monitoring all companies offering financial services in that country in such a way that ensures that these companies operate with total integrity and transparency. To this end, ASIC is responsible for providing the required licenses to operate, so only those companies that meet the strict regulations of this organization can offer any type of financial service in the territory of Australia. ASIC is an independent government body which was set up under and administered by theAustralian Securities and Investment Commision Act (ASIC Act) In general, the work of ASIC is to maintain, facilitate and improve the performance of Australia’s financial system. The following is a list of brokers regulated by ASIC:
More information about the ASIC through the following link:
Financial Regulatory Authorities of Cyprus
Cyprus is a small country in which many brokers have set up their headquarters in part because of tax advantages that have led many companies to conduct their operations from there. Cyprus is considered a tax haven where low tax charge, which is used by many companies including brokers. The financial regulatory authority is the CySEC:
CySEC is a commission in charge of regulating financial markets of Cyprus and in accordance with its rules and objectives is responsible for ensuring that all organizations under their supervision comply with the financial guidelines of the European Union and Cyprus as part of this. Among its functions, this agency is responsible for granting operating licenses to companies investing and inspections among organizations providing financial services such as brokers. Below is a list of regulated brokers by CySEC:
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More information about CySEC through the following link:
Other important financial regulatory authorities
The Finansinspektionen (FI) of Sweden
The Finansinspektionen is a public entity for financial regulation in Sweden, a country with high standards in the control of companies that provides all kinds of financial services. This organization meets the strict regulations of the European community in this field (MiFID). Its role is to promote stability and efficiency in the financial system and ensure effective protection to the customer. For that reason, is responsible to authorize, supervise and monitor all companies operating in financial markets that are based in Sweden. Finansinspektionen is an agency of the Ministry of Finance of Sweden.
IIROC (Investment Regulatory Organization of Canada) of Canada
The IIROC is a self-regulatory organization in Canada whose function is to regulate and supervise any company located in that country whose activities and services are related to investment and financial markets in general. It was created in 2008 through the consolidation of the Investment Dealers Association of Canada and Market Regulation Services Inc. Basically, the IIROC carries out its regulatory responsibilities through the establishment and strengthening of regulations related to competition and financial practices of this kind of companies and their registered employees. With this, this organization seeks to ensure the integrity and respect for the laws and good market practices of Canadian companies whose activities are related to trading, especially in the equity markets in that country.
Below is a list of brokers regulated by IIROC: