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The Importance of Attaining Forex Regulations

by | Dec 31, 2019 | Blog

Forex traders are increasing rapidly with the rapid expansion of the retail foreign exchange industry. Novice or experienced investors are savvier today, as they have understood the importance of choosing a reliable and regulated broker. Whether a broker/dealer is regulated or not, does determine their way of seeing how safe their funds are. It is a very important factor in today’s investors’ choice of choosing a broker.


Most investors understand that if a broker is regulated under a specific jurisdiction, so long as evidence show of any misconduct, the broker will be fined, or in some serious cases, revoked their licenses where they would be unable to conduct foreign exchange transactions.


For brokers who are regulated, it will take lesser time to convince a client to deal real business with the broker. Different jurisdictions have different requirements before offering out licences to forex companies. Jurisdictions that are more flexible with regulatory requirements are Belize, Seychelles, Vanuatu, Cayman Islands, etc. For jurisdictions that are much stricter in terms of capital requirements, audits, local regulatory laws, at present can be represented by the United States, United Kingdom, Switzerland, Australia, Cyprus, etc.


Time taken, capital requirements, audit requirements, manpower requirements, Directors’ CV, hardware requirements are factors that differentiate the requirements needed by different countries to assess the ability of the company to carry a financial license to run the brokerage business. If you are a broker/dealer, you may want to choose according to where you may dim fit and proper.


Applying to be regulated is getting more challenging year on year as governments have become more stringent with their requirements. If you are a new brokerage, and in the early stage of building your brokerage business, you may want to consider putting legality as your first priority to operate as a broker/dealer first, thereafter transitioning to a regulator which require higher requirements.

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