Forex Brokers Regulation
Posted in Brokers by Lewis Wolfe
Thursday, January 29th, 2009 8:55 AM GMT
When you’re learning your way in the forex trade, regulation is something in the small print to be glossed over.
Some sites offer services to US residents only, some are for EU residents only, others are open to all – nothing to do with the trading, it depends how they operate in their local jurisdiction and how they are regulated.
1. It’s kinda obvious, but maybe stay well away from non-regulated forex brokers…
2. It’s also kinda obvious, but among brokers registered with a regulatory body, look for those with a clean regulatory record.
You can, if you want to have a go, search around for the financials of a given company. There’s information and opinion available from a variety of web sources. But then Enron showed a clean set of financials to the world for quite a long time…
This route is still tricky though – who knows who owns what? – and this can get get very tangled. Those with slightly longer memories will have the example of FXCM, Forex Capital Markets, in mind. In late 2005 Refco, a commodities brokerage got involved in a false accounting investigation, which sent the company down the drain – trouble was Refco owned about 35% of FXCM at the time, which lead to considerable fallout. The lawsuits are still going on, probably only just getting into their stride…
Last point, for now – it’s called “regulation”, as if it’s a constant process. Not really so, I’m afraid. Problems still tend to be tackled retrospectively, and it might suggested that this is the only way of doing it. The examples of light-touch regulation failing across all markets have been much in the news recently, so we’re probably in for a period of good behavior for a while – then things will start to slip…
Best advice? If you’re with a big forex broker, you won’t be alone – you’ll have other small investors around you, and the combined leverage of these – whatever that counts for…
We’re going to look at the various regulatory bodies – NFA, FSA – in more detail shortly.
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[...] Original post by ForexPerform [...]
[...] It’s kinda obvious, but maybe stay well away from non-regulated forex brokers… [...]
Hi thanks for the info..
Im new here want to learn more about the forex trade.
Hi,
Very good information.
I’m interested to have more example of false accounting investigation for my study, anyone can help?
Thank you.
Good information – Well they call it regulation but it means more, maybe we’ll do something about it after it’s all happened and the sh*t has hit the fan.
Hi!Mr Lewis
Good info..thank you information which gave hopefully it make all and could increase knowledge and in use as guide.
Hi Lewis,
Thanks for this input.