Like other stuff, regulations of the forex market become one of the most crucial indicators to make sure everything going well. This multi-billion-dollar industry is currently being one of the most liquid and largest financial markets with an average of over $5 trillion daily turnovers.
With its current size and easy 24/5 accessibility, the regulation system applied to this market faces various challenges. Moreover, the centralized body governing all the forex trading hasn’t been decided yet. Instead, numerous independent governmental bodies regulated their countries separately from others.
Thus, understanding the rules for those traders entering the forex market may different depends on the country where he/ she is joining. However, regulations of the forex market are an essential thing to completely safeguard for customers from corrupt and immoral forex brokers.
Why Are the Regulations So Important?
Basically, regulation is a common and important thing for everything. Just like other markets, without any regulation, the forex market will leave too much space for scams. It will definitely ruin everything, whether for the brokers or the traders itself.
Fair trading with some moral behavior of both brokers and traders are being the main focus of the forex regulatory bodies. These regulations of the forex market become the main key to regulate everything and avoid scams.
Due to security, licensed brokers have more regulations that clearly separate the clients’ and companies’ funds all the time. It ensures the caps on leverage in traders’ potential loss can be limited. Like what you will get from the Didimax forex broker, every transaction you do under the regulated market will be safer.
Apart from that, traders also need to consider the way of depositing and withdrawing. By picking the best forex broker which clearly let you know about the regulation, you’ll find the perfect way to get refunded when it eventually reach bankruptcy. It protects traders’ investments perfectly.
Common Regulations of the Forex Market around the World
It is impossible to supervise all the forex market activities. To accommodate the needs, multiple independent and governmental bodies have taken the regulating job to ensure every party can conduct all their activities securely. Here are some of the most influential regulators in the forex market;
1. Cyprus Securities and Exchange Commission (CySEC) - Cyprus
2. Markets in Financial Instruments Directive (MiFID) – Europe
3. Federal Financial Supervisory Authority (BaFIN) – Germany
4. National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC) – United States
5. Financial Service Agency – Japan
There is numerous agencies concern with the forex market in a different name in each country. The goals of these regulatory bodies basically are to revolving the same principles. They occasionally work to set, validate, and maintain the standards. Although seems different, you’ll find the common regulations of the forex market;
1. Each platform must have a valid license to legally operate in its country.
2. Each licensed forex broker has to accept the periodic audits and reviews to ensure the implementations of industry standards.
3. Each forex broker has to honor the contract with trading clients. If they can’t accommodate this requirement, it can revoke the license.
4. Each forex broker should have enough cash and funds to cover the investment applied by their clients.
5. All platforms should meet fair representation legislation by disclosing potential risks while trading. If the brokers promise a lot of infinity profit, just leave it alone.
Choosing forex trading instead of stocks or other platforms offers more hugely profit among of all. It has so many kinds of investments and opportunities. However, keep in mind to choose the right broker that has licensed under your country. Didimax is one of the most outstanding platforms that definitely follow these regulations of the forex market.
