How is the Forex Market Regulated?

Forex Market Regulated
Forex Market Regulated

Forex is short for foreign exchange, this being the financial market where currencies are bought and sold. It works according to many of the same principles as the traditional stocks and shares market, although there are important differences. Forex Traders aim to buy currencies when they are weak relative to other currencies and then sell them in markets where conditions are more favorable.

As you can imagine, the value of any given currency is reported to the nation that uses that currency. The forex market is affected by the value of currency, but it can also play a role in determining those values. For this reason, among many others, the Forex market is heavily regulated just as the stock market is.

But how exactly is the forex market regulated? The answer to that question is relatively complex but easy enough to understand. Let’s take a look at some of the key regulatory bodies and regulations that are in effect for the Forex market.

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Who Regulates the Forex Market?

The Forex market is regulated by the Financial Conduct Authority (FCA). They are a consumer Watchdog agency and regulatory body. The FCA is funded by the various financial services companies and forex brokers who make use of the markets. They enjoy a good reputation around the world, consequently, they are able to regulate forex brokers operating in the UK. The FCA also works alongside the Bank of England and the Prudential regulatory authority in its work determining appropriate regulations.

Finding a Regulated Broker

Whether you are a citizen, or you are just passing through, whenever you invest in the UK you should do so through a regulated broker. Look for brokers carrying the FCA seal of approval, indicating that they can be trusted to handle your money in a proper and legal manner. Operating without a licence is, in most cases, illegal, and this is one of the most important reasons for regulating the Forex market.

As well as ensuring that the broker is regulated, you should also have a look at some online reviews.

Reading online reviews will give you a good idea of how these brokers perform in the real world. They will also allow you to glean insights and tips from other brokers who have first-hand experience with using them. If you’re looking for some high-quality reviews that you can trust, you should check out who are one of the best sites available if you want to learn how to become an expert in trading.

How Does the FCA Help Reduce Market Risk?

As a watchdog, the purpose of the FDA is to protect investors and their interests. In acting in the interest of the consumers, the FCA ensures that there are limits on the amount that they can lose. Additionally, they deter, prevent, and punish the manipulation of, and malpractice within, the forex market. Whenever the FCA becomes aware of fraud or abuse, it will investigate on behalf of consumers.

There are a number of actions that the FCC can take against companies who flout the rules, and they are not afraid to do so in the face of complaints and evidence.

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