Forex regulation and regulated forex brokers

Currently forex brokers are usually better regulated in UK, US,Switzerland,Australia.

FCA UK (FCA UK) regulated Forex brokers

Firm Status in FCA, Authorised and EEA Authorised

EEA Authorised -A financial services firm authorised in another European Economic Area (EEA) state that has a ‘passport’ to offer certain products or services in the UK and other EEA countries. The EEA includes the EU states, plus Iceland, Norway and Liechtenstein. These firms are regulated in their home country and must meet standards which have been agreed across all EEA countries.

The services or products an EEA authorised firm can offer in the UK will be detailed in the ‘Passports’ section of their record on the Financial Services Register.

Authorised -A firm that has been given permission by the FCA to carry out regulated activities. If a financial services firm is based in a foreign country outside the EEA it can still operate in the UK but will need to be authorised by FCA and will appear on the Financial Services Register as ‘Authorised’.

Find out more about foreign firms on the Financial Services Register. http://www.fca.org.uk/firms/systems-reporting/register/use/foreign-firms

Firm Status: EEA Authorised Forex Brokers List

ACFX, AFX CapitalAvaTrade, Blackwell Global (CY), Bulbrokers, Deltastock, Finexo, Forex Time (FXTM), FX Global Markets (FXGM), FxNet, FXCCiFOREXMarkets.comMAYZUS, Saxo Bank, Traders Trust, Trading212, Windsor Brokers, XGLOBAL Markets, XM,

Firm Status: Authorised Brokers List

Abshire-Smith, ActivTrades, Atom8, Bulls And Bears Forex UK, City Credit Capital, City Index, CMC Markets UK, CMS Forex UK, Darwinex, DF Markets, FOREX.com UK,FXCM, Fxopen UKFxPro UK, GAIN Capital, GKFX, Hantec Markets, Hirose Financial UK, HY Markets UK, ICAP, ICM Capital, IG Markets, IKON Markets, Interactive Brokers (UK) Ltd, InterTrader, LMAX, London Capital Group (LCG), MB Trading, OANDA, One Financial Markets, Plus500 UK, RBS – Royal Bank of Scotland, SVSFX, Tradenext, Valbury Capital, Valutrades, Vantage FX UK, XTB UK

FCA Registered Brokers Comparison

 
BrokerTypeRegulationMinimum DepositMax leverageMinimal LotLowest spreads EURUSD
XM (Visit)STP+DMACySEC, FCA UK$55000.01>1
Plus500(Visit)MMFCA UK$1002940.010.8%
HY Markets(Visit)MMFCA UK$503000.025 – Mini
4 – Standard
Admiral Markets(Visit)ECN & MMFSA of Estonia, FCA UK$15000.011
FXCC(Visit)STP & ECNCySEC, FCA UK$1005000.01>0.1
FXCM UK(Visit)ECN & STPFCA UK, ASIC$254000.01>
1.5 – Mini
1 – Standard
OANDA(Visit)MMNFA, CFTC, FCA UK, FSA Dubai, IIROC, MAS Singapore$1500.001 or less>0.9
FOREX.com(Visit)MMNFA, CFTC, FCA UK$2502000.01>1 – 1.5
MB Trading(Visit)ECNNFA, CFTC, FINRA, SIPC, FCA UK$400500.01>0.1 – 0.8
Interactive Brokers(Visit)ECNNFA, CFTC, FCA UK, IIROC, NYSE, FINRA, SIPC10000400.25>0.5
London Capital Group (LCG)(Visit)ECNFCA UK1001>1 or <1
FXGM – Forex Global Market(Visit)STPCySEC, FCA UK, BaFin, FINMA$2503000.255 – Mini
4 – Standard
Finexo(Visit)MMFCA UK, CySEC, BaFin, CONSOB, AFM, CNMV$1002000.015 – Mini
3 – Standard
Hantec Markets(Visit)ECN & STPFCA UK, ASIC$1,0002000.01>1.6
Valbury Capital(Visit)STPFCA UKno1000.25>1.5 – 2.0
Abshire-Smith(Visit)STP & MMFCA UK$5002000.1>1.4
Finotec(Visit)ECN & STPFCA UK$2002000.1>0.7
GKFX(Visit)STP & MMFCA UK$14000.1>1.5
Traders Trust(Visit)STPCySEC, FCA UK, BaFin,?Banque de France, CNMV Spain, CONSOB, FI of Sweden, AFM Netherlands, Danish FSA$1005000.1>
1.8 – Mini
0.9 – 1.6 – Standard
ActivTrades(Visit)STP+DMA & MMFCA UK€ 2504000.012 – Standard
1.5 – Interbank
DF Markets(Visit)ECN & MMFCA UK$12000.012
One Financial Markets(Visit)ECN & STP & MMFCA UK$2502000.012 – Mini & Standard
0.2 – 0.8 – ECN
Vantage FX(Visit)STP+DMAFCA UK3505000.01>0.5 – 2.3
Windsor Brokers(Visit)MMCySEC, FCA UK, BaFin, AMF, ICF$1005000.01>2
Markets.com(Visit)MMCySEC, FCA UK, BaFin$1002000.01>2.2 – 3
FxPro(Visit)ECN & MMCySEC, FCA UK$5005000.10.8
ACFX(Visit)MMCySEC, FCA UK$505000.01>
3 – Mini
2 – Standard
0 – Zero spread
Deltastock AD(Visit)ECN & MMFSC of Bulgaria, FCA UK$1002000.012 – Regular
0.1 – (>) Level 2 trading

About FSA and FCA, PRA

The Financial Services Authority (FSA) was a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom between 2001 and 2013. It has now become two separate regulatory authorities, The Financial Conduct Authority (FCA, www.fca.org.uk) and the Prudential Regulation Authority at (PRA, www.bankofengland.co.uk).

The FCA regulates financial firms providing services to consumers and maintains the integrity of the UK’s financial markets. It focuses on the regulation of conduct by both retail and wholesale financial services firms. The FCA is structured as a company limited by guarantee.

The PRA is structured as a limited company wholly owned by the Bank of England and is responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms. It sets standards and supervises financial institutions at the level of the individual firm.

Requirements for FCA regulated brokers

  • Ensure & monitor the quality of the bank in which clients funds will be held. The bank must be approved by FCA.
  • Keep clients' funds separate from company funds, clients' funds can never be treated and used as company assets including the situation when the company becomes insolvent.
  • Submit financial reports to the FCA regularly and undergo annual audit.

The Financial Services Compensation Scheme (FSCS)

Even if a broker is insolvent you may still be able to claim compensation through the FSCS.

The compensation limits for forex market: A client receive 100% of the first £30,000 + 90% of the next £20,000, up to £48,000.( http://www.fscs.org.uk/what-we-cover/eligibility-rules/compensation-limits/investment-limits/)

The FSCS(http://www.fscs.org.uk/) is an independent body and a fund of last resort for customers of authorised financial services firms. Generally, it covers claims against firms who are insolvent and unable to pay claims against themselves. The FSCS is funded by levies on FCA-authorised firms. Their costs are made up of management expenses and compensation payments. The service is free to individual consumers.

FCA Register-Protect yourself from unauthorised forex brokers

Beware of cloned firms (fraudsters pretending to be from a firm authorised by FCA). If you deal with an unauthorised firm you will not be covered by the Financial Ombudsman Service (FOS) or Financial Services Compensation Scheme (FSCS) if things go wrong.

Check FCA Register: http://www.fca.org.uk/firms/systems-reporting/register

The Register has information on forex brokers that are regulated by FCA. Firm status must be ‘Authorised' or ‘EEA Authorised'(not ‘registered').

If a forex broker does not appear on the Register but claims it does, contact Consumer Helpline of FCA on 0800 111 6768.

Unauthorised firms and individuals to avoid:

FCA: http://www.fca.org.uk/consumers/protect-yourself/unauthorised-firms/unauthorised-firms-to-avoid

Foreign regulators: http://www.fca.org.uk/consumers/protect-yourself/unauthorised-firms/foreign-warnings

NFA & CFTC US regulated forex brokers

NFA registered Forex brokers Comparison (Brokers for US Traders)

Note: We don’t include IBs(introducing brokers) in the table.

BrokerTypeRegulationUS clientsMini accountMinimal LotSpreadsLowest spreads EURUSD
Interactive Brokers(Visit)ECN/STPNFA, CFTC, FCA UK, IIROC, NYSE, FINRA, SIPCyesno0.25variable>0.5
FXCM(Visit)ECN/STP & DMA/STPNFA, CFTC, FCA UK, ASICyes$500.01variable>1.5 – Mini1 – Standard
OANDA(Visit)MMNFA, CFTC, FCA UK, FSA Dubai, IIROC, MAS Singaporeyes$10.001 or lessvariable>0.9
FOREX.com(Visit)MMNFA, CFTC, FCA UKyes$2500.01variable>1 – 1.5
MB Trading(Visit)ECN/STPNFA, CFTC, FINRA, SIPC, FCA UKyes$4000.01variable>0.1 – 0.8

About NFA & CFTC

National Futures Association (NFA) is the self-regulatory organization(non-profit) for the U.S. derivatives industry, including on-exchange traded futures, retail off-exchange foreign currency (forex) and OTC derivatives (swaps). NFA's mission is to safeguard market integrity and protect investors.

Commodity Futures Trading Commission (CFTC) is the US government agency that protect market participants and the public from fraud, manipulation, abusive practices and systemic risk related to derivatives – both futures and swaps.

NFA's activities are overseen by CFTC.

NFA membership is mandatory for all forex brokers(including introducing brokers) in US.

NFA regulated brokers:

  • Must follow strict rules set by NFA to ensures the safety of clients' assets.
  • Must have net capital of no less than $15 000 000 to guarantee client's positions. This minimum raises to $20 000 000 starting from May 19th, 2009.
  • Must report their account balances to NFA weekly.
  • Must have comprehensive yearly audits.

NFA register

Background Affiliation Status Information Center (BASIC) http://www.nfa.futures.org/basicnet/

Some NFA/CFTC rules

  • Non-US brokers or brokers that are not registered in NFA are not allowed to accept US citizens as clients.(They can accept non-US citizens that live in US)
  • Maximum leverage of a US forex broker can offer should be 50:1 on major currencies and 20:1 on minors since October 18th, 2010.
  • US Forex brokers are not allowed to offer leveraged commodities and precious metal trading (including Gold & Silver) to retail clients.So they can only offer those on a 1:1 non-leveraged basis(requires substantially more margin).(Since July 15th, 2011, enforced by CFTC)

US Forex brokers with high leverage

US brokers usually offer a higher leverage to international clients with non-US accounts. They usually have international branches.

Swiss Regulated forex brokers

  • Swiss Bank Directive 3a mandates all brokers in Switzerland to obtain a banking license from the Swiss Financial Market Supervisory Authority (FINMA).
  • Swiss forex brokers are required to sign the Swiss Banks and Securities Dealers agreement, which protects all customer deposits of up to CHF 100,000.
  • Forex brokers from Switzerland are very popular among the wealthy traders.

Swiss regulated brokers list

Most popular Swiss regulated brokers:  Dukascopy (Suisse) SA(Visit)

 
BrokerTypeCountryRegulationMini accountMax leverageMinimal LotSpreadsLowest spreads EURUSD
Dukascopy (Suisse) SA(Visit)ECNSwitzerlandFINMA, ARIF, KPMG, SCF Revision SA, is a licensed bank$5000 (Swiss)1000.01variable>
0.5 – 1 – Mini-
0.5 – 1 – Standard
Swissquote Bank(Visit)STPSwitzerlandFINMA, E&Y, SGS, CCIG, ACI, KPMG$2,0001000.14 – Mini
1.5 – 2.8 – Standard
CIM Bank(Visit)ECN & STPSwitzerlandSBA, FINMA, is a licensed bank$5,0001000.1variable>
1 – 3 – Mini & Standard
0.7 – ECN

Other Forex Regulatory Bodies

International organizations:

EU Commission

ec.europa.eu

Ernst & Young (E&Y)

www.ey.com

Financial Markets Association (ACI)

www.aciforex.com

KPMG

www.kpmg.com

United Kingdom:

UK Financial Services Authority (FCA UK)

www.fsa.gov.uk

The Financial Conduct Authority (FCA)

www.fca.org.uk

The Prudential Regulation Authority (PRA)

www.bankofengland.co.uk

Financial Services Compensation Fund (FSCS)

www.fscs.org.uk

United States:

Commodities and Futures Trading Commission (CFTC)

www.cftc.gov

Financial Industry Regulatory Authority (FINRA)

www.finra.org

National Futures Association (NFA)

www.nfa.futures.org

New York Stock Exchange (NYSE)

www.nyse.com

Office of the Comptroller of the Currency (OCC)

www.occ.treas.gov

US Securities and Exchanges Commission (U.S. SEC)

www.sec.gov

Chicago Board of Trade (CBOT)

www.cmegroup.com

Securities Investor Protection Corporation (SIPC)

www.sipc.org

Australia:

Australian Securities and Investment Commission (ASIC)

www.asic.gov.au

Switzerland:

Association Romande des Intermediares Financiers (ARIF)

www.arif.ch

Swiss Bankers Association (SBA)

www.swissbanking.org

Swiss Federal Banking Commission (SFBC)

www.finma.ch

Swiss Federal Department of Finance (SFDF)

www.efd.admin.ch

Swiss Federal Finance Administration (SFFA)

www.efv.admin.ch

Swiss Financial Market Supervisory Authority (FINMA)

www.finma.ch

Swiss National Bank (SNB)

www.snb.ch

PolyReg

www.polyreg.ch

Geneva Chamber of Commerce (CCIG)

www.ccig.ch

Organisme d'Autoregulation des Gerants de Patrimoine (OAR-G)

www.oarg.ch

Cyprus:

Cyprus Securities and Exchange Commission (CySEC)

www.cysec.gov.cy

France:

Autorite des marches financiers (AMF)

www.amf-france.org

Banque de France

www.banque-france.fr

Credit Institutions and Investment Firms Committee (CECEI)

www.banque-france.fr

Germany:

Federal Financial Supervisory Authority (BaFin)

www.bafin.de

Canada:

British Columbia Securities Commission (BCSC)

www.bcsc.bc.ca

Canadian Investor Protection Fund (CIPF)

www.cipf.ca

Financial Transactions and Reports Analysis Center of Canada (FINTRAC)

www.fintrac.gc.ca

Investment Industry Regulatory Organization of Canada (IIROC)

www.iiroc.ca

Ontario Securities Commission (OSC)

www.osc.gov.on.ca

Ombudsman of Banking Services and Investments (OBSI)

www.obsi.ca

Japan:

Financial Services Agency of Japan (FSA Japan)

www.fsa.go.jp

Japan Securities Dealers Association (JSDA)

www.jsda.or.jp

Japan Investor Protection Fund (JIPF)

jipf.or.jp

Tokyo Commodity Exchange (TOCOM)

www.tocom.or.jp

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One thought on “Forex regulation and regulated forex brokers

  1. Khairul Anuar Ramli says:

    is it save if i deposit $50,000 to Saxo Bank,XM Markets or FXTM