Many of us have questions like, “Is forex trading regulated?”
I do not know, but why do we have such questions when we know that the foreign exchange market is the largest and most liquid market in the world.
The market opens 24 hours a day and five days a week, while there is no government body that enforces the rules of the foreign exchange market. So, is this a relevant question?
I do not think so …
There are some independent regulatory bodies that oversee the overall market to prevent it from being exposed to fraud and other unwanted activities. These regulatory bodies are responsible for every activity conducted on the market.
Who are regulatory bodies?
In order to run the market smoothly, it is not possible to manage all activities from a single regulatory body, therefore, many regulatory bodies around the world are required to manage various functions so that both the broker and the trader can trade as securely as possible.
Some important regulatory bodies are:
- Financial Conduct Authority (FCA)
- The Markets in Financial Instruments Directive (MiFID)
- The Cyprus Securities and Exchange Commission (CySEC)
- The Federal Financial Supervisory Authority (BaFIN)
- The Autorité des Marchés Financiers (AMF)
- The Commodity Futures Trading Commission (CFTC)
- The National Futures Association (NFA)
- The Australian Securities and Investments Commission (ASIC)
- The Financial Services Agency (FSA)
- The Financial Services Board (FSB).
Each regulatory body has its own function to carry out the activities.
Why is regulation important?
Like any other industry, without efficient regulation, there is enough room for fraud scams. Neither foreign exchange brokers nor traders can trade safely in the market.
This is why brokers are required to meet certain standards set by the regulation in their respective jurisdictions. In addition, brokers also have to meet certain capital requirements to ensure that the broker can withdraw money in any eventuality if it goes bankrupt.
Therefore, regulation is important to drive any market.
Why would you doubt its legality?
There is no doubt in saying that the foreign exchange market is the most adequate in the world as it allows traders around the world to make money and even start their own successful trading business.
Like any other industry involving money, mainly in digital money, Forex trading is also surrounded by some myths and false impressions. Some people believe it is gambling but it is not. It is not part of gambling.
One can legally trade in foreign currency in all countries, where legal entities, even they are allowed to create their own currency account or can buy currency in bank exchange offices, and so on.
In addition, traders use foreign exchange for international investment, import and export operations, and many other necessary activities.
Is Forex trading legal in the UK?
For traders or brokers, the UK is an ideal place for foreign exchange trading. As the UK is known for its strict policies and reliable companies.
It provides updated products and services that are highly relevant to merchants. The UK financial market has established new regulatory guidelines for those who are more familiar with foreign exchange trading.
These guidelines are meant to ensure professional foreign-exchange traders.
Compared to other Asian countries like Spain, trade-in Britain has been around for a long time which is also problematic. Because the existence of something for so long gives undesirable people the opportunity to make money by taking advantage of others.
Therefore it is important to choose a reliable broker. Here is a complete list of the top U.K. Forex brokers that will help you choose the right broker for your need.
How to protect yourself from illicit activities?
Scam happening in the foreign exchange market is not a common thing in today’s world. When you search on Google “Forex Scam 2020”, you will find a list of results of Forex Scam worldwide.
Therefore, it is very important to choose a reputable or trusted broker. When you go for a broker you need to be careful:
Always do your research before choosing a broker, read the broker reviews if you plan to start with them. You can also take the help of forums; there are many foreign exchange forums, such as BabyPips, available on the web which discuss brokers and their legitimacy.
Do not forget to read all the documents that are provided to you when you go to open an account. Read all the terms and conditions carefully, make sure that you understand each and every word. Because once you agree to the terms, they can later use the terms against you, if you file a complaint.
Always start with a small amount, never go for a big investment. Even if you have done your research or are going through a broker because this way will help you get the money back if something goes wrong.
Therefore, the foreign exchange market in the UK is highly regulated. As there are different regulatory bodies for each sector that oversee the overall market and prevent it from being exposed to fraud.
But we also have some responsibilities, because we need to be very careful while choosing a broker, one should always do some research before starting with someone.
Is Forex Trading Legal in the UK? Yes, it is.
Which broker would you like the most? And, why?
Tell us in the comments below.