As you know the beginners or experienced traders in the Forex market and other financial markets, is a key part of this business of what are the brokers. These companies act as intermediaries placing our money on the market and allow us to operate in. Being so big the business of the financial markets, the supply of the brokers has increased almost exponentially in the recent years and have emerged one another broker who frankly what they have done is rip people off or do not offer the operating conditions that are more suitable.
One of the criteria by which we can guide is for the regulation of the brokers. When we talk about the regulation regarding the brokers we mean if they are registered and appropriately regulated by a body of important financial regulation either in their country of origin or in the country where they have their base of operations. Generally these entities, especially in the United States of America and Europe, have the strict requirements for accepting any company that provides any financial service, whether is a bank or in this case a broker. In this way it seeks to ensure that the legality of its operations and that the money from their customers are insured. For example, in the United States of America it requires that any of these companies have a certain level of liquidity so that it can cover its operations, to have the money to pay and continue to operate under any circumstances. This does not mean that an unregulated broker necessarily is synonymous with scam and that we will lose our money, but the reality is that when you open an account and deposit the money with a company that does not have any regulation, we are risking to lose money that we struggled so hard to earn.
If instead we open an account with a broker properly regulated, we ensure at least to deposit our money and trust in a company that at least meets the certain standards. Likewise, in case of a problem, there is a possibility however remote to present our complaint.
Then a list of the main financial regulatory authorities in the United States of America and Europe that control the companies that provide the financial services such as the brokers:
The NFA is an organization that is responsible for the full regulation of all United States of America futures of the industry. This organization aims to ensure the market integrity in order to protect all the investors against the fraud of certain of the operators. It has a set of strict regulations regarding the capital requirements and other conditions in order to ensure that the company has with actual conditions to provide the financial services. In the case of brokers, this ensures that it has the necessary liquidity to enable it to cover its operations. There are currently less than 30 brokers that are registered with the NFA.
The FCA (Financial Conduct Authority) is the authority of England’s most important financial regulation. This organization operates independently of the government of that country and funding the comings from the brokers it regulates. A transparent organization that provides the comprehensive information on the firms, the consumers and others about their policy, objectives, regulations and others. The FCA (Financial Conduct Authority) has great power in England to introduce the regulatory regulations, in addition to the inspection and the enforcement powers in order to be considered that its objectives are met. Currently London is one of the largest and most diverse financial markets in the world and among its functions the FCA (Financial Conduct Authority) is responsible for avoiding any criminal practices related to the market as the money laundering, the fraud, the abuse or the dishonest trading practices.
The BaFin is the financial regulatory agency of Germany. It is an independent federal institution that has its headquarters in cities like Bonn and Frankfurt which are under the supervision of the Federal German Finance Ministry. The BaFin currently supervises about 2,700 banks, approximately 700 companies offering the insurance related as such institutions and 800 financial services. Founded on May 1, of 2002 the BaFin has had as a primary objective since its formation, creating an integrated financial regulator that would cover all the financial markets of the German nation.
The CNMV is a Spanish financial regulatory agency that is responsible for the supervision of the financial markets of Spain and all the actors involved in them. Currently it acts according to a regulatory framework that the European Union and adapts to the regulations that this dictates. The main activity of the CNVM is to monitor the transparency of the Spanish financial markets in order to ensure the protection of the investors and avoid any kind of criminal or an unfair trade practice. The actions of this entity focus on any organization that provides the financial services in that country.