copied from Global Gain’s website
resource link: http://globegain.com/brokers/forex-regulators
Like any financial market Forex currency trading requires proper regulation to avert and eliminate the abuse of investors’ rights. For this purpose each country has its own governmental and independent supervisory bodies which are altogether called ‘Forex regulators’. The most prominent of them are the NFA (the National Futures Associations), the CFTC (the Commodity Futures Trading Committee), the FSA (the Financial Services Authority).
The first and foremost objective of these regulatory bodies is to set and implement the policies for fair and ethical business behaviour of all forex-related institutions within their jurisdiction. In their turn all Forex brokers, IBs and signal sellers have to operate in strict compliance with the rules and standards laid down by the Forex regulators, otherwise their activity is regarded as unlawful. First of all, they must be registered and licensed in the country where their operations are based. This point is really indispensable as approval of the national regulatory institutions implies that the broker must stick to strict quality control standards and ensures that your business with the broker is safe and fair. In accord with this regulation licensed brokers are subject to recurrent audits, reviews and evaluations which force them to maintain the industry standards. Besides, Forex brokers must keep a sufficient amount of funds to be able to execute and complete Forex contracts concluded by their clients and also to return clients’ funds intact in case of bankruptcy.
Not all the brokers nowadays are regulated by appropriate financial regulators in their countries. So it’s of utmost importance to check the broker’s regulatory status before signing an agreement as it will determine the level of security and protection of your investments.
All the financial markets and firms in Australia as well as organizations and individual self-employed specialists consulting on and dealing with such issues as superannuation, insurance, investment, deposit withdrawals and credit-taking are regulated and controlled by ASIC.
On the one hand, being one of the market regulators, ASIC evaluate the efficiency of these structures performance and their discharge of obligations to act on financial markets properly, fairly, and transparently. Making recommendations to the Minister on the new markets authorization is also in power of ASIC. On 1 August 2010, the oversight of trade carried on domestic licensed equity, derivatives and futures markets was entrusted to ASIC too.
On the other hand, being the financial services regulator, ASIC grant licenses and supervise businesses rendering financial services connected with superannuation and insurance, managed funds and derivatives, shares and firm securities.
Being the Montreal Exchange’s subsidiary companу, CDCC fulfills the function of the principal clearing counterparty in the process of derivative output trading on the exchange. Apart from this function, CDCC performs as a counterparty in an increasing number of the off-exchange trade deals. To guarantee the steadiness and unity to the supported markets is the CDCC’s basic aim.
The exceptional position taken up by CDCC among all the financial markets of Canada is easily explained by the following reasons:
· There’s no other counterparty equal to this unique corporation in options, futures and options on futures clearing and settling in North America.
· 35 years’ experience and practice in exchange-trading.
· According to the average audience rating got from Standard & Poor’s CDCC proves to conduct both reasonable and standard risk assessment policies and a process sequence.
CDCC includes about 30 members, among which both main Canadian brokers and financial institutions are represented.
The BCSC is a state-run corporation able to control and govern a dynamic market due to its self-sufficiency and adjustability. Being one of the governmental agencies we report to the Legislature via the minister that bears responsibility for the Securities Act administration. BCSC’s self-financing signifies that not ratepayers but the participants of the market bear the securities regulation cost.
BCSC incurs a liability for the regulation of securities in British Columbia commerce via the Securities Act administration.
Public interest protection and promotion is BCSC main goal which can be achieved only by cultivating the following ideas:
·A fair and transparent securities market that guarantees public certainty and trust
·Creating securities industry characterized by competiveness and dynamics and thus providing vast opportunities for investors with their capitals.
All the capital markets of Ontario including equities, derivatives markets and fixed income are liable to the regulation by the OSC. Being a self-financed organization, the OSC is at the same time a state-run agency. It means that this commission is responsible vis-a-vis the Legislature of Ontario via the Minister of Finance.
Both the Commodity Futures Act and the Securities Act of the given province are administered and enforced by this regulatory body. The Business Corporations Act, and more exactly some of its provisions, is controlled and regulated by the OSC too.
According to the legislation the OSC’s duties are set out in the following areas: the development and enforcement of rules helping in investment safeguarding; the misconduct discouragement and prevention; the cultivation of fairness and integration at capital markets; the fosterage of public certainty and trust in the markets.
Widely known as CySEC, The Cyprus Securities and Exchange Commission corresponds to a regulatory body in the sphere of financial relations in the Republic of Cyprus.
When in 2004 the Republic of Cyprus was included into the number of European Union members, the CySEC became a part of European regulatory system MiFID. Since that time all the companies that have been registered in this Republic have been given access to the markets of Europe.
The CySEC watches that the Cyprian investment firms strictly followed financial instructions according to the legislation and the normative base of Cyprus and European Union. CySEC is a public body which supervises actions and the operations performed at stock exchange.
The incomplete list of obligations CySEC:
– Supervises activity of the licensed investment companies
– Observes activity of brokers and the broker companies
– Gives out current licenses to investment companies
The Danish FSA’s main mission is to carry out the supervision of various financial ventures such as banks, superannuation funds, mortgage-credit institutions and insurance companies. Solvency supervision is one the basic priorities of this regulatory body. This supervisory activity means that all the financial ventures have to possess their own adequate funds in order to cover all their risks.
So all the Danish securities markets are controlled by this organization. It supervises as well if the given undertakings fulfill their duties and obligations concerning all the relevant information publication (prospectuses, internal knowledge etc.). At last, all the cases of market abuse are also prosecuted by the Danish FSA. Apart from a supervisory activity itself, this regulator performs as a collector of key statistics and as an assistant in financial legislation drawing up.
Since 1 January 2011 ESMA has been functioning instead of former CESR (the Committee of European Securities Regulators). The latter one, being an independent organization set by European Commission, gave birth to ESMA. Since then ESMA has made its contribution to the protection and support of the EU financial system stability.
Close cooperation with EBA, EIOPA and other organizations connected with the supervision in banking, insurance and pensions assures ESMA to foster harmonization both across financial segments and among securities regulatory bodies. But the main aim of ESMA remains unchangeable – to create and support proper functioning of securities markets. It signifies to provide markets with the unity, transparency, efficiency and fairness. Improvement and reinforcement of the investment sector is another ESMA priority.
Since its establishment in May 2002, BaFin has been carrying out the supervision of most financial undertakings in the country such as banks, insurance ventures and providers of all kinds of financial services functioning under the same roof. The Federal Ministry of Finance exercises control over BaFin. Being an independent public-law regulatory body, this organization is financed by dues and payments contributed by the supervised institutions and ventures. So thanks to this fee system, BaFin doesn’t depend on the Federal Budget.
As for BaFin’s main goal it’s, first of all, to operate in the public interest assuring due functioning, unity and stability of the financial system in Germany. BaFin’s solvency supervision consists in controlling financial institutions ability to meet their engagements concerning all kinds of payments. Preventing illegal business and enforcing professional behavior standards are other objectives of BaFin.
The FSA is a Japanese regulatory body, undertaking to assure the financial system stability, to protect depositors, holders of insurance policies and investors of the securities market. Characterized by strict supervision, the FSA doesn’t only inspect private financial companies, but also carries out securities transactions monitoring. Taking by the FSA such measures as planning and policymaking provides financial system in Japan with transparent administration. Discipline and self-responsibility are the main principles of the existing national economy, and the FSA Japan supervises at all levels if these principles are followed by the participants of the market.
Financial systems qualitative repletion is another desired goal for the FSA. It can be achieved only by adapting financial regulations to such financial environmental changes as innovations and globalization.
The Central Bank of Ireland is the financial services regulator of Ireland and historically the central bank. In compliance with Central Bank Reform Act 2010 the Financial Services Authority of Ireland (commonly known as the Central Bank) and the Irish Financial Services Regulatory Authority (financial regulator) were replaced by a new single body – the Central Bank of Ireland – which now fulfills both central banking and regulatory functions. The Central Bank controls the activities of all financial institutions in Ireland with the purpose to enforce and maintain fair and safe financial environment for consumers. It implements and monitors the consumer protection, the compliance of financial bodies with the established business and prudential requirements. It also fixes min competency requirements for companies. The Central Bank has created several statutory codes of conduct which force financial bodies within its jurisdiction to carry out operations fairly, transparently and solely in the interests of their clients. These protection codes are enforced by means of on-site inspections and backed up by enforcement powers.
The Swedish FSA is a governmental agency. We strive for promotion of financial stability and assurance of consumer rights. Every company engaged in Swedish financial markets is liable to our supervision and authorization. Analysis of market patterns, evaluation of business soundness of firms, industries and market in general are within our cognizance. Paying due attention to risks and control measures, we ascertain conformity to the relevant normative acts.
We license every activity associated with financial services. Our legislative competence involves issuance of standards and amendment of current unqualified normative acts. Should incompliance or market rate manipulations become apparent, on-the-spot investigations will involve resident and non-resident Swedish companies.
We see to elaboration of accounting and reporting rules, guaranteeing that the public is kept posted on the activities pursued by the companies.
FINMA protects the investing public, system and its reputation, and advances financial market soundness, thus, strengthening the competitive capacity of the financial sector.
FINMA regulates the activity of other financial organizations, ensures protection against money laundering, and sometimes it acts as the liquidator. FINMA authorizes operation of companies and ensures their compliance with normative acts and laws along with fulfillment of the licensing requirements. It provides lawful administrative aid and imposes penalties, if necessary. Moreover, FINMA exercises regulatory and legislative activity, issues acts and guidelines, providing for acknowledgement of the standards of self-governance. FINMA monitors the matters related to takeover proposals, disclosure, and appeals against decisions taken in this field.
Economic activity of a free target-oriented zone in Dubai is regulated by the DFSA.
Management of resources and securities, execution of banking and trust services, Islamic finance, exchange of international equities and derivatives, as well as insurance matters fall within the competence of the DFSA.
Activity of DFSA is based on a principle of risk-related regulation and avoidance of unnecessary regulatory implications. Besides, the agency made it clear that the obligations liable to fulfillment should comply with optimization of risks in order for such obligations to be successfully met.
Under the circumstances, the priorities include generation of a cycle of risk optimization that aims at identification, evaluation and assessment of risks in order to enhance local and international markets and their patterns.
According to DFSA, the reality of efficient risk-based regulation is more important than the way of its achievement.
Fulfillment of federal tasks has always been the goal of Securities and Commodities Authority. Its normative acts establish and enhance the legal environment of the companies engaged in the securities business, thus, strengthening the Authority’s credibility.
The Authority continuously strives to enhance administration of the subordinate companies, alerting them to the general requirements set by the relevant federal laws and any other supportive normative acts.
The SCA shall license all securities markets in the UAE established in the form of electronically interconnected local public bodies.
Market management shall be ensured by the locally established Board comprising only those members that participate neither in any public joint-stock company nor in any brokerage activity.
The primary task of this agency lies in protection of the investing public, adequate enactment that promotes fair business and advances market efficiency, and adoption of the relevant control measures.
SEC in the U.S. ensures protection of investors, maintenance of fair markets, and capital formation advancement. The main participants dealing with securities are controlled by the agency. The first concern of the SEC here lies in promotion of crucial information disclosure, protection against fraud and fair business relations.
Rational and well-educated investors are an important mechanism of efficient market functioning, since they serve as the major information source. A variety of information aligned with investor awareness is posted by the SEC on this website, including the database of documents liable to disclosure and submission.
The SEC regulates and controls the American securities markets in cooperation with many other agencies, including Congress, various private companies and other organizations. Notably, the Chairman of the agency and certain public officials participate in a working group on financial markets.
NFA is a self-governed sectoral organization representing American futures industry. Day after day NFA strain to elaborate regulations, programs and services meant to protect market integrity and investors, ensuring legal qualification of it Members.
Being an autonomous regulatory agency, NFA is unbound to any certain marketplace. It activity has no financial implications for the taxpayer and it is funded solely by users of the futures markets in the form of affiliation and assessment fees.
With rapid development of financial markets, NFA has become the leader in self-regulation field. Since the need for efficient regulation today is as substantial as ever, NFA’s reputation is rather beneficial for the market agents willing to share their experience, while NFA serves as a model of self-regulatory organization.
FINRA is the largest independent agency regulating securities-related sphere of activity of various organizations in the U.S. FINRA’s objective lies in protection of American investors through assurance of fair and honest operation of the securities industry.
Every feature of the securities business, including registration and instruction of industry agents, elaboration and enforcement of rules and federal laws, evaluation of companies engaged in the field, training and instruction of investors, submission of trade reports, as well as administration of forum for dispute settlement, is covered by FINRA. Contractual market regulation for the key U.S. stock markets falls within our competence as well.
In this sophisticated global economic situation FINRA acts as a reliable representative of investors’ interests; its activity is devoted to assurance of market soundness and aimed at regulation of financial matters to protect the market and the investors themselves.
Economic benefit of the markets dealing with futures is assured by the CFTC through promotion of their competitive capacity and efficiency. It strives for protection of market agents against fraud in order to exclude manipulation and unfair commercial practice, paying due attention to the clearing process soundness. Effective supervision of the CFTC makes it possible for the futures markets to fulfill their key function and provide for price regulation and market risk optimization.
CFTC’s activity is aimed at protection of market agents and individuals from fraud, manipulative action, abuse and constant derivative-related risk in conformity with relevant acts. Besides, its operation advances overt, viable and efficient markets.
The FSA is the independent body that regulates the financial services industry in the UK. Limited by guarantee, FSA is sponsored by the financial services industry. Although general policy establishment is reserved to the Board, daily decision making and staff management matters fall within the competence of the Executive Committee.
The FSA has a wide range of rule-making, investigatory and enforcement powers which enables them to meet four statutory objectives. The four statutory objectives are:
1. Market confidence – maintaining confidence in the UK financial system;
2. Financial stability – contributing to the protection and enhancement of stability of the UK financial system
3. Consumer protection – securing the appropriate degree of protection for consumers; and
4. The reduction of financial crime – reducing the extent to which it is possible for a regulated business to be used for a purpose connected with financial crime.