FOREX regulation

[BenderRodriguez]

Hello everyone !

I am running an academic investigation into FOREX regulation issues. In particular, my question is following:
"Does FOREX need a centralized regulation or selfregulation is enough given a high disclosure of informaton?" By centralized regulation I mean laws and central banks' actions. This paper is related to all countries more or less.

I need some information about history of FOREX regulation development in different countries (not only US). Most needed info is new laws of last 10-20 years. If you know any information I would appreciate your help. No need for detailed history, even breif info is very useful. This would help me find info in foreign languge.

 

[Enivid]

I have recently written a blog post on a related topic. You might find some of the information useful in your research:
http://www.earnforex.com/blog/forex-regulation-authorities/

As for your main question - do traders need a centralized regulation? No, I don't think so. National regulation is sufficient in most cases.

 

[GazFx]

Rather than centralised regulation, I would rather see the emergence of a uniform set of rules that individual regulators subscribe to and enforce. I believe the global nature of this market, with its many different legal jurisdictions, creates uncertainty for traders. For example, whilst I might fully understand my rights here in Australia, if I open a trading account with a broker located in, say, Japan, do I have the same rights? What about the UK? Cyprus? British Virgin Islands? Russia? What are the procedures for raising a complaint? Can I rely upon the regulator to take action and remedy the situation if my complaint proves correct? Where do I stand?

For many years I operated companies involved with international trade, and we operated under Uniform Customs Codes that all players can understand without the need for central regulation. Most of us used Irrevocable Letters of Credit to transact payments, and again all players, regardless of their global location, understand how these instruments work. There is certainty!

 

[BenderRodriguez]

Thanks for your answers. They are really helpful!

 

[inggo]

yeah its gonna be really hard we are talking about one of the largest markets in the world, what might look right to us retail traders, might now necessarily seem beneficial to those with fat bank accounts and those who actually can do something about, many capitalist believe in the more complicated and confusing the situation the more the chances to make money there is.

 

[GazFx]

yeah its gonna be really hard we are talking about one of the largest markets in the world, what might look right to us retail traders, might now necessarily seem beneficial to those with fat bank accounts and those who actually can do something about, many capitalist believe in the more complicated and confusing the situation the more the chances to make money there is.

Seems the capitalists you talk about and politicians have much in common...treat the general public like mushrooms - keep them in the dark and feed them bullshit!

 

[Ary Barroso]

Regulation is the key; without regulation status there is no way to invest real money since, almost all of the market maker brokers are scammers.

 

[J_C_Anderson]

First of all, it is necessary to distinguish the regulation of FOREX as operations between banks and regulation of so-called "Forex trading" financial services provided to the retail clients (natural persons).
There is no centralized regulation of Forex trading, but national regulators analyse foreign practice to implement best ideas. Another point is that ESMA could create rules, that would be adopted by European national regulators.
As for me, the most innovative forex-related legislation is in UK. Pay attention to the Guidance issued by FCA.
At the same time, there could be a rather different approach to the regulation. For example Russia imposes additional restrictions on retail Forex trading, even withdrows licenses while advertising national exchange "MOEX" to solve two problems at once: add more liquidity to the national stock exchange and reduce the scam events by transfering traders to the regulated market. To my mind, British FCA would make something like that in the nearest time.

 

[Ary Barroso]

First of all, it is necessary to distinguish the regulation of FOREX as operations between banks and regulation of so-called "Forex trading" financial services provided to the retail clients (natural persons).
There is no centralized regulation of Forex trading, but national regulators analyse foreign practice to implement best ideas. Another point is that ESMA could create rules, that would be adopted by European national regulators.
As for me, the most innovative forex-related legislation is in UK. Pay attention to the Guidance issued by FCA.
At the same time, there could be a rather different approach to the regulation. For example Russia imposes additional restrictions on retail Forex trading, even withdrows licenses while advertising national exchange "MOEX" to solve two problems at once: add more liquidity to the national stock exchange and reduce the scam events by transfering traders to the regulated market. To my mind, British FCA would make something like that in the nearest time.

Nice words; new traders need to know these tricks with the details; because Island based regulation doesn’t mean much.

 

[Ulacan]

I have recently written a blog post on a related topic. You might find some of the information useful in your research:
http://www.earnforex.com/blog/forex-regulation-authorities/

As for your main question - do traders need a centralized regulation? No, I don't think so. National regulation is sufficient in most cases.

Thanks for sharing the link to your blog, very helpful indeed. I don't really see the need for centralization of regulation. What's more important is the consolidation of the different regulaton rules in the market to come up with similar standards for the entire market. Regulation is important, but central regulation is a waste of time and resources

 

[37riched]

I personally don't think that traders need a centralised regulatory system. The regulation done at national levels is more than enough to prove that a broker is legit. Unless the big fish up there have something to gain from it that can force it into the market as an international rule. Just thinking.

 

[Dictorsto]

Forex is a free market and if it becomes regulated by central banks than we are not going to have anymore Forex market and such a huge turnovers. There is regulation for brokers, but it is quite normal as they are collecting other people’s money, but on the market there are no rules

 

[Zack King]

Regulation is the key; without regulation status there is no way to invest real money since, almost all of the market maker brokers are scammers.

I disagree here... in my experience during the past years i have been trading, i have used a healthy mix of both regulated and non regulated broker and in terms of security of funds, i have been lucky and can say i have not had any major issues with either regulated or unregulated. however, i prefer the trading conditions of unregulated brokers as the trading conditions usually are a lot more attractive to me, for example: higher leverage, freedom in the order i choose to close my trades, tighter spreads, lower trade commissions...

To combat the doubt in terms of security of my funds, when i use unregulated brokers, i always ensure beforehand that they have a fast withdrawal method, preferably via bitcoin as that is what i prefer and is usually the fastest, and i ensure i withdraw my profits regularly to avoid any issues

 

[Ary Barroso]

I disagree here... in my experience during the past years i have been trading, i have used a healthy mix of both regulated and non regulated broker and in terms of security of funds, i have been lucky and can say i have not had any major issues with either regulated or unregulated. however, i prefer the trading conditions of unregulated brokers as the trading conditions usually are a lot more attractive to me, for example: higher leverage, freedom in the order i choose to close my trades, tighter spreads, lower trade commissions...

To combat the doubt in terms of security of my funds, when i use unregulated brokers, i always ensure beforehand that they have a fast withdrawal method, preferably via bitcoin as that is what i prefer and is usually the fastest, and i ensure i withdraw my profits regularly to avoid any issues

Please avoid so called Iceland based regulated broker; try to use high profile regulated sources (hope you know that). With a non-regulated broker we all are in danger.

 

[Zack King]

Please avoid so called Iceland based regulated broker; try to use high profile regulated sources (hope you know that). With a non-regulated broker we all are in danger.

what do you mean by iceland based broker?

 

[Zack King]

Please avoid so called Iceland based regulated broker; try to use high profile regulated sources (hope you know that). With a non-regulated broker we all are in danger.

i totally disagree with the 'unregulated' brokers puts us all in danger.... regulated brokers have had downfalls too lol

 

[Ary Barroso]

i totally disagree with the 'unregulated' brokers puts us all in danger.... regulated brokers have had downfalls too lol

Let’s go with unregulated Forex broker! All the best.

 

[Enivid]

i totally disagree with the 'unregulated' brokers puts us all in danger.... regulated brokers have had downfalls too lol

That's a poor argument. The proportion of unregulated brokers going scam/broke is incomparable to that among the regulated companies. Moreover, in case a regulated broker goes down (e.g., Alpari UK, FXCM USA), traders get compensated. In case an unregulated company runs with the money, nobody gets anything.

 

[Zack King]

I get what you are saying however i personally do a lot of research on unregulated brokers and 9/10 find that unregulated brokers offer much better trading conditions than that of regulated brokers, that suit and match my trading style. In response to your mention of unregulated brokers ''running off with client money'' i always make sure to check that the broker offers a fast withdrawal method before i sign up, and if i make substantial profits, i withdraw regularly as i go along. I appreciate what you are saying, but personally i just prefer the trading conditions offered by unregulated brokers in general.

 

[Enivid]

You know, I actually too prefer the trading conditions of unregulated (or loosely regulated) Forex brokers, as they are usually much more flexible. However, if we are talking about reliability and safety, a regulated company should be the primary choice.