Here is what you should know about FCA and ASIC

antonyyu3

Trader
Mar 14, 2024
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Reliability is one of the most important attributes when it comes to trading. Trading is not always about the winning. The transparency and security of your capital are crucial parts as well. That’s when regulation comes in. Generally, a well-regulated broker is equivalent to reliability and trustability. So today, we will introduce you to two of the most reputable bodies in the financial industry: FCA and ASIC.

Financial Conduct Authority (FCA)

The Financial Conduct Authority (FCA) is the regulatory body responsible for overseeing the conduct of financial firms in the United Kingdom. Established in 2013, the FCA has three primary objectives: protecting consumers by ensuring financial products and services are sold fairly, protecting the integrity of the UK's financial markets, and promoting healthy competition between financial services providers.

To achieve these goals, the FCA has extensive powers, including creating rules that firms must follow, authorizing and supervising around 59,000 financial firms, investigating wrongdoing and taking enforcement action, and charging fees to fund its operations. FCA-licensed forex brokers are considered trustworthy since the brokers need to fulfill a minimum capital of €730,000 to maintain a license. Monthly reports and audits are required from the brokers to ensure the segregation of clients’ funds. FCA-licensed brokers aren’t allowed to manipulate trade practices and sabotage clients by giving unrealistic promises or risk-taking monetary benefits.

List of recommended brokers regulated under FCA
Australian Securities and Investments Commission (ASIC)

The Australian Securities and Investments Commission (ASIC) is the regulator of Australia's financial markets and services, established as an independent Commonwealth Government body by the Australian Securities and Investments Commission Act of 2001.

ASIC's role includes registering and licensing financial services providers, maintaining public registries and databases, investigating suspected breaches and issuing enforcement actions, and regulating a broad scope encompassing Australian companies, financial markets, financial service organizations, and professionals. ASIC-licensed brokers are required a minimum share capital of AUD 1,000,000 to apply for a license. The maximum leverage for retail clients is 1:30. An AFSL license from ASIC is required for brokers who want to provide retail forex and CFD trading services to Australian residents. Similar to FCA, conducting audits and following specific operating guidelines are obliged by ASIC-licensed brokers.

List of recommended brokers regulated under ASIC
  • Pepperstone – Versatile trading app
  • IC Markets – Fast order execution, VPS hosting
  • FP Markets – Multiple tradeable assets
  • Eightcap – User-friendly trading interface
  • AvaTrade – Risk-reduction tool, multi-lingual customer support
The intention of regulations is to protect traders from scams and fraud. Regulatory bodies such as FCA, ASIC, and others play a significant role in ensuring participants hold a certain standard, strengthen reliability, and provide a safe trading environment for their clients.

Note that this article is informational and does not constitute financial advice. Trading involves risk, ensure you are proceeding with caution and careful consideration regarding your financial state.