Broker
Forex brokers are companies or agents dedicated to financial intermediation that give access to trade in the Forex currency market.
Forex is the largest financial market that exists today. Some 6.6 trillion dollars a day (about 76 million per second) are traded on it daily. It is also the oldest market, it is said that it was the ancient Greeks, in the 7th century BC. C., those who introduced the first coins and there began their exchange. Since then (and to this day), Forex offers an exciting way to invest and develop a trading operation.
To start investing in the foreign exchange market, you only need to open an account with a Forex broker, an Internet connection and a computer, tablet or mobile phone in which you will have a trading and analysis platform provided by the broker itself.
Would you like to know the details of this great market and what do you have to keep in mind to open your account with a Forex broker?
Regulation of Forex brokers
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Regulated brokers are subject to financial legislation and the supervision of their activities by the bodies that regulate them. These bodies are mainly in charge of ensuring investor protection and the adequate commercialization of services, transparency and non-misleading advertising of the different products that brokers offer to their clients.
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Regulation is one of the most important aspects when choosing a Forex broker. This market, as previously stated, does not consist of a single financial market. It is a decentralized market and, therefore, it lacks internal regulations; as well as a clearinghouse.
In other words: it is an over-the-counter market, also called OTC (Over The Counter). The negotiation consists of an agreement between the two parties, without involving the control mechanisms characteristic of a Stock Exchange.
For this reason, hiring a broker that has all the solvency guarantees and good practices imposed by financial regulations is especially important.
Forex brokers, in order to carry out their activity, must have a license granted by the regulatory body of the country in which they are based. Similarly, it must be registered in the public records of said body.
Having the regulation of a financial authority is synonymous with the Forex broker complying with all the guarantees imposed by financial regulations. The broker's activity is supervised and there is no margin to commit fraud. The regulator ensures that all transparency parameters and an adequate relationship with the client are met. Its job is to guarantee confidence and security in financial investments and has the ability to impose sanctions.
Some of the most characteristic regulatory bodies could be:
Spanish National Securities Market Commission (CNMV).
Cyprus Securities and Exchange Commission of Cyprus (CySEC).
UK Financial Conduct Authority (FCA).
Australian Securities and Investments Commission of Australia (ASIC).
National Futures Association of the United States (NFA).
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