Foreign currency exchanges (forex) run constantly across the globe through over-the-counter markets. The boundaryless space allows seamless access. For example, an Australian trader can trade in euros and Japanese yen (EURJPY) through a ♕U.S.-based broker despite geographical boundaries.

澳洲幸运5官方开奖结果体彩网:Speculative trading in the retail forex market continues to grow. As a result, there can be intermedia🐽ries (banks or brokers) who engage in financial irregularities, scams, exorbitant charges, 💎;hidden fees, and high-risk exposure offered through high-leverage levels or other bad practices.

Internet and mobile app-based trading allow smooth trading processes, but they also add the risk of unrecognized sites that may close unexpectedly and abscond with investors’ money. Regulations ensure s⛄uch practices are avoided. Regulations are aimed at protecting individual investors and ensuring fair operations to saf💫eguard clients’ interests.

The most important criteria when 澳洲幸运5官方开奖结果体彩网:selecting a forex broker are the regulatory approval status of the broker and its gover🍌ning autho🍌rity.

How U.S. Authorities Regulate Forex Brokerage Accounts﷽

The National Futures Association () is the “🧸premier independent provider of efficient and innovative regulatory programs that safeguard the integrity of the derivatives markets” (including forex). The scope of NFA activities is as follows:

• To provide necessary licenses (after due diligence) to eligible forex brokers to conduct forex trading business
• To enforce required adherence to necessary capital requirements
• To combat fraud
• To enforce detailed record-keeping and reporting requirements regarding all transactions and related business activities

A detailed is available𝄹 on the official NF🍸A website.

Key Provisions of U.S. Regulations

Customers defined as "individuals with assets of less than $10 million and most small businesses," underscoring that these regulations are meant to protect the small investor. High-net-worth individuals may not be covered under standard regulated forex brokerage accounts. Below are several further provisions:

• The available leverage is limited to 50:1 (or a deposit requirement of only 2% on the notional value of a forex transaction) on the major currencies so that uneducated investors do not take unprecedented risks. 澳洲幸运5官方开奖结果体彩网:Major currencies are defined as the U.S. dollar, the British pound, the Swiss franc, the Canadian dollar, the Japanese yen, the euro, the Australian dollar, the New Zealand dollar, the Swedish krona, the Norwegian krone, and the Danish krone.
• The available leverage is limited to 20:1 (or 5% of the notional transaction value) on minor currencies.
• For short forex options, the notional transaction value amount plus the option premium received should be maintained as a security deposit.
• For long forex options, the entire option premium is required as security.
• The 澳洲幸运5官方开奖结果体彩网:first-in-first-out (FIFO) rule prevents holding simultaneous positions in the same forex asset, that is, any existing trade position (buy/sell) in a particular currency pair will be squared off for the opposite position (sell/buy) in the same currency pair. This also implies no possibility of hedging while trading forex.

Notably, money owed by the forex broker to the customers should be held𝐆 only at one or more qualifying inst🔯itutions in the United States or in money-center countries.

How U.S. Regulations Differ

Care should be taken to verify the ownership, status, and location of each forex trading firm, website, or app before signing up for💯 a trading account. There are many websites claiming low brokerage charges and high leverage (allowing more trading exposure with less capital); some as high as 1000:1.

However, almost all sites are hosted and operated from oꦉutside the United States and may not be approved by the concerned authority in the host country. Even those authorized locally may not have regulations that apply to U.S. residents. Regulations on offered leverage, required depo🦹sits, reporting requirements, and investor protections will vary by country.

Foreign Regulatory Bodies

Here is a list of forex brokerage regulators for a few select꧅ countries:

• Australia: Australian Securities and Investments Commission ()
• Cyprus: Cyprus Securities and Exchange Commission ()
• Russia: Federal Financial Markets Service (FFMS)
• South Africa: Financial Sector Conduct Authority ()
• Switzerland: Swiss Federal Banking Commission (SFBC)
• United Kingdom: Financial Services Authority ()

Verifying a Broker’s Regulatory Status

The NFA provides an online verification system called (BASIC) where the status of U.S.-based forex brokerage firms can be verified using their NFA ID, firm name, individual name, or pool name. Care should be taken to use the correct name/ID in the correct form as many fo♍rex broker firms are known by different names (e.g., a website name may be different from the legal co🍰rporate name).

The Bottom Line

Financial regulations are complex and often change as markets develop. They also attemꩵpt to strike a balance. Too little regulation may lead to ineffective investoꦫr protection, while too much regulation can result in reduced global competitiveness and dampen economic activity.