Foreign exchange controls are various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents. Just like depositing your money in any bank or financial institution, before you deposit with an on-line forex broker, it’s important to comprehend which regulatory body is going to be looking after your funds. In the US, the National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC) are tasked with overseeing off-exchange foreign currency exchange broker transactions.
As such, each forex company that is in any way involved with US traders, or is located in the US, must be registered and licensed with the NFA and CFTC. So, if you’re a US resident looking to trade forex, you should definitely inquire about a prospective forex broker’s regulation in the US before you decide to use their services.
Since the NFA/CFTC regulations regarding forex transactions are quite stringent, only a minority of forex trading brokers are eligible to accept US forex traders.
In Europe, there exist a wide range of regulatory bodies tasked with overseeing forex transactions with on-line forex brokers depending on the country.
In the United Kingdom, the Financial Services Authority has the mandate of regulating off-exchange foreign currency exchange trading.
In France, the Autorit de Contrle Prudentiel of the Banque de Franceis responsible for “the licensing of French financial firms and monitoring compliance by entities subject to its authority.”
In Italy, the CONSOB (Commissione Nazionale per le Societ e la Borsa) describes itself as the competent authority for ensuring transparency, disclosure and compliance by securities market participants.
Other financial regulatory bodies exist for Denmark, the Netherlands, Switzerland, and other European countries.
It’s a good idea to take a few minutes and inquire about a forex trading brokers regulatory status before you decide to use their investment services. Beyond the issue of financial regulation and supervision for on-line investors, it’s also important to ensure that the trading platforms you use and the financial transfers you initiate when conducting your forex investing with on-line forex brokers are secure.
The other aspect of account safety is encryption, and the physical safety of your account data against theft. Firms like Markets.com, and Finexo take great care about these aspects of safety, but there are also many others that assume a proactive attitude to this crucial side of running a brokerage business. To aid our task, technologies like SSL-encryption are standard in the business nowadays, and if you don’t see them implemented, it is time to depart for better, more serious brokers.
Also, there are many sites on the Internet dealing with Forex and on these websites you will find references to various brokers from around the world. You may find references also here. The reputation among the clients is an important factor when deciding about the Forex broker. However, if you still want more in-depth reference and you resort to any discussion forum, always ask how the broker behaves in crisis situations, such as:
Performance of market orders in an important announcement
Extraordinary market movements
Communication in poorly filled orders, etc.
Communication with Customer
When searching for a good and reliable broker for your forex trading strategies, it is recommended to find out how – and especially how quickly and operatively – a broker can communicate with you. Check out all the options. That means that if the broker is able to communicate by telephone, try it. Test also how quickly he responds to an e-mail, find out if he is using Skype or other types of online communication on the Internet. Check the possibility of helpdesk. Each broker provides a solid chat today, so you should try also this form of communication. But at the same time, you should check who you are talking to when using a helpdesk; if you are talking to someone competent and not to someone who will offer you an e-mail to their technical department on every possible issue. And because the currency market is a market that operates continuously, it is good to find out if the connection with your broker can be fully guaranteed 24 hours a day.