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For retail FX traders, the biggest risk of non-regulation is that of illegal activity or outright fraud.
Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions, and guidelines.
Forex market regulation refers to the rules and laws that firms operating in the forex industry must follow. But regulation is more than just having rules in place, it’s also about the ongoing oversight and enforcement of these rules.
The purpose of regulation is to protect you from undisclosed financial risk and fraud.
The forex market is by far the largest, most liquid market in the world, with more than $5 billion traded daily.
Due to its decentralized and global nature, the forex market has been more prone to fraud and has been less regulated than other financial markets.
How do you regulate a market this big? And one that trades 5 days a week, 24 hours a day, all over the world?
Its size and scope create unique challenges regarding market regulation.
How do you eat an elephant?
One bite at a time.
How do you regulate the forex market?
Apparently, one country at a time.
There is no single global body governing the forex market to police the massive 24/7 market.
Instead, several governmental and independent bodies supervise forex trading around the world.
The supervisory bodies regulate forex by setting standards that all brokers under their jurisdiction must comply with.
These standards include being registered and licensed with the regulatory body, undergoing regular audits, communicating certain changes of service to their clients, and more.
Licensed forex brokers are subject to recurrent audits, reviews and evaluations to ensure that they meet the industry standards.
This helps ensure that currency trading is ethical and fair for all involved.
Every country has its regulatory authority that lays down the framework of rules that are to be complied with when operating in the forex trading market.
Each forex regulatory body operates within its own jurisdiction and regulation and enforcement vary significantly from country to country.
Below is a list of financial regulatory bodies for each country in alphabetical order.
Bangladesh:
British Virgin Islands:
Canada:
- British Columbia Securities Commission (BCSC)
- Canadian Investor Protection Fund (CIPF)
- Financial Transactions and Reports Analysis Center of Canada (FINTRAC)
- Investment Industry Regulatory Organization of Canada (IIROC)
- Investment Industry Regulatory Organization of Canada (IIROC)
- Ontario Securities Commission (OSC)
- Ombudsman of Banking Services and Investments (OBSI)
Cayman Islands:
Czech Republic:
Dominica:
Dubai, UAE:
Finland:
France:
- Autorite des marches financiers (AMF)
- Banque de France
- Credit Institutions and Investment Firms Committee (CECEI)
- French Autorité de Contrôle Prudentiel et de Résolution (ACPR)
Hong Kong:
Isle of Man:
Lebanon:
Liechtenstein:
Panama:
Russia:
Seychelles:
Slovakia:
South Korea:
St. Vincent and the Grenadines:
Switzerland:
- Association Romande des Intermediares Financiers (ARIF)
- Organisme d'autorégulation fondè par le GSCGI
- PolyReg General Self-Regulatory Organisation
- Swiss Bankers Association (SBA)
- Swiss Federal Banking Commission (SFBC)
- Swiss Federal Department of Finance (SFDF)
- Swiss Federal Finance Administration (SFFA)
- Swiss Financial Market Supervisory Authority (FINMA)
- Swiss National Bank (SNB)
