Working with a regulated brokerage company by a reputable authority will give traders confidence and security as it is an inevitable requirement to be monitored under a legitimate regulatory body.
One of the main criterias not to overlook while choosing a brokerage company among numerous entities is picking one regulated by a reputable authority. Regulated entities are required to comply with the financial services industry standards, rules, laws, regulations, that have been established by the international authorities with the purpose to provide secure trading, offering safety, reliability, and security for traders.
Forex Regulations are established in order to protect the interests of customers and to ensure fair and honest operations at FX brokers. Trading with Forex Brokers that are authorized and licensed by the most respected regulatory bodies such as, FCA, ASIC, CySEC, BVI & others, means that they have to meet strict financial standards and implement fair trading practices. Also, the safety of your capital has the highest priority for regulated forex brokers, for these reasons they keep customers’ capital segregated from the company’s capital, work only with top-respected banks, and provide maximum transparency.
There are a lot of factors that need to be taken into consideration before choosing a brokerage company, such as commission rates, spreads, leverage options, etc. Nevertheless, you should not skip the most important aspect: is the broker regulated or not? Considering the fact that unregulated brokerages are extremely risky places for traders to invest in since in case of encountering problems, the traders might find themselves in a position where they will have very little recourse and may experience major financial losses.
Why Trading with a Regulated Broker is Important?
1.Safety of Capital
Fully regulated FX brokers are compelled by the law to keep customers’ funds in separate accounts at top tier banks. The segregated accounts that many regulated and reliable Forex brokerages offer are segregated accounts, meaning separate accounts for the clients and the company funds. Many regulators require opening of segregated accounts, in order to ensure that the customers’ money are not used for operational purposes, also verifying that the broker will fulfill withdrawal requests anytime.
2.Business Ethics
The rules and regulations are laid down to ensure that all regulated and licensed FX brokers handle and behave ethically towards their customers. In addition, they must provide quality services to their customers, meaning fair pricing, quick and safe executions of orders, and transparency.
3.Leverage Limit
Another way to protect customers by regulated entities is by limiting the maximum leverage level provided. No one can argue the fact that leverage can be helpful since it lets you invest in higher volumes with min. amount of margin provided, making it possible to trade with higher volumes, but we always say it is a doubled-edged sword. Providing extremely high leverage, especially for beginners, can be tremendously dangerous for the traders, putting them at risk of losing more than the initial capital.
4.Protection from Fraud
Regulated and licensed brokers should not act in any manner that can affect their customers negatively. If any illegal practices are completed, it can directly attract penalties for the broker from the entity it’s regulated by or even a permanent ban from the industry, depending on the sort of action. If a licensed broker does not meet the rules and requirements set by its regulator, the regulatory bodies can take legal action, which can end up in the invalidation of the license.
5.Protection from Fraud
Regulated and licensed brokers should not act in any manner that can affect their customers negatively. If any illegal practices are completed, it can directly attract penalties for the broker from the entity it’s regulated by or even a permanent ban from the industry, depending on the sort of action. If a licensed broker does not meet the rules and requirements set by its regulator, the regulatory bodies can take legal action, which can end up in the invalidation of the license.
6.Anti-Money Laundering
In addition to all the personal benefits of working with a regulated entity, it also brings with it a legal benefit. Before opening an account for the individuals applying, regulated entities request documentation, such as photo ID or any kind of proof of address, in order to verify the personality. This kind of action, in its own ways, helps to prevent such crime that distress the governments around the world.
Under Which Regulatory Authority is FTD Limited Regulated?
FTD Limited is incorporated under the laws of the British Virgin Islands as a BVI BUSINESS COMPANY with registration number 1944994, licensed and regulated by the BVI Financial Services Commission (FSC) under Investment Business Licence number SIBA/L/19/1123.
Financial Services Commission is the Territory’s single regulatory authority responsible for the regulation, supervision and inspection of all financial services in and from within the BVI. The FSC was established in 2001 pursuant to the Financial Services Commission Act, 2001.
About BVI FSC:
BVI FSC, which stands for the British Virgin Islands Financial Services Commission, is one of the most respected regulatory bodies with responsibility for the regulation and supervision of all financial services operating in or from within the British Virgin Islands. The regulator was established in 2001 pursuant to the Financial Services Commission Act, 2001. It is perceived as a member of the classical trio of Offshore Forex – Belize, Seychelles and BVI.
The BVI FSC is responsible for matters, as protecting consumers, detecting financial crime, preventing market abuse, ensuring a proper regulatory environment, overseeing legislation and monitoring its effectiveness, improving public understanding about risks associated with different financial products, communicating with international authorities, and consulting with the financial industry in respect of regulations, policies, and practices related to supervision
Final Words:
Regulation plays an important role in ensuring that forex brokers abide by the laws and standards set, as well as ensuring that unethical practices are not followed. As such, to protect your interests, you should ensure that you choose and work with licensed and regulated brokers.
Regulation plays an important role in ensuring that forex brokers abide by the laws and standards set, as well as ensuring that unethical practices are not followed. As such, to protect your interests, you should ensure that you choose and work with licensed and regulated brokers.
