3 Common Laws and Regulations of The Forex Market

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Like any other field of finance, there are heavy forex regulations for forex trading as well. It ensures that most operations carry out smoothly. It also creates a sense of accountability, establishes money trails, and helps the authorities detect scams, frauds and penalize any offenders.

Generally, these are the regulations and laws of the forex market:

Registration with Regulated Authority

Both the broker you’re working with and the platform must be registered with the financial regulatory authority operating in your country. Trading is illegal if they’re not a regulated broker with your company’s regulatory authority. 

This rule also applies to any broker offering offshore services; therefore, foreign brokers need to be legally registered within your country to operate legally. This helps authorities establish a money trail and prevents you from becoming part of a fraud or scam.

Audit and Review for Forex Regulations

Forex dealers and brokers must undergo regular reviews and audits. The purpose of this is to go through business records and forex transactions made by the broker.

Company’s industry structure and foreign currency records are also looked into to determine whether they’re complying with industry standards and regulations set by the regulatory body of the country they’re operating from. This ensures that the broker isn’t committing any illegal activities. 

Broker signing a forex contract

Brokers must sign detailed contracts with each client they work with. The contracts establish a code and enlist rules, regulations and responsibilities of the broker. In case of any issue, a client can report them to the regulatory authority, which holds the right to revoke the trading license for any platform or trader.

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