Like any financial market, the Forex market undergoes proper supervision from different regulating bodies around the world. Because of the enormous size of the Forex market, it creates challenges in terms of market regulation.
Forex traders are advised to only transact with brokers supervised and authorized by certain regulating entity. We list down below some of the most well-known regulating bodies in the Forex market, as well as other financial markets.
National Futures Association (NFA)
The National Futures Association, established in 1982, is the regulating body that supervises brokers that intend to provide service in the United States. NFA’s main responsibility is to create guidelines and programs to protect the public and financial system of the U.S. Swap dealers and swap participants must also obtain NFA membership.
Financial Conduct Authority (FCA)
Based in the United Kingdom, the Financial Conduct Authority oversees the operations of over 60,000 financial companies in the country. The FCA, founded in 2013, protects the public and maintains the stability of the market. Additionally, the FCA helps improve competition among market players.
Australian Securities and Investments Commission (ASIC)
ASIC is Australia’s main regulating body. Founded in 1998, ASIC monitors the activity of financial companies and institutions in the country. Moreover, enforcing laws and beefing up a healthy financial system are its top priorities.
Cyprus Securities and Exchange Commission (CySec)
Created in 2001, the Cyprus Securities and Exchange Commission is a regulating body in Cyprus. A member state of the European Union, CySec operations must comply with the legislation of the European Commission’s Markets in Financial Instruments Directive (MiFID). CySec supervises and controls licensed companies offering investment services, mutual funds, investment advisors, as well as mutual funds management companies.
Financial Market Supervisory Authority (FINMA)
A Swiss regulator, FINMA supervises banks, insurance companies, dealers, and exchanges in Switzerland. FINMA also safeguards the efficiency of the country’s financial system to protect investors and other market players.
Financial Services Agency
The Financial Services Agency was instituted in 2000 in Japan. As the country’s main regulating entity, the FSA is tasked to maintain the integrity of Japan’s financial system. Therefore, it oversees the operations of banks, insurance companies, and securities and exchange. The FSA also sets rules and standards which brokers must comply with.
Because the Forex market is huge, monitoring it is a challenging task. Many companies, as well as individuals, continue to deceive the public and get away with it. Thus, always practice due diligence when selecting a Forex broker.