Regulation??

alvinhan · Newbie Joined: Dec 15, 2004 Posts: 12

What is regulation all about actually? Is it very important for all online forex broker to be regulated? Is there any rules or act that stated online forex broker must be regulated?

According to my understanding, FOREX is unregulated. CFTC and NFA have no jurisdiction regarding FOREX. FOREX is totally different with Futures and Options.

Even if you sign up with a Futures Broker (which is regulated) who also allows you to trade FOREX, the broker will actually makes you sign a special form that says you recognise that FOREX is unregulated and that any funds you deposit for the purpose of trading FX will be kept in an 'unregulated' account *separate* and *different* from the 'regulated' Futures account you also having with them.

Personally, I feel that that regulation is just a matter of politics. While risk is the questions for investors. EVEN BANKS ALSO HAVE GONE BANKRUPT.

munwaithong · Guest

Regulation is a necessary part in forex trading. This is because the market maker is the counterparty to all your transactions. You win, they lose (unless they fully hedge the exposure). Regulation is necessary to ensure capital requirements are met (they cannot take more risks than they are allowed). Regulation is necessary to prevent market makers from making use of the clients' funds (segregated clients' accounts). Regulation is needed so that market makers make the appropriate disclosures (on risks in trading forex). Regulation is necessary to for investors to know which companies are reliable (there are reasons why some companies do not submit themselves to regulation, and they are not good reasons. Therefore, regulation is necessary to ensure that the game remains fair so that market makers deliver and that investors do not get cheated out of their hard earned money.

Check with the CFTC (USA) and FSA (UK) to clarify on all the regulations. Other jurisdictions may have their own rules.

Before opening any account with the market maker, do your own due diligence. Find out a company's regulatory status with the regulators and whether there is any history of infringement or customer complaints with the market maker.

thehand · Guest

Kaabi · Newbie Joined: Aug 28, 2005 Posts: 96

It is a very important part of Forex, without it, you have nothing.

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