The Financial Conduct Authority (FCA) is the UK regulatory body – a consumer watchdog agency – funded by all regulated financial services companies, including Forex brokers. The FCA is only tasked with licensing and regulating UK entities. It is a reputable regulatory body which oversees Forex brokers in the UK. It works in conjunction with the Bank of England (BOE) and the Prudential regulatory Authority (PRA).
The FCA is aligned with the MiFiD derivative and the EEA requirements vis-à-vis rules and regulations regarding Forex trading. The regulatory framework provided by the FCA ensures that all Forex brokers act in the interests of traders, and a healthy trading environment. The prevention of financial malpractice is a core tenet of the FCAs underlying goals. Scams, fraud, malfeasance, promotion of the benefits of Forex trading, and similar activities are frowned upon by the FCA.
The FCA takes full responsibility for protecting customers from unscrupulous Forex brokers. All regulated brokers are required to conform to FCA guidelines, by maintaining segregated accounts for client funds and company funds. The FCA further mandates that all regulated Forex brokers must maintain at least £1 million in operating capital, based upon the number of traders currently registered to their platform and depositing at their company. FX brokers must comply with these financial regulations to maintain their good standing with the FCA.
How to Find a Regulated Broker?
Regulated Forex brokers all bear the FCA stamp of approval. The FCA – Financial Conduct Authority – is the gold standard for all UK-licensed operators. According to FCA requirements, all FX brokers must submit periodic financial statements of their investment holdings, and annual reports for audit. The FCA takes a no-nonsense approach to verifying the financial well-being of FX brokers.
When you’re searching for a regulated FX broker, you can conduct a cross check of the broker/FCA list of regulated brokers to ensure that everything is above board. Here at iForexTrader.co.uk we provide you with a full listing of all fully licensed and regulated brokers. Our trusted UK Forex review platform is associated with the leading Forex brokers in the industry. All of them are trusted providers of regulated Forex trading services.
We offer comprehensive reviews on the leading Forex brokers for your benefit. Our unbiased commentary lists the merits of each broker, so that you can make an informed decision when you are ready to trade Forex online.
How does the FCA help in reducing the risk of trading currency pairs?
The Financial Conduct Authority (FCA) is a watchdog organisation that acts in the interests of consumers. By limiting leverage on Forex trading, the FCA can control how much traders can lose in their personal capacity. Additionally, the FCA works hard to tackle financial abuse and malpractice in the Forex trading arena. All brokers that are FCA regulated are compliant with stringent regulations in the UK. If there is any consumer abuse, or instances of fraud, the FCA will conduct an inquiry, and investigate accordingly. If companies act irresponsibly and recklessly, the FCA has the authority to revoke a license and impose stringent punitive measures against the company. That’s the reason why it is important to choose one of the FCA licensed Forex brokers and not an offshore unregulated Forex broker.
By requiring Forex brokers to maintain segregated accounts, client money is held separate from the broker’s money. This is a necessary safeguard when claims against the company are made, or in the case of liquidation, bankruptcy, or fraud. By proposing caps on Forex trading activity (1:50) as proposed by the FCA in December 2016, the FCA can limit how much Forex traders can lose on any trade. From 1:200 down to 1:50 is a significant protection for clients. High leverage levels typically result in larger losses when currency markets don’t move in your favour. The FCA is working hard to prevent such occurrences from taking place.
FCA regulated Forex brokers offer peace of mind to traders. For starters, all UK licensed FX brokers must maintain segregated accounts for client funds and company funds. Caps on leverage can also serve clients well by limiting their potential losses when markets move in the wrong direction. Further, there is recourse in the event of a dispute, or a claim against a UK Forex broker when it is licensed and regulated by the FCA. These are but a few of the many rules and regulations imposed upon FCA-licensed Forex brokers in the UK.
In late 2017, the FCA issued a warning about the risks inherent in Forex trading with cryptocurrencies. Given that the world’s most liquid market – the Forex market – is volatile, traders need to be aware of the possible risks. The official warning issued by the FCA was published on 14 November 2017, and it goes to great pains to highlight the risk-laden nature of speculative products such as cryptocurrency pairs.
Currently, CFDs are fully regulated by the FCA, and cryptocurrency CFDs also offer the same protections as other CFD products. There is ongoing discussion about regulations for cryptocurrency pairs trading in the FX arena, and the UK Parliament is tasked with providing further direction in this regard.
FCA regulation vis-à-vis Forex trading, cryptocurrencies and the like is continually evolving to meet the exigencies of the market. The UK is a hub of activity for Forex trading, and is regarded as the epicentre of global currency trading. Cryptocurrency is now a $500 billion market with explosive growth potential, and FCA regulators will be monitoring it closely. You can follow the latest news and updates related to Forex trading and UK brokerages right here at iForexTrader. Our trading experts are continually following the latest news, reviews, and updates from the UK Forex arena.
As soon as you wish to terminate your contractual agreement with a regulated FCA brokerage, you can do so by simply logging into your account and contacting the account manager. Advise them that you would like to close your account and have your remaining balance transferred to your preferred payment processing option. In the event of a problem, you are protected against losses up to £50,000 courtesy of the Financial Services Compensation Scheme (FSCS). The FCA does not intervene directly between a broker and a client, but it has full authority to impose fines, or get involved if required. Regulated brokers offer a no-nonsense approach to account closures and will happily transfer your funds to you.