Forex Industry
by ForexNewsNow Team on September 4th, 2011

Top Forex Brokers: Regulation and Security

ForexNewsNow – Whether you’re a seasoned financial trader or a newbie to the world of candlestick charts and pips, it’s always important to do your homework when it comes to selecting the organization with whom you entrust your hard-earned cash in order to invest and grow it. Forex trading is no different.

In this “Top Forex Brokers” series of articles, we will discuss what to look for in an online forex broker and examine the top forex brokers with a selection of foreign exchange brokers reviews.

In this installment entitled “Regulation and Security”, we will examine the issue of regulation, oversight and security with regards to online forex brokers and what traders should look for before deciding to invest with a forex trading broker.


Just like depositing your money in any bank or financial institution, before you deposit with an online forex broker, it’s important to understand which regulatory body is going to be looking after your funds.

In the US, the National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC) are tasked with overseeing off-exchange foreign currency exchange broker transactions.

As such, each forex company that is in any way involved with US traders, or is located in the US, must be registered and licensed with the NFA and CFTC. So, if you’re a US resident looking to trade forex, you should definitely inquire about a prospective forex broker’s regulation in the US before you decide to use their services.

Since the NFA/CFTC regulations regarding forex transactions are quite stringent, only a minority of forex trading brokers are eligible to accept US forex traders. However, among these “elite” forex brokerages are some of the most well-known and trusted foreign exchange brokers including FXCM and

In Europe, there exist a wide range of regulatory bodies tasked with overseeing forex transactions with online forex brokers depending on the country.

In the United Kingdom, the Financial Services Authority has the mandate of regulating off-exchange foreign currency exchange trading.

In France, the Autorité de Contrôle Prudentiel of the Banque de France is responsible for “the licensing of French financial firms and monitoring compliance by entities subject to its authority.”

In Cyprus, the Cyprus Securities and Exchange Commission provides regulation for forex trading brokers as part of its mandate to “grant operation licenses to investment firms, including investment consultants, brokerage firms and brokers.”

For Germany-based forex trading brokers, the BaFin (short for Bundesanstalt für Finanzdienstleistungsaufsicht) is responsible for ensuring the ability of banks, financial services institutions and insurance undertakings to meet their payment obligations” and enforcing the “standards of professional conduct which preserve investors’ trust in the financial markets.”

In Italy, the CONSOB (short for Commissione Nazionale per le Società e la Borsa) describes itself as the competent authority for ensuring transparency, disclosure and compliance by securities market participants.

Other financial regulatory bodies exist for Denmark, the Netherlands, Switzerland, and other European countries.

It’s a good idea to take a few minutes and inquire about a forex trading brokers regulatory status before you decide to use their investment services.


Beyond the issue of financial regulation and supervision for online investors, it’s also important to ensure that the trading platforms you use and the financial transfers you initiate when conducting your forex investing with online forex brokers are secure.

Whenever transferring sensitive information online, it’s essential to verify that your connection is secured via SSL (Secure Sockets Layer). Most Web browsers display a “lock” or a logo in the URL field at the top indicating if an Internet connection is secured via SSL.

Once you decide to initiate a deposit (or make a withdrawal) when trading forex with a foreign exchange broker, it’s important to make sure that the connection you’re using is SSL-encrypted and that no sensitive information is sent via e-mail, online chats or other unsecured means.

Forex trading brokers will often request official documents when one begins using their services as a way to verify the identity and nationality of the trader. It’s important to fulfill these requests but one should take care to obscure any sensitive information (credit card numbers, social security numbers, bank account numbers, etc.) so that there is no way the documents can find their way into the wrong hands and be used for nefarious purposes such as identity theft or phishing scams.


In an effort to make your forex trading experience as profitable, fair and risk-free as possible, it’s a good idea to verify who you’re entrusting your funds to and what regulatory body oversees their actions before you get started. In addition, you should take care to verify that the transfer of sensitive information is done in a secure manner.

If you’re looking for a good place to start looking, we recommend FXCM – a publicly-traded company on the New York Stock Exchange licensed by all major regulatory bodies around the world – which provides also provides a suite of secure and intuitive trading platforms and exceptional customer support.


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By ForexNewsNow Team

This is a general account of the ForexNewsNow Team. It is used to published exclusive content carefully crafted by our experts as well as it is used to bring you the most recent industry highlights from our guest contributors that wish to remain anonymous.

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