Forex trading regulations around the world – Best known regulatory bodies

Forex trading is the biggest financial market in the world. Because the market is decentralized and there is no one specific place where the trading is conducted, many jurisdictions have created their own regulatory bodies.

These regulatory agencies are overseeing the Forex trading market to ensure that trading is conducted in compliance with local laws to guarantee the safety and security of traders.

There are numerous Forex trading regulatory bodies and all of them work in a very different way. While some of them are very strict, there are others that adopted lighter regulatory laws. Depending on the country you are from, you might have to follow the different regulatory frameworks.

To help you better understand how Forex trading regulations work, we have created guides on regulatory bodies from all over the world. Check out our guides below and see how the Forex trading market is regulated by some of the best regulatory agencies around the world.

Financial Services Conduct Authority of South Africa

The Financial Services Conduct Authority of South Africa, simply known as FSCA, is the main Forex trading agency of the country. The main responsibility of the FSCA is to oversee the financial markets in the country and protect the rights of the local investors.

The primary task of the regulatory body is to give out licenses to the Forex brokers in South Africa. The regulatory body works hard to make sure that every company offering trading services to locals of the country is officially and legally licensed locally.

To guarantee the safety and security of the local traders, the regulatory body of South Africa has adopted several rules over the years. Among them are restrictions on the maximum leverage offered to traders, also, every broker is required to keep the funds of their clients on segregated bank accounts, and the adoption of the negative balance protection.

FSCA also requires all Forex brokers in the country to be locally regulated to be able to offer traders from South African their services.

Financial Services Commission of Mauritius

Financial Services Commission of Mauritius is another very famous Forex trading regulator. Founded in 2001, FSC is responsible for the regulation, supervision, and inspection of all financial services providers and banking institutions in Mauritius, including Forex brokers. The regulatory body works under the aegis of the Ministry of Finance and Economic Development of the country.

FSC of Mauritius represents an integrated regulator for the non-banking sector in the country. The regulatory body is mandated under the Financial Services Act 2007 and works tirelessly to ensure the safety and security of Forex traders. The regulatory body strictly follows an anti-corruption policy. Although not as strict as other regulatory bodies, the agency is still able to ensure safety and security for Forex brokers.

The Securities and Exchange Board of India

The Securities and Exchange Board of India, simply known as SEBI, is the main regulatory agency of India. It is responsible for regulating the securities and commodities markets of the country. The regulatory agency works under the supervision of the Ministry of Finance. Established back in 1992, it is headquartered in Bandra Kurla Complex, Mumba.

There are several steps that Forex brokers will have to follow to get the local license in India. The regulatory agency works very hard to ensure that the safety and security of local Forex traders is guaranteed. The regulatory body operates independently. To be registered by the regulatory agency, a broker will first need to get a Certificate of Registration, CoR. Then, they are required to pay special membership fees.

Because of the fact that the interest in the Forex trading market is increasing so fast in the country, the role of the regulatory agency is of utmost importance in ensuring the safety and security of the Forex traders in the country.

Vanuatu Financial Services Commission

Vanuatu Financial Services Commission, simply known as VFSC, is the main regulatory agency of Vanuatu. The regulatory body was created back in 1993 and is known to be one of the best-known regulatory agencies around the world. Compared to other regulatory agencies around the world, the requirements of the Forex broker are not as strict.

Although the regulatory body does not have a strict framework, it is still very actively trying to make the market safer for investors. When it comes to financial misconduct, the regulatory body has a very strict reaction. This can include fines or the cancelation of the license.

The regulatory agency works hard to promote healthy competition among Forex brokers by providing a stable and competitive atmosphere. There are numerous Forex brokers that own a license from VFSC.

AMF of France

Autorité des marchés financiers, also known as AMF, is the main regulatory body of France. The regulatory body is an autonomous agency that is responsible for managing French financial markets under the Financial Security Act of 2003. The regulatory body was created by merging 3 regulatory agencies, which are the Committee of Operations of the Bourse, COB, the Council of Financial Markets, and the Council of Discipline and the Financial Management.

Since France is the EU-member country, the regulatory agency of the country strictly follows the general guidelines set out by the main European regulator, called ESMA. Because of this, Forex trading in France is considered to be safe.

Much like many other European Forex regulators, AMF has adopted very strict regulations. Among many others, the regulatory agency restricts brokers from offering traders leverage higher than 1:30, the brokers are required to keep the funds of their clients on segregated bank accounts, as well as to adopt the Negative Balance Protection policy. This is making the market a lot safer for traders.

Unregulated FX brokers

While it is true that regulations in Forex trading are very important, there still are some companies that are unregulated. In most cases, jurisdictions restrict brokers from offering traders access to the trading market without a local license, however, there are some countries where brokers can function without any problems while being unregulated.

There are different reasons why Forex brokers decide to be unregulated, some of them want to avoid the costs of the license, others want to offer traders services that they would not be able to offer with a license, and so on.

Although not being licensed does not directly mean that a broker is a scammer, traders are still advised to avoid using Forex brokers that are not locally registered in their jurisdictions to make sure that they are staying safe.

Why are regulations so important?

Forex trading is a very risky market where you can easily lose a lot of money. By trading with a Forex broker that does not own a license you are increasing the risks associated with the market. The Forex trading regulators have forever transformed the market and have made it into something that is a lot safer for traders.

There are numerous Forex trading regulators in the market working very hard to ensure that traders are not scammed. These regulatory bodies are coming up with the laws about Forex trading while also making the market safer, secure, and more attractive for investors.