List of Trusted Regulatory Organizations Worldwide

When you trade Forex, you have to deal with one of the biggest hurdles when trading Forex, which is, trying to find out which brokers you can trust. Just about anyone can build a slick website and slap on the tagline “***Best Forex Broker***” in the world backed with a few guarantees, but what is underneath all the bells and whistles, are brokers that are unregulated or even worse, regulated in countries that marginally have regulations. This is where the regulatory agencies come in. 

Think about regulatory agencies as a referee of a sport. Without referees, you can end up with an intense level of unfairness very quickly in the sport. In Forex trading, regulatory agencies act as referees who establish the rules, police the brokers, and in the event things get bad for the trader, they can act. When the brokers are regulated with a reasonable authority, it is like providing safety net under your investment against brokers ripping you off. 

Next, we will look at regulatory agencies that are considered trustworthy at an international level. 

US - CFTC & NFA 

Forex trading in the US is very heavily regulated through CFTC / NFA. CFTC and national futures association place regulatory measures on firms, some of the most stringent for broker operations in the world. US brokers are required to maintain a higher level of capital reserve, provides detail and strict reporting to traders on what has transpired before trading occurs. 

A U.S. license is very difficult to obtain, so there are limited firms operating in the US market, but for the trader this is actually a good proposition based on the miniminum more there is to be safe. A firm that is regulated with U.S. (CFTC / NFA),This is naïve and a blunder.

United Kingdom - FCA

Across the Atlantic is the FCA or Financial Conduct Authority, acknowledged as one of, if not "the," best regulators in the world. The FCA garners a lot of press coverage for protecting traders' funds by way of rules like segregated accounts (where your funds are held separate from the broker).

Many global brokers like FCA regulation, as it helps build their image - if you see "FCA-regulated" at the bottom of a broker's webpage, you can usually depend on it as a mark of credibility.

Europe - CySEC and BaFin

Some of the big names in Europe are:

CySEC (Cyprus Securities and Exchange Commission) - Cyprus is tiny, but respected in the European Union - which is why many brokers register here - CySEC regulation allows them to operate in all 27 member states in the EU.

BaFin (Federal Financial Supervisory Authority in Germany) - BaFin is regarded serious and professional with brokers - expects financial safety and an ethical code of conduct.

These regulators create benchmarks in Europe for brokers, however some carry stronger reputations than others.

Australia - ASIC

ASIC (Australian Securities and Investments Commission) is the last tier regulator I could think of out of Australia. ASIC expects brokers to work on good financial conditions in their operation where their clients are subject to honesty.Traders value ASIC most because brokers get some degree of protection but are also allowed some flexibility for competition. If you see ASIC regulation, it is usually safe to say you can sleep easier. 

Japan - FSA

In the Asia panorama, the FSA (Financial Services Agency) is known as being one of the strictest regulators. Japanese brokers are bound to very strict leverage limitations/rules. Another positive for the transparency. While this seems constraining, it is designed to benefit the trader community and protect them from unwarranted damage. 

For examples, Japanese brokers, like, could not just throw high leverage at traders to persuade them. As well, it limits their chances of just blowing their accounts up in a few weeks! 

Other Regulators of note

A few more names are worth knowing:

Why does this matter?

Picture this as you throw all your too many stuffed animals into a sack and hand the sack over to a broker.  Then a few weeks later, you try and check on your broker and their website is gone!In this circumstances there was really nothing you could could do without being regulated. The only positive result was that your broker was regulated with an authority that was well known, so now you know! If the broker was regulated with a regulated authority, you have at least been informed of the good potential of retrieving your funds.

Sure regulation does not offer any results you are guaranteed to make a profit or not - but it will give you peace of mind in knowing your broker cannot simply change the rules, vanish over night, or attempt to mismanage your deposits.

A Word of Caution

Not all regulators are really the same. There are many offshore "authorities" that grant licenses, often to brokers, that some feel are essentially worthless. Brokers often advertise having these licenses as a way to convince you about their belief and trust me the broker is not just without individual coverage from the license issue. 

As a trader, it is up to you to become educated, so you are aware of the regulators who are trustworthy. A good rule of thumb, if you haven't heard of the country, and it is not some small island somewhere in the ocean you will likely want to proceed with caution.

Summary

Trading in the Forex market has its own challenges and risks, however trading with a broker that has trusted regulation does greatly reduce the odds of falling into fraud. Think of regulation as your armor, while you still have to manage the fight yourself, it has at least mitigated the damage.

If you would like to learn more about safe trading and reputable brokers or the discussion of trust in general, check out the Learn section of Wikilix. It is a good way to continue to peel away the onion of knowledge while protecting yourself in a rapidly changing environment.