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Editor'S Choice - 2019

All About Forex Brokers Regulation

When a trader, especially a novice, opens an account in one of the dealing centers, he is unlikely to think about which regulator this license was obtained from. And, most likely, he will never think about it. But cases of unfair rendering of services by brokers and even refusals to pay the initial deposit are not so rare. This is where the question arises about the forex regulator, but, as a rule, it is already too late. In this article we will discuss the main regulators of the forex market, try to figure out which broker you can trust with which license, and which one is better to bypass it.

So, the activities of any financial intermediaries, which include Forex brokers and dealing centers, are subject to mandatory certification. When issuing a license, any of these organizations will post on its official website information about the company for which the license was issued, so you can simply and quickly check whether the license of your dealing center or forex broker is valid at the moment. So, any, even the kitchen broker, has a license. But, as you probably already guessed, not all licenses are equally useful. The regulator regulates the regulator, therefore Forex regulators and licenses that they issue are one of the most important criteria when choosing a broker.

Today, there are a very large number of different regulatory organizations, and sometimes the difference in their reliability is enormous. A license from one regulator can cost as much as a brand new Lamborghini, while another can sell its licenses at the price of toilet paper. Thus, it is quite difficult to obtain a license from the same English FSA regulator, so many third-rate kitchenettes go for it at the FSC (Financial Services Commission, Mauritius). You understand that there is little use from such a license.

So, let's go over the main world powers and regulators of different countries, evaluate the level of trust in them, analyze the functionality - what this regulator can do and what it lacks power for. We’ll also find out how difficult it is to obtain a license of one or another regulator and which brokers have already received it.

Australia

Australian Securities and Investment Commission ASIC

Full title:Australian Securities and Investments Commission
English name:Australian Securities and Investments Commission
Abbreviation:ASIC
Subordinate countries:Australia
Confidence level of traders:average

The Australian Securities and Investments Commission is the only regulator in the country. It is she alone who exercises all control over the activities of all financial markets, companies and private enterprises. Money transfers, purchase and sale transactions, investment, pension, deposit and other funds, as well as consulting services related to finance in one way or another - all this is also controlled by ASIC.

Story

The Australian Securities and Investment Commission appeared in 1998. At that time, several state oversight bodies for financial companies were operating in Australia at once. For banks, insurance, investment companies, funds, exchanges had their own regulatory organization. ASIC was called up as a single, modern state oversight body to replace old and inefficient ones. Since 2002, banks have been added to the area of ​​responsibility (ASIC acts as the central bank), and since 2009, the Australian stock market. That is, now absolutely all financial companies registered in Australia are required to obtain an ASIC license. With the increase in regulated companies, the ASIC itself also expanded. Now the organization has more than 2,100 employees.

Functions

  • registration of financial companies, issuance and revocation of licenses;
  • improving the financial literacy of the population and customers of financial companies in particular;
  • collection, control and provision of public access to information about financial companies;
  • identification of violations, detection of fraudsters, conducting their own investigations, bringing to administrative responsibility and referring the case to court;
  • development of laws in the financial sector;
  • fight against bureaucracy in financial companies.

At the same time, ASIC has the right to exchange information with other government agencies, including the Federal Police of Australia. But clients of financial companies, in order to receive any document from the ASIC registry, need to pay - on average about 20 Australian dollars for providing a certified copy. Here is such a public access.

Contacts

You can find information about a financial company here.

In order for ASIC to start resolving a financial dispute, it is necessary to file an appeal through a special section of the ASIC website.

You can also visit the office of the regulator in person. It is located at Australia, Sydney, Market Street, 100, 5th floor.

You can also write a letter using [email protected], or call +612 9911 2000. All communications must be in English, of course.

License

To obtain a license for this regulator, a broker needs to:

  • fill out an application form;
  • until recently, having a net worth of AU $ 50,000, which was the lowest threshold for brokers in the world. Since 2010, the amount has increased to a decent five hundred, and in 2014 the bar has risen to a respectable million dollars. There is only one small caveat - this requirement applies only to market makers. Regular ECN / STP brokerage companies must still have the same fifty;
  • a certain level of training and length of service (the regulator must be sure that everything will not break down there on the first day of work);
  • a certain certain level of technical equipment, allowing somehow to provide the very services that are mentioned on the site;
  • pay for registration services (ranging from 1.5 to 8 thousand Australian dollars).

Then you need to wait four weeks and now you are no longer just a forex kitchen, but a broker with a license.

Brokers with a license

Among the most well-known ASIC licensed brokers, one of the Fibo group subsidiaries is FXOpen (AFSL 412871), FXCM (AFSL 309763), Oanda (AFSL 412981) and ICMarkets (AFSL 335692), eToro (AFSL 335692), IronFX ( AFSL 417482), Ava Trade (AFSL 406684).

ASIC in action

All that I found interesting was just a few cases of large fines being imposed on companies that violated the requirements of the regulator. Among them, a fine imposed on BarclaysBank for actions that led to significant risks to client funds, as well as a violation of corporate law by withdrawing US $ 13.8 million from customer accounts.

Another interesting case occurred with Citigroup Global Markets Australia. The regulator imposed a fine on the company in the amount of thirty thousand US dollars. A trader at Citigroup Global Markets Australia placed an order to sell 119231 shares of Fantastic Holdings Limited through the Australian Securities Exchange. It is noteworthy that the price at which the trader placed the order was $ 0.024 per share, instead of $ 2.4. As a result, the price fell 99%. As part of the investigation conducted by the commission, it was revealed that the trader was using a new computer, which had not yet been configured with warnings and restrictions. Citigroup Global Markets Australia contacted the exchange and reported an error within 80 seconds. After that, the Australian Securities Exchange canceled the auction, which ended with the wrong price.

But in general, Citigroup Global Markets Australia regularly runs into various fines due to its crooked software. A few years before this incident, one trader trading through this company, instead of four, drove one into the order and bought shares for 1.85 bucks instead of 4.85, dropping the market by 61.86%. According to the results of the investigation, the Australian Exchange had to cancel nineteen transactions, as there were many who wanted to weld on someone else's jamb.

Here is another interesting case related to a certain Mr. Horsell, director of Horsell International and PSCHorsell Insurance Broker.In the period from 2007 to 2010, this guy transferred funds of clients aimed at paying insurance payments to his own bank account. At the same time, insurance products for customers, of course, were not purchased. The reprisal was bloody - the brow was simply forbidden to conduct activities in the field of financial services for life. Well, of course, I had to return the money.

In order to track possible market irregularities, such as transactions using insider information, as well as manipulation, ASIC specialists use the special IRESS service, which processes all market information online. This system tracks company news, market capitalization, index changes, option analysis. All company specific information is collected for later analysis. So masking your dirty tricks from the regulator is not so simple.

findings

ASIC is considered an average regulator in terms of efficiency. In the worst case, he is unlikely to return your money, does not have time to find it from scammers, does not prevent fraud. Nevertheless, if the broker did not disappear without a trace, but simply does not want to give you the honestly stolen earnings, there are many chances. But, if we are cheated in an Australian bank by mistake, the bank will definitely receive a large fine.

Belize

IFSC Financial Regulator

Full title:International Financial Services Commission
English name:International Financial Services Commission of Belize
Abbreviation:IFSC
Subordinate countries:Belize
Confidence level of traders:low

The Commission regulates the activities of financial institutions registered in Belize and providing services in international financial markets, in particular the activities of brokerage companies, trading in currencies and other financial instruments. The regulator's tasks include issuing licenses to financial companies, as well as monitoring compliance with the rules and requirements of the regulator. The IFCS itself reports to the Belize Securities Department. Belize is a member of the Caribbean Anti-Money Laundering Organization (CFATF) and UNOffshoreForum.

Story

IFSC appeared in 2007, when the Belizean government passed a law on the Commission’s work that regulates financial services such as international trading, trading in financial instruments, brokerage, loans and currency exchange. Moreover, the law does not say anything about whether one license gives the right to carry out all of the listed activities.

Functions

The main functions of the regulator include issuing licenses for activities related to the above types of financial services.

Contacts

The regulator is located somewhere in Belize. You can visit the official website of this organization, but you will not find the address there. Nevertheless, you can write a letter in human English and send it to the mailing address [email protected] or even chat with representatives by phone +501 822-2974.

License

The IFSC licensing procedure is quite simple. To gain access to work in financial markets, including Forex, a company must submit an application to IFSC and deposit $ 100,000 into an account with a local bank. Money should remain in the account while the license is valid. If all the requirements are met, the company will receive a license to engage in the selected type of activity. Although the procedure is simple, very few brokers have found it necessary to obtain a license for international currency trading operations. The explanation may be a rather large bank deposit, while for a regular brokerage license a deposit of $ 25,000 is enough. To get the right to exchange currency, you also need to pay an annual fee of $ 5,000.

Applicants for a license present the following documents to IFSC:

  • Statement on behalf of the company;
  • Biographical information about each director, shareholder, company officer.Information should be confirmed by relevant documents;
  • The fee for filing and considering the application is $ 500. After obtaining a license, the company is obliged to contribute annually, depending on the type of license, $ 2,500 or $ 5,000;
  • In addition, IFSC may request documentary evidence of the professionalism and integrity of the license applicant and its responsible persons;
  • A prerequisite for issuing a license is that the director from Belize should be listed in the structure of the company. A virtual office is also required.

The average term for obtaining a license is from 30 to 90 days from the time of submission of documents to IFSC.

But generally in Belize, doing business is pretty profitable. A properly structured company does not pay taxes in Belize. The costs of obtaining an IFSC license are:

  • Company registration and preparation of documents - $ 1,000.
  • Opening a bank account in Belize - $ 1,250.
  • License services - $ 11,000.
  • State fee - $ 500.
  • Total amount: $ 13 750.

In addition, each year the company must pay a maintenance fee and a state fee. The amount of payments is in the range of $ 1,000-2,000, depending on the authorized capital of the company. You also need to pay for director services and administration - $ 6,500. A license to work on Forex requires an authorized capital of $ 100,000 and annual contributions of $ 5,000.

Very funny regulator requirements for companies after issuing a license:

  • Company documents must be available to the regulator so that he can verify compliance with the rules. This is quite an adequate practice;
  • Attention! License holders cannot provide services to residents of Belize;
  • All structural changes must be consistent with IFSC. Here, too, no questions arise;
  • Companies can operate in any currency other than the Belizean dollar. Do not touch the Belizean dollar!

IFSC Brokers

The following brokers have an IFSC license: FX Choice Limited (IFSC / 60/191 / TS / 17), FBS Markets Inc. (IFSC / 60/292 / TS / 15), Roboforex Ltd. (IFSC / 60/271 / TS / 16), Alpari Limited (IFSC / 60/301 / TS / 17), TenkoFX (IFSC / 60/349 / TS / 15) and, of course, Gerchik & Co Ltd (IFSC / 60/400 / TS / 17). If you saw the familiar name of the broker, this does not necessarily mean that you are trading with a broker with this license. Under a familiar name, one of the daughters or branches may be hiding.

IFSC in action

Unfortunately, I did not find a single interesting story - not a single case has been recorded of IFSC imposing penalties on brokers for violating the rules of the regulator, but this is most likely simply due to the small number of licensed companies. The vast majority of broker companies do not have an IFSC license, but refer to it if necessary. The Commission’s official website has a “Notification List” listing scammers. On the same site you can find real companies regulated by IFSC.

findings

Given the very loyal requirements and low cost of the license, one can judge the value of such a license. In fact, only a poor broker is not able to obtain a license from this regulator, and the conditions for doing business in Belize perfectly stimulate brokers to acquire. On the other hand, frozen one hundred thousand dollars on deposit is a rather unpleasant drawback. So how valuable is an IFSC license? The level of its value is quite low, since the regulator, after receiving money for a license, practically does not intervene in the affairs of brokers. Most likely it will not be possible to return your deposit if something happens.

United Kingdom

Financial Regulators FCA and FSA

Full title:UK Financial Regulatory Authority
English name:Financial services authority
Abbreviation:FSA
Subordinate countries:United Kingdom
Confidence level of traders:tall
Full title:Financial Services
English name:Financial conduct authority
Abbreviation:FCA
Subordinate countries:United Kingdom
Confidence level of traders:tall

In the UK, officials are far from fools and have long realized that it is most effective to create a separate independent organization to combat all kinds of economic crimes. And they are very purposeful - they understood and created.They created the Financial Supervision Committee, which protects the effective and transparent functioning of the British financial markets, including Forex, prevents economic offenses and fraud attempts by exchanges and brokers and helps users of financial services receive high-quality and timely legal protection.

Story

The department was created in 1985, but received powers in their current form on December 1, 2001 after the adoption of the Act on financial services and markets. FSA reports to the Ministry of Finance and the Parliament of Great Britain. Funded by contributions from regulated companies, fees and taxes.

This English office belongs to the category of state regulatory authorities and oversees how all national investment, financial, insurance and banking companies conduct their operations. FSA appeared in 1997, replacing the previously existing Securities and Investment Management Limited (SIB), and a year later began to fulfill the functions of the Bank of England to regulate the banking sector and financial markets.

The history of this regulator has more than 30 years, however, only in 1998 there was one event that significantly expanded the powers of the regulator. The fact is that this year in the United Kingdom a reform was carried out to liberalize state power, within the framework of which the FSA transferred the powers of supervisory functions of the Bank of England.

In 2004, the financial regulatory authority began to control the mortgage business, and in 2005 - intermediation in general insurance. The FSA gradually expanded its "holdings", establishing its own order in more and more new markets. And now a storm in the blue in 2010 was the statement of the new Minister of Finance of Great Britain J. Osborne that the work of the FSA is a failure. He proposed the establishment of new structures under the control of the Bank of England. The head of the bank, Mervyn King, supported this initiative.

On April 1, 2013, the FSA was reorganized. Instead, two new regulatory organizations appeared: the Financial Conduct Authority (FCA UK) and the Prudential Regulation Authotiry (PRA).

Contacts

Until now, the site of the old FSA has not gone anywhere. There are all sorts of different archival information.

You can visit the official website of the regulator or, if you suddenly find yourself in London, you can go for a cup of tea in person at 25 The North Colonnade, Canary Wharf, London E14 5HS. Well, or you can just call: (+44) 207 066 1000. And the site also has a chat room like brokers tech support chats.

Functions

The functions of the FSA are as follows:

  • monitoring and auditing the activities of financial institutions;
  • compliance with fair and transparent business conduct, development of “healthy” competition between financial organizations, control over the advertising of financial services;
  • prevention of actions and manipulations that could violate both the interests of organizations and the interests of clients;
  • development and implementation of high standards and requirements for financial reporting;
  • disagreement investigations between organizations and private clients, protection of financial market participants;
  • immediate measures to eliminate the risks that may affect and violate the financial integrity of the country.

FCA decisions are binding, but in some cases they are appealed by the Financial Services and Markets Tribunal of the Department of Constitutional Affairs. Regulatory areas are determined by the Ministry of Finance, and the regulatory forms are administered by the FCA.

License

The number of Forex brokers regulated by FSA is not that big. The financial regulatory authority is considered “strict” and intractable in controversial situations, which does not add to its attractiveness in the eyes of companies planning to conduct their business in the financial markets.Perhaps this is one of the reasons why many brokers prefer to register not in the UK, but in other countries. However, the regulator does not have requirements for the place of registration of a financial company. That is, even a broker registered in Russia, for example, can obtain a FСA license. The license applicant must provide the entire package of constituent documents and about twenty different pieces of paper. A specific list of documents is constantly updated and can be viewed on the regulator's website, if interested. But in general, having studied the documents in the list of necessary, you can get a very clear idea of ​​the company. By the way, the minimum capital should be one million euros.

Favorite chips of the regulator include:

  • The company's responsibility is to maintain a certain level of capital liquidity;
  • Annual audits;
  • Regular reporting by the company to the regulator on financial transactions.

The FSA has the authority to audit licensed brokers. The task of inspections is to study the quality of broker's services. Brokers are required to have an independent representative on staff who is responsible for monitoring the observance of client rights. This specialist should resolve conflict situations and regularly report to the FSA.

FSA Brokers

FCA licensed brokers are: FXPro (FCA 509956), FXOpen (FCA 579202), Activ Trades (FCA 434413), LMAX (FCA 509778), FOREX.com (FCA 113942), OANDA (FCA 542574), FIBO Group ( FCA 532885), GKFX (FCA 501320), eToro (FCA 583263), Admiral Markets (FCA 595450), XM (FCA 538324), IronFX (FCA 585561), Fibo group (FCA 532885). Until January 2015 - Alpari UK.

FSA in action

Not so long ago, namely on January 15, 2015, the Central Bank of Switzerland canceled the fixed rate of the franc to the euro, which led to a sharp increase in the Swiss currency in the foreign exchange market, while causing unprecedented volatility. As a result of what happened, many brokerage companies failed to fulfill their financial obligations to customers and were forced to report insolvency (bankruptcy). Among these companies was a broker regulated by FCA - Alpari UK.

The company's customers were in a difficult, but still solvable situation. The first thing that FCA UK did was to post on its website a guide to what to do for clients of bankrupt companies. On the 4th day, an auditor was identified who was engaged in the current assessment of finances and had direct contact with the affected customers. As a result, Alpari UK customers were given the choice: either transfer to other companies under the jurisdiction of FCA UK (in particular, ETX Capital), to which they “transferred” all their customers, or completely return the funds “on hand”.

Under the Financial Services Compensation Scheme (FSCS), FCA UK guarantees the security of funds in the amount of up to £ 50,000. If the client has more than the specified amount on the account, then he can only rely on a compensation payment, but not on the entire deposit. In any case, only companies that are under the jurisdiction of FCA UK have such a program and no other regulatory organization in the world can boast of such.

findings

The confidence of traders in the FSA as a regulatory body is quite high, especially when you consider the position of the British pound in the list of the most popular world currencies. Therefore, choosing a broker regulated by FSA, you can be sure for the safety of your funds and quiet trading without interference. Recall also that some types of financial control in the English economy are carried out by another organization - the Bank of England.

British Virgin Islands

UK Financial Regulatory Authority BVIFSC

Full title:Financial Services Commission
English name:Financial services commission
Abbreviation:BVIFSC
Subordinate countries:British Virgin Islands
Confidence level of traders:low

The British Virgin Islands (BVI) is a very fashionable and popular offshore company, in which almost a third of the main investment companies and almost half of the brokers are registered.

Story

BVI is a small state in the Caribbean, consisting of 36 islands with a total area of ​​153 square kilometers and 25,000 English-speaking population. The main currency is the US dollar.And it’s also offshore, that is, taxes on business are minimal here. All financial companies registered in the BVI are required to register and obtain a license from the local Financial Services Commission. This is a state structure created in 2001, primarily with the goal of counteracting the legalization of money laundering.

Functions

BVIFSC operates in the British legal field, which is considered one of the fairest and most detailed and mandatory licensing and control of local banks, investment and insurance companies, as well as various kinds of brokers.

The main tasks of the Commission:

  • accounting and licensing of financial companies;
  • supervision of their activities;
  • ensuring the protection of the rights of clients of financial companies;
  • increase financial literacy of the population;
  • participation in financial lawmaking;
  • investigation of financial disputes.

BVIFSC has a whole department of 18 to investigate contentious issues. Upon receipt of a complaint, they study the essence of the issue, analyze the facts and, subject to legal norms, make a binding decision. If the financial company does not execute the decision, the license is revoked. In addition, according to the materials of the investigation, BVIFSC can go to court. Unfortunately, there are no funds to reimburse clients of financial companies in case of default in BVIFSC, and if under a license from the same British FCA a trader can count on adequate compensation for losses, in the case of a broker with a BVIFSC license, you can say goodbye to a deposit. The regulator also does not have functions to provide data on licensed companies. However, there is a rather mediocre registry. The regulator also publishes allegations of fraud and even sanctions. For example, I found a publication on the freezing of local assets of persons involved in the "attempt on the territorial integrity of Ukraine" 🙂

Contacts

You can communicate with BVIFSC specialists via electronic form on the official website or with a personal visit to: Australia, Road Town, Tortola, VG 1110. You can also call 284-494-1324 or send an e-mail to [email protected] .

License

Obtaining a BVIFSC license for a broker is not so simple. To do this, you need:

  • provide capital adequacy ratios;
  • insure the company’s activities;
  • keep clients' funds in reliable banks;
  • reveal the risk management system within the company;
  • provide an annual independent audit report;
  • provide financial statements.

Registration takes 20 business days.

BVIFSC Brokers

Brokers licensed by BVIFSC are not so few. Among them, the most famous are Fibo group (SIBA / L / 14/1063), Forex4You (SIBA / L / 12/1027), IFCMarkets (SIBA / L / 14/1073).

BVIFSC in action

Remember a broker like RVD Markets? He had a license in BVIFSC, so no one saw the money. That says a lot.

findings

BVIFSC is a mediocre offshore regulator that protects the rights, and most importantly, the money of clients of financial companies is worse than many other regulators. Therefore, if the broker has several "daughters", one of which has a BVIFSC license - feel free to choose the other. And if you can’t choose, the regulator will not save your deposit from non-trading risks.

Germany

German Federal Financial Supervisory Authority BaFIN

Full title:German Federal Financial Supervisory Authority
English name:The Federal Financial Supervisory Authority
Abbreviation:Bafin
Subordinate countries:Germany
Confidence level of traders:tall

BaFIN is subordinate to the German government and regulates services in the German markets, based on the regulation of the Federal Financial Supervision Act. The regulator works closely with the National Federal Bank, but the department is financed by controlled organizations. The main mission of BaFIN is to regulate the German financial market and ensure the cleanliness of brokerage services. He also informs consumers about various financial products, explains the rights and obligations of individuals in disputes with brokers. In case of violations of the law, the regulator has the right to impose sanctions against the broker until the liquidation of the company. The work of the body is aimed mainly at Germany. Therefore, all the major modern brokers who work, including in this country, are trying to get this license.

Story

BaFIN appeared on May 1, 2002, replacing the three previously existing control agencies BAKred (lending), BAV (insurance) and BAWe (operations with stock market instruments). Today, the Federal Office has two branches located in Bonn and Frankfurt. The organization has more than 1,000 employees who regulate 700 insurance companies, 800 stock market institutes and 2,400 credit organizations, that is, BaFIN combined the functions of all three disappeared departments.

Functions

Among the main goals set by BaFIN, it is worth highlighting:

  • maintaining the stable functioning of the national financial market;
  • licensing of dealing centers in Germany;
  • supervision and control of the German banking system, as well as monitoring of solvency and fulfillment of obligations undertaken by German financial institutions;
  • supervision of compliance with the standards for the provision of services provided by financial institutions and companies;
  • control over the reporting of brokerage houses;
  • conducting research activities aimed at detecting and reducing risks in the field of brokerage services.

Contacts

You can get all the information you are interested in on the official BaFIN website: www.bafin.de You can also contact the regulator by phone +49 (0) 228 99 80 80 83 8 or by using pigeon mail e-mail: [email protected] bund.de.

BaFIN License

Everyone knows the German pedantry with which they are suitable for the performance of any work. This also applies to the functioning of their state bodies. That is why BaFin is so highly regarded by traders, and brokers strive to become the owners of this certificate in order to prove their relevance and stand out from other companies. We see that BaFin's requirements are quite high, and more than 2,000 people who are part of the supervisory authority monitor their compliance. This makes this license one of the most reliable in the market. Moreover, if we are talking about working in the forex market, then BaFin is the distinctive feature of the best and largest brokers.

BaFIN Brokers

Here is a list of the most famous brokers who managed to get a BaFIN license: XM (BaFIN 124161). Fibo group (BaFIN 124031), Exness (BaFIN 133806).

BaFIN in action

Perhaps the most famous case of recent years is the dismissal of Jürgen Schremp from DaimlerChryslerAG. This dismissal was not disclosed in time to the public. This was due to the fact that Schremp held the post of director of the company and his dismissal should have negatively affected the position of the shares. As a result, a fine of 300 thousand euros was imposed for such misconduct. In principle, the regulator regularly conducts investigations in financial activities, which are mainly aimed at banks, as the most important institutions. But brokers are checked regularly and carefully.

findings

By and large, the German regulator perfectly copes with the tasks assigned to him in the field of monitoring the activities of dealing centers. This is facilitated by the extremely tight control system of the federal agency, which does not leave Forex brokers the opportunity to hide the facts of violation of the law. The main weapon of BaFIN is the sudden checks of organizations, and such a control tool perfectly shows itself in action.

The European Union

EU Directive “On Financial Instrument Markets” MiFID

Full title:EU Directive “On financial instrument markets”
English name:The Markets in Financial Instruments Directive
Abbreviation:Mifid
Subordinate countries:27 countries of the European Union and 3 countries of the economic zone of the region
Confidence level of traders:tall

The EU Directive “On Financial Instrument Markets” is a special EU directive that was developed to control financial transactions in the 27 member states of the European Union, as well as in three countries within the European Economic Area.This directive is part of the EU special plan, which provides for the creation of a single market for financial instruments. The directive contains certain requirements for European companies in financial markets, including reporting, storage of information and so on.

Story

For the first time, stock exchange operations in the EU were regulated in 1993 with the introduction of relevant documentation. By means of this, large banks and investment companies had the right to provide their services or to create branches in other countries for this. They could do this taking into account the availability of registration in their country and regulation by national financial departments. However, over time, the market has grown significantly and, given its transition to multilateral trading platforms, there is a need for the development of market regulation documentation. In the future, new rules were introduced into the current legislation, but Europe really took a huge step in the development of the investment sphere in 2002. This year, Denmark, as the chairman of the EU commission, took the initiative in convening a conference, where the ways of the most high-quality regulation of the financial sphere were to be considered. All this has given rise to the emergence of the European Union Directive “On Financial Instrument Markets”.

The main goal of the directive is to fully protect the rights of traders and all market participants. The directive was created in 2004, but it received its legal force only in 2007. Current MiFid rules are binding on all EU countries. In addition, countries that are part of the economic zone of Europe must also comply with all the rules of this directive.

In connection with a significant expansion of the sphere of exchange activity, there was a sharp need to supplement the current legislation. With this in mind, the European Commission of Finance, with the support of members of the G20, has made several changes to the current directive. Thus, in 2011, MiFid 2 appeared. It became a certain ideological continuation of the last document and introduced several important innovations. Among them are the creation of new legal provisions that are aimed at protecting the rights of investors.

Functions

The priority mission of the creators of the directive is to protect investor activity, trade cleanliness, efficiency and healthy competition in European financial markets. Thanks to the introduction of the directive, all conditions were created for the provision of operational reporting on any major transactions of investors. Today, MiFID defines the legal basis for the full protection of investor rights. The requirements of the document are mandatory for implementation in EU countries.

Unlike most regulators that are formed within controlled organizations, MiFID is a program document. This means that the MiFID licensing procedure is initiated by the competent authority of the state in which the brokerage office is registered. Thus, the state has the right to choose a regulatory body that will issue a license according to the main financial document of the European Union.

In addition, the directive assumes:

  • expanding the range of financial and investment services;
  • the ability to provide services at the interstate level through the opening of branches in different countries;
  • achieving maximum transparency in the stock market trading process;
  • regulation of brokerage companies (currency and stock dealing);
  • resolution of conflict situations in the relationship "broker-trader";
  • monitoring of operational reporting of controlled organizations;
  • organization of control of currency exchanges and markets that are not regulated today.

Contacts

All necessary information can be obtained on the official MiFID website: www.europa.eu

License

To obtain a certificate, a brokerage company must comply with a minimum set of requirements:

  • minimum authorized capital of $ 700,000;
  • strict structuring of the company for the uninterrupted provision of brokerage services;
  • the presence of an internal security system;
  • obligatory publication of data on conducted exchange operations;
  • staff of the proper professional level.

MiFID Brokers

Here is a list of the most popular brokers with a MiFID license: ACFX, XM, LiteForex, FXFINPRO Capital, Fibo Group, eToro, Ava Trade.

findings

Mostly professional, honest and reliable dealing centers are able to comply with the directive. Well, more or less. A trader can be quite sure of the safety of his capital, since the MiFID license guarantees the protection of the rights and interests of private traders. The regulator has serious levers of influence on brokerage companies, therefore, in case of conflict situations, you have every opportunity to prove your case and even get compensation.

Cyprus

Cyprus Securities and Exchange Commission CySEC

Full title:Cyprus Securities and Exchange Commission
English name:Cyprus Securities and Exchange Commission
Abbreviation:Cysec
Subordinate countries:Republic of Cyprus
Confidence level of traders:tall

The Cyprus Securities and Exchange Commission is a regulator very popular among brokers, combining the advantages of offshore registration and clear financial control according to EU standards. Let's check what Cypriot CySEC license is good for and which brokers use it.

Story

The regulator appeared in Cyprus in 2001 to control the financial and investment sectors of the country after the government passed the Law on Securities and Exchange. In 2008, Cyprus joined the European Union, and CySEC received expanded powers to monitor compliance with customer rights and legal regulations in regulated companies. At the same time, the country's legal framework changed, after which Cyprus for some reason ceased to be called a “tax haven”. The Cyprus regulator, by the way, has the status of a state.

Functions

The regulator can license companies from all European countries. Since the entry of Cyprus into the European Union, CySEC has been a full member of all European committees that deal with financial markets.

The main powers of CySEC:

  • licensing of investment companies;
  • monitoring the activities of brokerage companies and dealing centers;
  • regulation and control of the Cyprus stock exchange and all its exchange financial transactions;
  • monitoring issuers of securities;
  • analysis of the work of investment consultants, portfolio managers, monitoring the implementation of investment projects;
  • collecting information on companies subject to CySEC regulation;
  • Inspecting the activities of companies operating on the stock exchange and partnerships managing joint funds.

CySEC directives are published in the official press organ of Cyprus and on the regulator's website. In case of violations of the established rules, the commission has the right to apply administrative sanctions, impose fines and penalties, up to and including license deprivation.

Companies registered in Cyprus get huge benefits:

  • the lowest income tax in the European Union - 10% for Cyprus operations, 0% for operations outside Cyprus;
  • no dividend tax;
  • anonymity and confidentiality;
  • no income tax for foreign employees.

At the same time, CySEC has two key functions (Article 25 of Law L73 (I) / 2009):

  • issuance and revocation of licenses for financial activities;
  • control and regulation of the Cyprus Stock Exchange, the entire Cyprus Stock Market, the Cyprus Exchange Market (including Forex).

Contacts

Any questions, including refunds, can be asked at the CySEC office, located at 27 Diagorou Str. CY-1097 (Nicosia Center) in Cyprus. All information of interest can also be found on the official website of the regulator: cysec.gov.cy. You can also contact the company by e-mail [email protected] Naturally, you can write in English.

License

The regulator has the right to request information from law enforcement agencies, limit and terminate the activities of a financial company, intervene in its management or even initiate criminal prosecution. By the way, CySEC can also “freeze accounts”. That is, the set of tools is really wide and, in general, is almost as good as the most effective regulator in the world - the British FCA.

One of the main advantages of CySEC regulation for investors is insurance coverage from 13.6 to 22 thousand euros per client (depending on the type of activity and turnover of the regulated company). To provide a refund to clients of trust companies, the regulator organized a special Compensation Fund. Money for payments, if necessary, is taken from the annual membership fees of companies regulated by CySEC.

The CySEC Cyprus license is obtained by investment companies quite simply. For example, a broker needs:

  • fill out an application form;
  • pay for authorization services (from 3,000 to 130,000 euros);
  • disclose information about the structure and financial condition of the company.

Registration takes 1-3 weeks.

CySEC has recently introduced an accelerated licensing application review process. At the same time, organizations admitted to the expedited procedure must pay a fee of 1,500 -1,700 euros (depending on the direction and scope of activities).

Thus, the CySEC Cyprus license is very attractive for both investment companies and their clients. After all, it is easy and quick to get. At the same time, offshore registration allows you to save a lot on taxes. At the same time, protection from fraudsters is guaranteed by a reimbursement fund.

Offending companies are subject to the following penalties if they fail to comply with the rules established by CySEC:

  • Inappropriate accounting of customers and accounts - € 10,000;
  • Untimely transfer of customer funds - € 5,000;
  • Failure to comply with the company's internal charter - € 5,000;
  • Lack of customer classification information - € 5,000;
  • Use of unverified information on qualifications and experience of investors - € 10,000;
  • Lack of transaction accounting - € 5,000.

CySEC Brokers

Since the CySEC license is quite simple, almost half of the popular brokers have long received it: RoboForex (CySEC 191/13), 24option (CySEC 207/13), eToro (CySEC 109/10), Exness (CySEC 178/12), IronFX (CySEC 125/10), FXPro (CySEC 078/07), XM (CySEC 120/10), LiteForex (CySEC 093/08), TopForex (CySEC 242/14), Alfa Forex (CySEC 025/04). And a whole bunch of others. The Alpari broker, for example, until 2014 had a subsidiary company of Cyprus, which was regulated by CySEC. Now the "daughter" is liquidated. FXFinPro also had a CySEC license until November 2016.

CySEC in action

In 2013, the Cypriot financial market was in a very difficult position. Banks froze accounts, investor confidence declined, everything collapsed before our eyes. All this negatively affected not only the rapidly deteriorating economic situation of the country, but also the image of financial markets. CySEC at this difficult time decided to prohibit companies regulated by the committee from working with clients who are not EU citizens. Moreover, Cypriot companies generally lost the opportunity to open branches abroad to search for new customers. Naturally, such measures were met very negatively by organizations associated with financial markets. There was information that investment companies continued their activities outside Cyprus, but already without a license. Later, the decision was postponed to the fall of 2013, and then the situation was gradually resolved. Carried in general. Today, CySEC regulates the activities of Forex brokers, binary options, as well as all other financial market organizations. This regulator is very popular with binary options brokers. On the one hand, it is beneficial for organizations to open in Cyprus in terms of the tax base, on the other hand, their activities are regulated by the European Committee, and this inspires respect among potential customers.

findings

Despite the fact that Cyprus is still an offshore, the CySEC license has considerable weight. Especially when you consider the presence of a compensation fund by the regulator.

Mauritius

Mauritius FSC Financial Services Commission

Full title:Mauritius Financial Services Commission
English name:Financial services commission
Abbreviation:Fsc
Subordinate countries:Mauritius
Confidence level of traders:average

Despite the fact that Mauritius is an offshore zone, they are quite serious about the issue of licensing brokerage companies. Therefore, you should not despise the license from the FSC. Mauritius Financial Services Commission - Regulator of the non-banking financial services and business sector.

Story

FSC was founded in 2001 to regulate, control, supervise and license in these sectors. The organization's goal is to strike a balance between business development and regulation. In 2007, the legislative framework of Mauritius was revised, amended in terms of risk supervision and control in the field of financial services. The changes were aimed at approaching international norms and standards.

Functions

The main functions of FSC are as follows:

  • promoting the development, efficiency and transparency of financial institutions and markets in Mauritius;
  • contributing to the eradication of crime and financial abuse in order to protect the rights of investors;
  • ensuring the reliability and stability of the financial system of Mauritius;
  • streamlining management in the field of financial services and business;
  • development of policies aimed at ensuring fairness, efficiency and transparency of financial markets in Mauritius;
  • exploring new opportunities for development in the financial services sector to achieve economic stability and create jobs;
  • setting goals, policies and priorities for the development of the financial services sector and global business.

Contacts

You can find all the information you need about the work of the regulator on the official website: www.fscmauritius.org

License

FSC licensed companies must comply with regulatory requirements. The regulator's rules on financial services apply to all licensed companies. When deciding on a license, the regulator is guided by a complete set of criteria for all applicants. The organization takes measures to prevent abuses in the investment business and financial fraud in the field of non-banking financial services. Also, within the framework of international norms and standards, the fight against money laundering and the financing of terrorism is being waged. In accordance with the requirements of the law, FSC protects consumers and investors. The organization promotes access to financial services by disseminating financial information about the benefits and risks of financial markets.

findings

In principle, you can trust FSC licenses, but this license does not give serious advantages when choosing a broker. The organization is likely to solve some controversial issues, but if suddenly the broker ordered a long life, you definitely won’t see your money again.

New Zealand

FSPR Register of Financial Services Providers

Full title:Register of Financial Service Providers
English name:Financial Service Providers Register
Abbreviation:FSPR or FSP
Subordinate countries:New Zealand
Confidence level of traders:average

FSP alone does not offer much protection against fraudsters, so financial companies with such a license should be wary. Especially if the parent company that provides brokerage services is registered in this organization.

Story

At the end of 2008, New Zealand authorities passed a law on the registration and resolution of disputes of financial companies. After making a number of amendments and resolving organizational issues in 2010, the FSP earned, registration in which became mandatory for all financial companies, including banks, brokers and even financial consultants. FSP is a service subordinate to the New Zealand Department of Business, Innovation and Employment.

Functions

The tasks of this regulator include:

  • creating a register of intermediaries in financial markets;
  • ensuring transparency and accessibility of information about financial market participants to customers;
  • Prevention of market penetration of representatives previously convicted of financial fraud;
  • New Zealand's assistance in implementing international safeguards against money laundering and financial crime.

The FSPR does not have enough authority to conduct fundamental audits of all companies subject to regulation, but the dispute resolution is at a fairly high level. The work of the FSPR is controlled by the Ministry of Finance of New Zealand, which allows us to hope that the regulator will not have corruption, since full protection of investors depends on this interaction. FSPR-regulated financial services market intermediaries must become members of the Dispute Resolution Program (FDR).

The New Zealand regulator has the right to freeze the assets of companies. In the event of a conflict, the FSPR may make payments to investors from these assets, but in practice there have been no such cases. According to the regulations, the client first notifies the broker about the violation of rights that has occurred. In response, the broker is obliged to indemnify, but in cases of bankruptcy or fraud, the loss regulator itself does not compensate. Recently, the FSPR has significantly tightened the rules, in particular, increased the required capital of the licensed company.

Contacts

The service itself is located at New Zealand, Auckland, Albert Street 135, floor 18. You can also contact the company by phone: +64 3 962 6162.

License

Obtaining an FSP license is very easy. To do this, you need:

  • fill out an application form;
  • pay a fee of $ 5,284.25 (plus $ 61.33 annually);

Registration takes 20 business days.

FSP Brokers

Until June 2015, FSP was licensed by FX-Trend Ltd. Until February 2015, FSP was also licensed by TenkoFX Ltd. Until July 2015, Alpari and FXOpen had a FSP license.

findings

This regulator is likely to resolve disputes arising between the trader and the broker. It is not necessary to count on a refund in case of bankruptcy of a broker.

FSCL Dispute Resolution Service

Full title:Dispute Resolution Service
English name:Financial Services Complaints Ltd
Abbreviation:Fscl
Subordinate countries:New Zealand
Confidence level of traders:average

This is a non-profit and non-governmental company. Its main goal is to resolve disputes between financial companies (except banks) and their customers. Moreover, the FSCL is an alternative to the court.

Story

The independent FSCL was established in 2008 in New Zealand based on the Dispute Resolution Scheme developed and approved by the Department of Consumer Affairs. The priority goal of FSCL is the fastest and fairest resolution of conflict situations between dealing centers and private traders.

Functions

The organization does not compensate for anything itself - if necessary, it obliges one of the parties to compensate for the damage to the other side (within $ 200,000). It is also possible to recover funds through the FSCL and for non-pecuniary damage (up to $ 500). Accordingly, in case of bankruptcy of a broker, this organization will not help you.

The regulator will necessarily consider the customer’s complaint when:

  • FSCL member company has been seen as breaching obligations to customers;
  • the broker provides false information and offers knowingly unprofitable trading systems;
  • the dealing center hides the significant terms of the user agreement;
  • a violation of the industry code was recorded;
  • violation of the FSCL contract is noted;
  • Violations in any aspects controlled by the regulator have been noticed.

However, there are a number of situations where the regulator refuses to accept a complaint from a private trader. FSCL does not deal with situations in which:

  • a complaint is filed against a broker who does not have an FSCL license;
  • trade conditions of specific companies are disputed;
  • claims are made to the organizational structure of the dealing center;
  • the complaint is re-submitted without providing facts that had to be submitted in the initial appeal;
  • to resolve the situation, it is more relevant to contact the courts;
  • the conflict occurred earlier than April 1, 2010;
  • a trader requires compensation of more than $ 200,000 in cash.

In addition, to submit a complaint, the trader must have extracts from the trading account confirming the availability of funds in the broker's account. The process of conflict resolution is usually 75 working days, however, in difficult situations, the procedure may take up to 90 working days. It should be noted that filing a complaint with the FSCL will not burden the trader with any costs and the services of the regulator’s specialists are completely free.

Contacts

Check membership in the organization of a financial company at this link. You can file a complaint here. The planned term for the settlement of any dispute (complaint) is not more than 75 working days. The FSCL is located at New Zealand, Wellington, 101 Lambton Quay, Floor 4. You can also contact the organization by phone: 0800 347 257 or email: [email protected] More information can be found on the official FSCL website: fscl.org.nz.

License

The cost of membership in the organization is from $ 100 to $ 15,400 annually, depending on the turnover and the number of company employees.

FSCL Brokers

Brokers with a license from this organization are a couple of dozen quite unpopular.

findings

Using the services of this organization, clients of dealing centers can still resolve the controversial situation. The powers of this department are not as wide as investors would like. The regulator considers a rather narrow range of problems, assumes limited responsibility, while the number of brokers controlled by it is too small. This is a serious instance, but it cannot provide full protection to private traders, and clients will have to compete for compensation in case of disputes.

FMA Financial Markets Authority

Full title:Financial Markets Office
English name:The financial markets authority
Abbreviation:Fma
Subordinate countries:New Zealand
Confidence level of traders:low

FMA is a non-governmental service, which was established in 2011 to improve the transparency of the financial sector and improve financial literacy in general. Something like the Russian self-regulatory organization CRFIN.

Story

FMA was established in 2011. The official main objective of the FMA is to ensure public confidence in the financial markets and support the growth of the capital base in New Zealand.

Functions

The FMA investigates its supervised companies when complaints arise. For example, a broker cheated on his client and the client complained to the FMA. The FMA will register the complaint and contact the broker to discuss options for resolving the conflict. In this case, the broker may promise to resolve the conflict in one way or another and the FMA will transmit this information to the complaining client. If the issue is not resolved within 3 months, the FMA may revoke the license (which we will not know about, because the registry is not public). The most useful thing is that the FMA will make a public warning about a dishonest broker on its website. Here it is, for example. In short, help, like a goat’s milk.

Contacts

The organization is located at: New Zealand, Auckland, Takutai Square 2, floor 5 (sign on the Ernst & Young building. You can also contact the company by phone: (09) 300 0400.

License

Formally, the same brokers need an FMA license to carry out activities. However, the register of licenses is not public. More precisely, the list shows only certain categories, not including brokers. The cost of the license varies from $ 2 139 to $ 10 695.

FMA in action

As I mentioned above, the FMA writes on its website various warnings regarding brokers that have come to terms. So, for example, there you can find information about Forex Trend.Another story was related to the broker DGMFX. The regulator does not publish a list of brokers licensed by it, which they used. The broker DGMFX indicated the presence of an FMA license, although in fact they had it expired on November 7, 2014. What did the regulator do? Yes, as usual, wrote a warning on his official website. There are several more examples where brokers hid behind a non-existent FMA license. And the reaction has always been the same. Why not? The client cannot verify this information, and all that threatens the broker for such pranks is a couple of lines on the regulator’s website about how bad he is. Yes, by the way, DGMFX changed the regulator to FDR, also from New Zealand. And all is well with them.

findings

FMA can be equated to plain paper. If something happens, they will practically help you nothing, at the most - they will post an article on their official website, which your broker is not well done and will threaten him with a finger. And that’s all. Your question is unlikely to be resolved; you definitely won’t see the money.

FDR Financial Dispute Resolution Service

Full title:Financial Dispute Resolution Service
English name:Financial dispute resolution service
Abbreviation:Fdr
Subordinate countries:New Zealand
Confidence level of traders:tall

The Financial Dispute Resolution Service was founded recently - on June 30, 2014. Its main goal is to help resolve disputes between financial companies and their clients.

Story

The date of foundation of the service is June 30, 2014. Accordingly, this is still a very young organization.

Functions

To effectively resolve disputes, the service uses a three-level complaints processing system. First, the regulator collects and exchanges information with parties interested in resolving a dispute. Often this is enough to solve the problem. Let's say the company and the client did not understand each other. Customer filed a complaint. The parties once again discussed everything in detail, exchanged reasoned opinions and agreed. But if at this stage no dispute has been resolved, the process automatically proceeds to the second level. Now FDR collects all the information in all ways available to him. Including the service may request information from government authorities in New Zealand, if necessary. Next, the FDS analyzes the information to evaluate the dispute. At the same time, the FDR is trying to organize contacts between the disputing parties and acts as an intermediary between them, in every way pushing them to a truce. If the parties at this stage also fail to reach mutual understanding and reach an agreement, then the dispute moves to the third level. FDR offers the parties its verdict on the dispute. If, however, this decision does not suit the parties, the service issues its opinion, which is mandatory for all participants in the program. If the party who filed the complaint is not satisfied with the result, then the complaint is closed, but it becomes possible to send it to the court.

Contacts

The service is located at New Zealand, Wellington, Featherston Street 109, floor 9. You can also contact the regulator by phone: +64 4 910 9952.

License

I practically did not find information about how easy or difficult it is to obtain a license for this regulator. But it seems like everything is serious enough there. Nevertheless, such a license was, for example, in Forex Trend.

Brokers with a license

As I said, Forex Trend and DGMFX had the FDR license. Well, and a bunch of not the most popular brokers.

FDR in action

In critical situations, such as a default, the FDR itself pays compensation for complaints for the controlled company. The maximum amount of compensation is $ 200,000. Money is taken from membership fees, which range from $ 174 to $ 17,400 per year. For PAMM brokers, contributions will be approximately $ 2,500 per year. Agree, this is not enough to ensure payments. Therefore, in truth, receiving compensation is not so simple, and I do not know about such cases.At least from the same forex trend of money no one came.

findings

The office is serious enough to resolve sometimes conflicts and disputes between adequate brokers and their clients. In the event of a bankruptcy of a broker, you most likely will not see money, even though there is a certain compensation fund.

Russia

KROUFR Financial Market Participants Regulatory Commission

Full title:Financial Market Participants Regulatory Commission
Abbreviation:KROUFR
Subordinate countries:Russia
Confidence level of traders:average

The Commission for the Regulation of Relations of Financial Market Participants is a non-profit organization that regulates relations between Russian participants in financial markets. The main objective of KROUFR is the resolution of disputes and the monitoring of the fulfillment of obligations by brokers and dealing centers.

Story

Functions

The organization is engaged in:

  • dissemination of information about financial markets;
  • certification
  • market analysis;
  • seeking opportunities to minimize risks in the implementation of financial standards.

The Commission accepts for consideration claims and applications from existing traders, regardless of their membership in KROUFR. For companies - members of the Commission, decisions are binding. Other companies may be guided by the recommendations of KROUFR at their discretion. The Commission does not accept applications requiring expert reviews and investigative actions. Also, cases of material compensation for moral damage, lost or lost profits are not considered. If the investor has provided the trader with access to his accounts, claims for non-fulfillment of contractual obligations are not considered. Also, claims that have already been considered by investigative bodies, prosecutors and other government agencies are not accepted.

Contacts

You can find detailed information about the work of the regulator on the official website of KROUFR: www.kroufr.ru

License

This institution does not issue brokers a license to provide their services. In addition, the described regulator cannot stop the dealing center and apply sanctions against it, even if fraud is proven. For many companies, the decisions of this commission will be in the nature of recommendations; accordingly, the dealing center does not undertake to comply with the regulator's decisions.

KROUFR Brokers

Among brokers with membership in KROUFR, the following can be distinguished: Fibo Group, Admiral Markets, Alpari, Teletrade.

Actions

In the forums of the regulator (if the organization can be called a regulator at all), different graters and battles are constantly going on between brokers and their clients. Yes, the information is public and a lot of interesting things can be found and read. Well, all sorts of scandals, intrigues, investigations are there - everything, as you like. Nevertheless, pouring mud on each other is the whole thing and is limited. Sometimes the broker still meets the client and makes some concessions. Sometimes it is possible to agree on both sides peacefully and the question is closed.

findings

Today, KROUFR cannot guarantee full protection of the interests of traders and brokers, although the attempt to create the likeness of a regulatory state organization deserves respect. As you can see, KROUFR is a commission engaged in monitoring the activities of financial companies within the currency market and resolving various disputes between brokerage firms and their clients. In fact, the organization has been operating for a long time and has resolved many disputes, both in favor of companies and in favor of customers. It is worth noting that the advisory nature of the KROUFR decision does not impose absolutely no obligations on a third-party company, it is mandatory only for members of the organization. That is why the regulation of KROUFR is often underestimated and put in the rank of medium or even lower in importance regulators.It is difficult to challenge this opinion, but in the absence of an official regulatory body, even such an approach is worth a lot.

Russian Association of Financial Market Participants RAUFR

Full title:Russian Association of Financial Market Participants
Abbreviation:RAUFR
Subordinate countries:Russia
Confidence level of traders:low

The Russian Association of Financial Market Participants (RAUFR) is a non-profit organization that voluntarily brings together responsible participants in the financial markets of the Russian Federation.

Story

RAUFR was founded in 2008 as a regulator of relations between a broker and traders, and today the association acts as a representative of its participants in negotiations with other organizations, private traders and states. In addition, the association is considered an independent arbitration court.

Functions

RAUFR carries out the following activities:

  • licensing and certification of brokerage services;
  • research, consulting and training;
  • insurance of its members;
  • work in the field of banking technology development;
  • currency speculation and trading on the stock exchange;
  • increasing the level of information security;
  • settlement of legal aspects.

Contacts

Official website of the organization: www.raufr.ru.

License

The RAUFR certificate is a confirmation that the brokerage office is interested in honest business conduct, which means that the trader receives another guarantee of the safety of his funds. In addition, the association considers complaints from traders to dealing centers that are not members of the Russian Association of Financial Market Participants. The decisions of the arbitration court are advisory in nature, but many brokerage companies heed the advice of the association.

Brokers with a license

I found only two brokers with RAUFR certificate: LiteForex and InstaForex.

findings

RAUFR is a non-governmental organization that does not have its own legislative base, therefore, there are no real levers of pressure on unscrupulous brokers. In case of disputes in the broker-trader relationship, there is no guarantee that the RAUFR will be able to resolve the conflict in favor of the trader.

Federal Service for Financial Markets of the FSFM

Full title:Federal Service for Financial Markets
Abbreviation:FFMS
Subordinate countries:Russia
Confidence level of traders:low

This service is a government agency and reports directly to the government. Its purpose is to ensure the security of investment and to protect the rights of an individual trader in financial markets. The Federal Financial Markets Service is an executive body, however, it is directly involved in the adoption of legislative acts by providing recommendations to the state apparatus - the Ministry of Finance.

Story

The Federal Financial Markets Service of Russia was formed by Decree of the President of the Russian Federation dated March 9, 2004 No. 314 “On the System and Structure of Federal Executive Bodies”. In accordance with this Decree, she was transferred the functions of control and supervision of the abolished Federal Commission for the Securities Market, the functions of control and supervision in the field of financial markets of the abolished Ministry of Labor and Social Development of the Russian Federation and the functions of controlling the activities of exchanges of the abolished Ministry of the Russian Federation in antitrust the policy and support of entrepreneurship, the functions of control and supervision in the field of formation and investment of pension savings funds of the Ministry of Finance in the Russian Federation.

Functions

In its activities, the Federal Service for Financial Markets:

  • Prepares normative acts and recommends them to the Ministry of Finance of the Russian Federation;
  • It controls the activities of companies operating in the financial markets, except for audit firms and banks.

Contacts

You can see the list of broker companies licensed by the Federal Financial Markets Service on the organization’s official website: www.cbr.ru.

License

The Federal Service issues licenses for the right to engage in professional activities in the financial markets. The license confirms the fact that the company meets all the necessary selection criteria. So, the Federal Service issues all the necessary documentation to conduct its activities in this area. The license is valid for 3 years, and after this period, the broker, the applicant must re-submit the application to re-obtain permission.

FFMS licensed brokers

Brokers licensed by the Federal Financial Markets Service are: Admiral Markets, Alfa-Forex, Finam, Exness, Alpari, Grand Capital, InstaForex.

findings

Having a government license for the dealing center of your choice is quite good. It is important, however, to understand that before the Federal Financial Markets Service is officially appointed the regulator of the Forex market in Russia, its field of control ends with the stock and derivatives markets of the country, therefore, if you trade currency, unfortunately, this service will not help you in case of problems with the company. In this situation, even the unofficial KROUFR will have more weight, so be careful.

Center for Regulation of Relations in the Financial Markets

Full title:Center for Regulation of Relations in Financial Markets
Abbreviation:TSROFR
Subordinate countries:Russia
Confidence level of traders:average

There is no official regulator in the post-Soviet space, but there are non-profit regulatory structures that oversee the activities of financial exchanges. One such regulator is the Center for the Regulation of Relations in Financial Markets (CROFR). The organization is designed to protect the interests of investors. The CROFR monitors the currency and futures markets, and also participates in resolving conflicts between traders and brokers.

Story

CROFR (Center for the Regulation of Relations in the Financial Markets) is a non-profit organization that has been regulating the forex market since 2011. The main mission of the CROFR is to provide traders with maximum security for transactions in the foreign exchange market.

Functions

The obligations of the CROFR:

  • monitoring brokers and certifying them if they meet the requirements;
  • coordination of the activities of market participants;
  • warning of possible risks for market participants;
  • development and implementation of technological systems for the supervision of exchange activities;
  • creation and implementation of a compensation fund for investors affected by dishonest brokers;
  • operational counseling;
  • comprehensive assessment of the activities of companies providing services in the financial markets.

Contacts

On the official website of the CROFR you can find a list of certified companies: www.crofr.net.

License

In order to receive the CFROF certificate, you must go through the following procedures:

  • Apply for a certificate in the prescribed form;
  • Submit a package of documents (certificates and certificates), a sample contract for working with clients;
  • To draw up an agreement taking into account the new working conditions, in accordance with the certificate;
  • Pay for a licensing service.

The application is considered within five business days, after which a decision is made to obtain a license. Before issuing a license, the CROFR collects a dossier for the applicant company and conducts an performance assessment. The regulator finds out how the applicant complies with regulatory requirements. A license is issued only with confidence in the integrity of the company.

Requirements for issuing a license:

  • Presence on the market for more than two years;
  • At least 2,500 current trading accounts;
  • The minimum number of registered trading accounts is 5,000;
  • Registration with other regulators is desirable (a condition is optional);
  • Trading regulations and documents warning investors about risks;
  • Taking measures to combat money laundering;
  • Several representative offices in different countries.

CROFR Rules:

  • Implementation of decisions of the Center’s management;
  • Assistance in resolving conflicts;
  • Regular payment of membership fees;
  • Assistance in carrying out inspections of the CFRF (no more than once a quarter);
  • Inadmissibility of actions harmful to the work of the CRRC.

TSROFR Brokers

The list of brokers licensed by the CFRF is as follows: Grand Capital, IQOption, Alfa-Forex, Binomo, TurboForex (CRF RU 0395 AA Vv0094)

findings

Investors may turn to the regulator for illegal actions of a broker certified by the Center. When making a claim, it is necessary to inform the CROFR of information about yourself, your account and describe the essence of the problem. The claim must be submitted within one month from the moment of the event. Evidence of fraud or other misconduct must be provided. The center will consider the application within a month, and if the facts are confirmed, compensation will be paid. In such cases, the broker is deprived of the license and blacklisted. The degree of confidence of traders in the CFRF is average, as The Center does not constantly check its participants, but only guarantees their compliance at the time of entry or after the audit, which can be carried out no more than once a quarter. At the same time, a list of recent company reviews on the organization’s website was not found.

Center for the Regulation of OTC Financial Instruments and Technologies CRFIN and the National Association of Forex Dealers NAFD

Full title:OTC Financial Instruments and Technology Regulation Center
Abbreviation:CRFIN
Subordinate countries:Russia
Confidence level of traders:average
Full title:National Association of Forex Dealers
Abbreviation:NAFD
Subordinate countries:Russia
Confidence level of traders:average

The OTC Financial Instruments and Technology Regulation Center is a self-regulatory organization. The main task of CRFIN is the introduction of retail over-the-counter Forex into the Russian finance industry. Since the beginning of 2016, CRFIN was renamed NAFD - National Association of Forex Dealers.

Story

CRFIN was registered on December 20, 2010, and since June 15, 2011 CRFIN has the status of a self-regulatory organization. Since 2016, CRFIN was renamed NAFD - National Association of Forex Dealers.

Functions

The center carries out activities to develop and implement standards, as well as the rules for the functioning of the companies included in it. In addition, the NAFD forces monitor their compliance, analyze the organizations participating in SROs. Thanks to the NAFD, many principles and rules of professional ethics have been developed for companies providing services in the financial markets of Russia, and the standards of conduct for the members of the Center have been unified.

License

All certificate applicants are divided into several categories, depending on the volume of fixed capital: Group A. This category includes the largest financial entities that have capital with a total amount of at least 15 million rubles. Group B. It includes the rest, small companies. Here the minimum threshold of capital is already set, which is 50 thousand rubles. As you can see, almost anyone can become a member of the NAFD, since the restrictive minimum amount of 50,000 is not an obstacle for all large companies, since brokerage capital is much higher. The NAFD certificate is not a mandatory document that is obtained on a voluntary basis. The conditions that apply to the recipients look rather soft, so virtually any broker who has enough finance, and who conducts his business honestly and openly, can get a certificate without any problems.

Brokers licensed by NAFD

At the moment, the list is as follows: Alpari, Forex Club, InstaForex, RoboForex, AMarkets, 24option, Grand Capital, Exness, FreshForex. And the certificate was from MMCIS.

findings

CRFIN recommendations for a participating company cannot be binding, as is the case with the state regulator Forex. Therefore, the degree of confidence cannot be the highest.

United States of America

FINRA Financial Services Regulatory Services

Full title:Financial Services Regulatory Service
English name:Financial industry regulatory authority
Abbreviation:FINRA
Subordinate countries:USA
Confidence level of traders:tall

FINRA is the largest independent regulator of the US financial markets. FINRA sees its mission in protecting the rights of investors. The regulator controls about 4,250 brokerage firms, 162,155 branches and 629,525 registered holders of securities.

Story

NASD (National Association of Securities Dealers) - The National Association of Securities Dealers, was founded in 1939 and registered with the SEC after the adoption in 1938 of amendments to the Law on Securities and Exchange. This allowed the NASD to control the behavior of its members, subject to supervision by the SEC. In 1971, NASD launched the new computerized stock trading system, the National Association of Securities Dealers. In 1998, the NYSE and AMEX exchanges merged. Two years after significant recapitalization, an independent NASD entity emerged. In July 2007, the new self-regulatory organization succeeded NASD, and FINRA was formed as a result of the merger.

Functions

The organization employs about 3,000 people, with 20 branches located in different parts of the United States of America. The regulator has the largest forum of 73 sites in the United States, as well as in London and Puerto Rico. Since 2003, to increase the level of investor knowledge, the largest Education Fund in the USA has been operating, in which at least $ 63 million has been invested.

The main functions of FINRA:

  • qualifications of brokers;
  • issuance of licenses to brokers;
  • development and implementation of individual instructions for each broker;
  • work with investor complaints;
  • regulatory advice;
  • conclusion of contracts for market regulation with exchanges;
  • monitoring compliance by participants in the foreign exchange market with federal legislation;
  • information and education through the FINRA official website, forums and media;
  • familiarization of investors with the principles of security when investing;
  • initiating disciplinary proceedings against firms or individuals;
  • claim for damages in the form of fines in favor of affected investors;
  • suspension of the broker, until the complete liquidation.

Contacts

You can find out about licensing the selected broker by the FINRA regulator on the official website: www.finra.org.

License

FINRA regulates trading in stocks, corporate bonds, futures, securities, currency, and options. All firms that are not regulated by other self-regulatory organizations are required to be members of FINRA.

FINRA in action

FINRA runs the largest arbitration forum in the United States to resolve disputes between clients and member firms, as well as between brokerage firms and their employees. NASD and NYSE did not have these functions until they merged in FINRA in 2007. Now almost all agreements between investors and their stockbrokers include binding arbitration agreements. As a result, investors and brokerage firms were able to waive their right to litigation. Arbitration cases are the usual procedure for resolving a claim and are brought in pre-trial procedure. Despite the fact that arbitral awards are sometimes disputed, courts almost always recognize their fairness and uphold their decisions.

findings

It's no secret that fraud, unfortunately, has become an integral part of the trading process. So, the described regulator is endowed with certain powers and has the right to apply sanctions against violators. Has the right to impose a disciplinary sanction followed by a fine both for the organization as a whole and for an individual employee on staff. Obligates violators to indemnify affected customers. Has the right to stop the organization for a while.In case of serious violations, the regulator, empowered, has the right to make an act of liquidation of the company that violated the regulations. If necessary, this regulator can refer the case of the violator to the SEC if violations have been discovered that fit the criteria of a criminal offense. The presence of a FINRA license at the dealing center of your choice is a strong argument in favor of its reliability and honesty, and therefore the trust of traders in the organization is quite high.

US National Futures Association NFA

Full title:US National Futures Association
English name:National Futures Association
Abbreviation:Nfa
Subordinate countries:USA
Confidence level of traders:tall

The NFA is directly subordinate to the United States Commodity Futures Trading Commission (CFTC), a government entity. This can be considered a guarantee of the reliability of the regulator. A broker who violates the rules and requirements may be fined and deprived of an NFA license.

Story

NFA is one of the most respected forex regulators. The US National Futures Association was founded in 1976 to regulate the foreign exchange and futures markets. The status of the regulator was officially assigned by the NFA in 1982. The National Futures Association specializes in licensing brokerage companies operating in the financial market. NFA licenses can only be obtained by brokers who comply with the established rules and meet the requirements of the regulator. In 2001, the NFA was the first to distribute licensing to online Forex brokers and exchanges.

Functions

Any client of a broker company licensed by the NFA, in the event of a dispute, may contact the regulator for help. The NFA conducts a thorough investigation of all the facts stated in the statements and makes a fair verdict. If gross violations of regulatory requirements are found, the company may be fined up to $ 2,000,000 or lose its license. The NFA works closely with US government agencies such as the FBI and others. The regulator has all the authority to transmit information about major frauds, cases of tax evasion and other offenses to the appropriate authorities for further investigation.

Contacts

To learn about brokering regulation in the NFA, visit the official website: www.nfa.futures.org.

License

An NFA license is issued if the broker meets the following criteria:

  • Mandatory office availability. The area of ​​the premises may not be less than established by the requirements of NFA;
  • Qualified staff. Top managers and some employees must be certified on US exchanges and have experience in exchange trading and the financial sector;
  • Adequate material and technical base, reliable access to the Internet, etc .;
  • Open information about the authorized capital of a broker company, its financial situation.

NFA Brokers

Among brokers with this license, FOREX.com (NFA0339826), eToro (NFA0367140), Oanda (NFA0325821).

NFA in action

In 2010, the regulator recorded violations committed by Gain Capital Group LLC when using margin and price slippage in favor of a broker. As a result, the brokerage company was fined $ 459,000 and ordered to compensate for the financial losses of customers.

In 2011, FXCM was fined $ 2 million for frauds with compensation for investors' orders. After this incident, FXCM lost the right to use slippage and liquidation of margin positions.

In 2012, the NFA recorded violations in the technical control of the launch of the trading system committed by an Alpari subsidiary in the USA. The company was fined $ 200,000.

findings

Only a few Forex brokers were able to obtain an NFA license, but the holders of this document are included in the top league of brokers and dealing centers. If all regulators worked just as clearly, not paying attention to the influx of money for licenses, for “closing their eyes” to complaints, and so on, then Forex would be more transparent than the baby’s tears all over the world. Any company, before opposing a client with a desire to violate his rights, would touch his “fifth point” and think whether she could withstand an exciting adventure that would be provided by the regulator or not.

SIPC Securities Investor Protection Corporation

Full title:Securities Investor Protection Corporation
English name:Securities Investor Protection Corporation
Abbreviation:Sipc
Subordinate countries:USA
Confidence level of traders:tall

SIPC is an integral part of the legal system that regulates the activities of institutions providing financial services. The specifics of SIPC's activities are focused on regulating the work of reporting organizations and monitoring the process of their liquidation, in cases where they are not able to fully fulfill obligations to customers or when declaring bankruptcy.

Story

SIPC originates in the distant 1970, when at the initiative of the United States government a regulator was created to protect the rights of investors. This law was developed after a two-year crisis, which resulted in the bankruptcy of many large companies - bankrupt organizations could not fulfill their obligations to customers. Brokerage companies discredited themselves in front of the community of traders, so decisive action was required to resolve the conflict. Then a separate supervisory authority was founded, whose function was to regulate the payment of compensation to customers of bankrupt companies. In 1970, the regulator’s budget was about $ 150 million, and today the fund has $ 2.5 billion at its disposal. In addition, the US Department of the Treasury has the opportunity to issue an organization a loan of a similar size. Today, about 40 thousand companies providing investment and financial services have SIPC membership.

Functions

If the brokerage office announces the need to liquidate the company, then SIPC performs the following actions:

  • files a lawsuit, the decision of which appoints the person responsible for conducting bankruptcy proceedings and protecting the rights of the client;
  • after coordinating all the details, the regulator transfers the funds of clients to the accounts of SIPC member organizations, which allows private traders not to interrupt the trading process;
  • if certain reasons do not allow the supervisor to redirect the client’s capital to another company’s account, then SIPC is obligated to compensate the investor for lost funds.

The priority goal of SIPC is to return to the client the funds that he lost as a result of the bankruptcy of the broker, and the regulator successfully copes with the task entrusted to him.

Contacts

You can find more detailed information on the official SIPC website: www.sipc.org.

findings

As you may have guessed, the SIPC structure is a guarantee that the rights of investors are really protected, and in the event of force majeure, they can always count on monetary compensation. Brokers with membership in this organization are in high demand among consumers. This is due to the special approach of the organization to each individual client.

Switzerland

SIPC Securities Investor Protection Corporation

Full title:Financial Market Supervision Service
English name:Swiss Financial Markets Authority
Abbreviation:FINMA
Subordinate countries:Switzerland
Confidence level of traders:tall

The Swiss Financial Market Supervision Authority is one of the most reliable and influential financial services regulatory authorities. The organization acts as the regulator of the banking system of Switzerland and acts as a partner for national investors. FINMA has significant leverage over market participants, as it is involved in auditing Swiss banks and imposing sanctions against violators of financial laws (in particular, illegal actions against private traders and money laundering).

Story

In 2007, as a result of a merger, the Swiss financial market surveillance service was founded. The main powers of FINMA are aimed at regulating the activities of commercial banking structures, insurance companies, mutual and investment funds, as well as brokerage houses.The service employs approximately 350 people, including lawyers, economists, mathematicians, as well as audit, investment and accounting specialists.

Functions

The main activity of FINMA is the protection of the rights of investors, policyholders and creditors, as well as the guarantee of equal rights for all participants in financial markets. In addition, the service seeks to maintain an impeccable reputation and stable performance of the Swiss financial sector, indirectly contributing to the development of healthy competition between brokerage houses. The Swiss Parliament vested FINMA with complete authority over the country's financial and insurance organizations. The regulator has the right to require companies to provide the necessary documentation, take part in resolving conflict situations, and carry out the liquidation of a business or its recovery. Within its powers, the supervision service licenses, monitors and fines Swiss brokerage companies in case of violations. In addition, FINMA is developing a legislative framework in the field of finance, as well as providing advice and consulting services as part of the improvement of existing legal acts.

Contacts

You can find more detailed information on the FINMA official website: www.finma.ch.

FINMA Brokers

FINMA licensed brokers are serious large organizations such as Dukascopy Bank SA, Crown Forex and Swissquote.

findings

It is obvious that the regulator has high powers and exercises control over the financial and insurance sectors of the state economy. FINMA certificate for a trader is a 100% guarantee that the brokerage office is engaged exclusively in legal activities. The supervision service has gained an impeccable reputation, therefore FINMA-certified brokers are an order of magnitude higher than their competitors.

Conclusion

Opening an account with a broker with whom the trader had no business before, he usually focuses on reviews on the Internet, advice from colleagues in the shop and other subjective information. In this article, you got acquainted with another important factor when choosing a broker - the status of the license that he has. As you probably noticed, the presence of a license from some regulators not only gives hope, but guarantees the return of personal funds to the trader’s accounts in case of force majeure situations such as bankruptcy of a broker. And as recent years show, such cases are not uncommon. Pay attention to the choice of a broker and the availability of licenses from high-class regulators and sleep peacefully without worrying about the safety of your funds! This concludes this article, bye and see you all again!

Watch the video: My TOP 3 RECOMMENDED BROKERS For Forex Trading in 2018?! MY TRUE OPINION!! (November 2019).

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