Forex Brokers by Regulation
Because the Forex market is a decentralized market without a regulated exchange Forex Brokers need to be regulated by governmental supervisory bodies. As such, Forex brokers are required, before they start operating, to apply and register with the country’s regulatory authority that they run their operations.
Dealing with a regulated Forex Broker means that you expect a certain level of quality control as there are regular audits, reviews and evaluations that are forced to be maintained by the Forex Brokers. You can also argue that if the regulation was set up before the Forex market was evolved there wouldn’t be so many clients or investors losing their money on Ponzi schemes and misrepresentations.
From the Forex regulators point of view they normally operate on their own jurisdictions but sometimes they can cooperate together to pursue fraudulent activities. A good example of such cooperation is the European Union whereas a European licensed Forex Broker basically is licensed or regulated by all member states of the EU.
The most well-known regulators worldwide are the National Futures Association (NFA in the USA), the Commodity Futures Trading Commissions (CFTC in the USA), the Financial Conduct Authority (FCA in the United Kingdom), the Australian Securities and Exchange Commissions (ASIC), the Financial Services Authority (FSA in Japan). However, you will find many of the Forex Brokers to be licensed from the Cyprus Securities and Exchange Commission (CySEC) and the Financial Markets Authority in New Zealand.