Retail foreign exchange trading has grown exponentially in recent years. Today, more and more individuals are entering the foray of forex trading. However, as exciting as it is trading in forex, it is also important to do your trading with the help of regulated or authorized forex brokers in Dubai. A licensed forex broker is a far better and trustworthy option than an unauthorized broker. There are various reasons for this. So, let us start by understanding what an authorised forex broker is.
What is a regulated or licensed forex broker?
You may have come across these fancy names, such as FSA, ASIC, Cysec, and so on. These entities are financial regulators or watchdogs. The purpose of these regulators is to implement laws and regulate the functioning of the financial market within their jurisdiction. Other organizations such as forex brokers and insurance companies also fall into the ambit of these financial watchdogs.
It is important to note that financial regulators have their limitations when it comes to investor protection and trading supervision within their respective trade jurisdiction.
For instance, let us check out what CySec has to say about itself. “The Cyprus Securities and Exchange Commission (CySEC) is the independent public supervisory Authority responsible for the supervision of the investment services market and transactions in transferable securities carried out in the Republic of Cyprus”.
In simple terms, when a financial institution or forex broker is regulated or authorized by a competent authority, they get a license from the authority to operate within the trade jurisdiction. And follow the corresponding rules and regulations, like doing regular audits of your business, ensuring transparency in operations, and, most important of all, protecting the interest of the investor.
Therefore, traders should opt for licensed forex traders to get the best forex trading services in Labuan. These authorized forex brokers will put your interest first before theirs and will provide a transparent trading environment for the investors.
Services provided by a regulated forex broker
There are many benefits associated with working with authorised forex brokers in Dubai. They are:
Transparent audits
A licensed forex broker will always follow trading rules and regulations because of the consistent and strict supervision by financial and economic watchdogs. These rules and regulations include the most important aspect of a financial company, audits. Audits have a substantial effect on the results for the currency trader. For instance, any forex broker who has listed an ECN model or as straight-through data processing could not manipulate any trades like B-booking. Wherein B-boking means that the process involves executing an order in-house, that is if your profile reflects that you have been losing equity consistently in the market.
Insurance compensation
The chances of a forex broker going bust are also very high. In such cases, you could expect to get back at least part of the money by opting for an insurance package on your investments. As per the rules laid down by the regulators, different financial authorities implement additional rules for added security against the loss of money. For instance, forex brokers who do online forex trading in Malaysia must compulsorily be a member of the Investor Compensation Fund. Investor Compensation Fund is a dedicated pool of capital that are utilized to settle custom claims. This feature, however, varies along with the jurisdiction. Thus, the trader should first go through the legal documentation and the terms and conditions of the forex broker.
Legal protection against money laundering
Many governments around the world are plagued by the problem of money laundering. The major reason for this is the existing illegal financial activities. An authorized forex broker has to keep documentation from all the traders under its belt. Thus, the traders are required to provide relevant documentation as proof of self, such as Photo ID proof and address proof. Providing details about self may sound tedious and unnecessary to certain currency traders, but this is better than losing heaps of funds by being associated with an unauthorized forex broker. An authorized forex broker will follow the due diligence before getting associated with the trader. And the trader has to furnish the documents asked by the broker before commencing online forex trading.
An authorized forex broker is the safest and the best option to do trading with. Because they will follow the legal procedures involved in trading and ensure complete transparency, safety, and security of the investor’s interest while trading.
The essence of foreign exchange trading lies in effective risk management. Thus, the trader should manage their risk better by choosing an authorised forex broker. After all, why keep all your eggs in one basket when you have the option of another?
Additionally, authorized brokers are credible and accountable for their actions. If you are on the lookout for the best forex trading services, you must visit VPFX today.
