As with every other financial market, the Forex currency trading need regulation that will help protect the interest of investors. Read further to uncover why you will be safer working with a regulated forex broker.

There are different regulatory bodies that control the financial markets. There are overall regulatory bodies and those specific to each and every country. In most countries, the regulation of financial market is being undertaken by the central bank, Regulatory Authority, or both. In this case, the regulatory authority is either a subsidiary of the central bank or an independent body. Because Forex is one of the financial markets, it is not left out of such regulations. Similarly, there are different bodies that are designed to regulate Forex market. These bodies may vary significantly depending on the country. The primary role of the Forex regulatory body is to strengthen the regulation and monitoring of the Forex market within a given jurisdiction. The overall roles of these regulatory bodies are many as listed below:

1. Regulations Safeguard Traders

Regulation is the best way to safeguard Forex traders a requirement which is very beneficial. Forex regulatory bodies put across strict regulatory measures that ensure traders are protected. Just like any other financial market, the trader can be exposed to high level of risks if the brokers they are using are not regulated. The regulation safeguards the traders’ deposits or funds. They protect against inappropriate use of traders’ monies e.g. broker using such monies for operational purposes.

2. Control Of Manipulative And Fraudulent Activities

In the current financial market, there are so many uncertainties that affect your dealing with the Forex brokers. It is wiser to regulate Forex brokers to ensure that these uncertainties are limited. The regulatory body are designed to ensure that you are protected from the manipulative and fraudulent activities by the brokerage company. The substantially safeguard the traders’ funds.

3. Protection Of Trader’s Interests

The interests of the Forex trader must be protected. There comes a situation when the Forex broker is not protecting the interest of its clients. This is when Forex regulatory body becomes very helpful. The regulatory bodies ensure that the brokerage company you have trusted with your funds stick to the ethical principles of the business and lay down their policies well and open. Irrespective of their countries of origin, all regulatory bodies ensures that the interest of the investor is protected at all times.

4. Integrity Of Forex Trading

The regulatory bodies ensure that the integrity of the Forex trading is maintained at all times. They enforce the Forex broker and the trader to maintain integrity. There are several rules that are subjected to the Forex brokers by the regulatory body designed to help maintain integrity in the Forex market. This creates conducive trading environment and outstanding relationship between the trader and the broker.

5. Scam And Fraud Protection

It is no secret, there are several scammers using the internet to con your monies. It is usually very difficult to meet a broker physically especially if you are from different countries due to the setting of the Forex market. The Forex regulatory body’s main role is to fish out such scammers and fraudsters in the market.

Conclusion

Money frequently changes hand and in large sums in the Forex world. A form of regulation must be applied to provide a certain level of control and protection to the parties involved. With strict regulation, it is rare for things to get out of hands. Forex trading significantly requires strict regulations just like in any financial market.

Not all Forex regulatory body applies to all brokers. Every country has its own independent body that regulate the Forex market. It is the role of the government to provide this regulation. It is important to note that not all Forex brokers are regulated despite this call to protect the interest of every investor. It is pretty wise to commit yourself to only regulated Forex brokerage firms.

Author's Bio: 

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