A broker is a platform where the instruments are actually bought and sold, such as currencies. In simple words, they act as a middleman between the trader and the market.
Forex Brokers By Regulation
The forex market is a decentralized market without an exchange; hence brokers are suggested to be regulated by certain regulatory bodies in which they operate. As such, before they start running their operations, they must register themselves with a reputed regulatory body in the country. Read More
For traders, dealing with a regulated broker means they can expect a certain level of quality control because there are regular evaluations and forex broker reviews forced to be maintained by the regulated brokers. With a regulated broker, you would not have to worry about losing your money due to Ponzi schemes or misrepresentations.
Unregulated Forex Brokers
An unregulated forex broker is simply a forex brokerage with no license, meaning an unregulated forex broker is not legally authorized to provide forex cfd trading services to customers in any part of the world. However, just because a forex broker is unregulated, it does not mean that they don’t have a physical office. Although there might be several unregulated forex brokers available on the internet, it is not guaranteed they are going to provide you with the utmost security when it comes to your hard-earned money. However, it is always recommended for traders to deal with regulated forex brokers only for their own safety.
The knowledge of differences between regulated and non-regulated forex brokers is crucial and must be widely considered by traders before they put their hard-earned money into an investment. However, many traders do not know whether they are dealing with a regulated or unregulated broker in the foreign exchange market. It is a huge concern because regulation is an important procedure that aims to ascertain transparent and honest conduct in the forex market.
Hence, whether your forex broker is regulated or not is a matter of utmost significance and must never be overlooked at any cost.
- Compliance/Non-Compliance With Regulations:
Starting from the most basic stage, a regulated broker must work according to the rules and standards of its regulatory authority. On the other hand, a non-regulated forex broker does not need to comply with any regulations.
Furthermore, the regulated broker is required to be registered within the country where the broker runs their business. Additionally, they must adhere to all the quality control standards as recommended by the forex regulator for that country. On the contrary, the unregulated brokers are neither authorized nor regulated, meaning they might not incorporate quality control standard practices in their operations. Consequently, it implies that the quality control standards are fully satisfied. You can also read cfd broker reviews by experts to compare regulations.
- Nature Of Quality Control:
As mentioned above, the significant difference between a regulated and non-regulated broker is quality control. When it comes to the nature of quality control, such as what it consists of and how it is invaluable, well, the answer is pretty straightforward: regulated brokers are registered and therefore audited on a regular basis. Furthermore, their business conduct is cautiously scrutinized frequently. Along with this, they are forced to adhere to the regulations formulated by their regulator.
Due to this, regulated forex brokers should have sufficient funds available at their disposal, which they can return to their clients if the business goes bankrupt. On the other hand, unregulated brokers are not subject to regular audits, and they do not have any obligations as mentioned by the regulatory bodies.
Also read : Top Reasons To Select A Regulated CFD Broker
- Customer Safety:
Another impeccable feature that differentiates the regulated broker from the unregulated one is customer safety and security. Even if a broker is not regulated, it does not give them the freedom to cheat and manipulate customers and deviate from regulated forex practices. It is high time now, considering the increasing number of scams going on in the forex market every day, to take strict actions to bring all the unregulated brokers under the regulatory umbrella.
The Bottom Line
In short, traders should avoid unregulated brokers at all costs. Dealing with unregulated brokers could wipe out your entire account balance, and you would have no one to blame. Thus, to keep your transactions safe and honored, a regulated broker is the only option you should go with.