The forex market is the largest financial market in the world. The forex market turns over trillions of dollars in a day. In fact, a large number of people get into the forex market to make a career or to make money and meet financial goals that they have set. There is no central exchange to control the forex market and no central clearinghouse.
Because of this and some other factors, it happens that sometimes there is no transparency in some of the dealings and functioning of the forex markets. What comes out of this is that the people who get in for trading are vulnerable and are therefore cheated by dishonest brokers.
The Financial Conduct Authority was set in the UK with a view to prevent such happenings. The FCA in the UK regulates all the financial transactions that happen there. Therefore it regulates the business of forex brokers as well. If you are a brand new trader and wanted to trade forex in the UK, if you search the Internet for forex brokers, you would end up with a huge list. The challenge would be to pick out the most reliable from among them. They reliable ones would be those that are regulated by the FCA.
It is mandatory for FCA regulated brokers to comply with some rules and regulations to be able to function in the local forex market. The most important rule that they are expected to follow is that an FCA regulated broker should maintain the clients reading funds separately from the company capital funds. They should be maintained in separate accounts. This is done because the traders’ funds will remain untouched if there is a financial crisis for the broker. It will also prevent subsequent frauds and malpractices by the brokers.
It may also happen that fraudsters also claim that they are FCA regulated forex brokers. Is there a way that the genuine ones can be spotted out? Fraudsters may give false addresses in London to claim that they are genuine. They may not have an office in the UK at all. It is a good idea to check the FCA register to identify the genuine ones.
How Unauthorized Brokers Function
They initially attract clients by giving away large bonuses in the starting stages. This keeps the clients coming back to them and investing larger amounts of moray for trading. After some time, communication with the broker reduces and altogether stops. Accounts are suspended by which time the traders have lost all their money.
Clone forex broker firms also exist in the UK. The FCA issues warnings against such brokers. These companies conveniently use the registration numbers of other genuine companies registered with the FCA and get away with it. In their websites, they, however, give their own addresses and phone numbers. New traders are easily tricked into picking the wrong brokers. It is a good idea to check with the FCA register which is updated once every day in the evening. It is important to realize that traders that have fallen victim to such frauds are usually not covered by the Compensation Scheme Services or the Financial Ombudsman.
The Best Forex Broker UK Are FCA Regulated Brokers
The FCA being the supreme authority in control of all types of financial transactions in the UK, they have with them the power to suspend rogue forex brokers’ license of operation. Sometimes they can be suspended only for a limited period of time. In case of big frauds, they may be permanently suspended. They can audit the firms’ accounts periodically and also inspect the promotional material of the firm to see if they complying with the required regulations and rules. The FCA also ensure that the traders working with a broker get a fair deal in their trades. They are required to submit their financial statements at regular intervals to the FCA.
FCA constantly monitors firms so that clients are not tricked when the brokers use the loopholes in the system. Thus the FCA ensures that the firms provide services that are useful to the clients. They also see to it that the firms are simply not engaged only to make profits by neglecting the needs of the clients.
FCA constantly monitors the firms’ activities so that the rogue brokers do not set up operations in markets that are unregulated. The FCA is empowered to trap them by having the power to pass on relevant documents to other countries to bring them to book at the earliest.