Foreign exchange regulation

Foreign exchange regulation is a form of financial regulation specifically aimed at the Forex market that is decentralized and operates with no central exchange or clearing house. Due to its decentralized and global nature, the foreign exchange market has been more prone to foreign exchange fraud and has been less regulated than other financial markets.

However, some countries do regulate forex brokers through governmental and independent supervisory bodies, for example, the National Futures Association and the Commodity Futures Trading Commission in the US, the Australian Securities & Investments Commission in Australia, and the Financial Conduct Authority in the UK. These bodies act as watchdogs for their respective markets and provide financial licenses to organizations that comply with local regulations.

## Contents

* 1 Objective
* 2 Main regulatory requirements
* 3 Regulatory Bodies by Country
* 3.1 Europe
* 3.2 Asia
* 3.3 North and Middle America
* 3.3.1 North America
* 3.3.2 Middle America
* 3.4 Africa
* 3.5 Australia and Oceania
* 4 References

## Objective

The objective of regulation is to ensure fair and ethical business behaviour. In their turn all foreign exchange brokers, investment banks and signal sellers have to operate in compliance with the rules and standards laid down by the Forex regulators. Typically they must be registered and licensed in the country where their operations are based. Licensed brokers may be subject to recurrent audits, reviews and evaluations to check that they meet the industry standards. Foreign exchange brokers may have capital requirements which require them to hold a sufficient amount of funds to be able to execute and complete foreign exchange contracts concluded by their clients and also to return clients’ funds intact in case of bankruptcy.[citation needed]

Each Forex regulator operates within its own jurisdiction and regulation and enforcement varies significantly from country to country. In the European Union a license from one member state covers the whole continent under the Mifid regulation and has resulted in regulatory arbitrage where companies select the EU country that imposes the least controls such as CySEC in Cyprus. Not all foreign exchange brokers are regulated and many will register in jurisdictions that impose low-regulatory environments such as tax havens and corporate havens that form part of offshore banking.[citation needed]

## Main regulatory requirements

Client conduct \- These insure brokers cannot make unrealistic or misleading claims or promises. It also prevents brokers from advising clients to take risky trade decisions or to enter into positions that are not in their best interest.

Segregation of client funds \- These restrictions ensure that the broker can not use any of the clients funds for its operational or other expenses. This regulation requires that all deposits be maintained separately from the broker’s bank accounts.

Reporting and disclosure \- These rules insure the broker’s clients are well informed of the status of their account and the risks associated with FOREX products.

Leverage limits \- These limits ensure clients maintain an acceptable risk level. As such, firms may not offer increasingly higher leverage to consumers (e.g. 1:1000).

Minimum capital requirements \- These restrictions ensure that clients can withdraw their funds at any time including in the event of bankruptcy of the broker.

Audit \- Periodic auditing assures the broker financial risk is tolerable and there is no misappropriation of funds. To this end, brokers must submit periodic financial and capital adequacy statements.

## Regulatory Bodies by Country

### Europe

* Belgium - The Financial Services and Markets Authority, FSMA (Dutch: De Autoriteit voor Financiële Diensten en Markten, French: L'Autorité des services et marchés financiers)
* Bulgaria - Financial Supervision Commission of Bulgaria, FSC Bulgaria (Bulgarian: Комисия за финансов надзор)
* Croatia - Croatian Financial Services Supervisory Agency, CFSSA (Croatian: Hrvatska agencija za nadzor financijskih usluga)
* Cyprus - Cyprus Securities and Exchange Commission (CySEC)
* Czech Republic - Czech National Bank, CNB (Czech: Česká národní banka)
* Denmark - Danish Financial Supervisory Authority, Danish FSA (Danish: Finanstilsynets)
* Estonia - The Financial Supervision Authority (Estonian: Finantsinspektsioon)
* Finland - FIN-FSA in Finland (Finnish: Finanssivalvonta)
* France:
* Autorité des marchés financiers, AMF (French: L'Autorité des marchés financiers),
* Banque de France (French: La Banque de France),
* Credit Institutions and Investment Firms Committee, CECEI (French: Le Comité des établissements de crédit et des entreprises d'investissement), and
* French Autorité de Contrôle Prudentiel et de Résolution, ACPR
* Germany - Federal Financial Supervisory Authority, BaFin (German: Die Bundesanstalt für Finanzdienstleistungsaufsicht)
* Greece - The Hellenic Capital Market Commission, HCMC (Greek: Επιτροπή Κεφαλαιαγοράς)
* Hungary - Hungarian Financial Supervisory Authority, HFSA (Hungarian: Pénzügyi Szervezetek Állami Felügyelete)
* Iceland - The Financial Supervisory Authority, FME (Icelandic: Seðlabanki Íslands)
* Ireland - The Central Bank of Ireland
* Isle of Man - The Financial Supervision Commission (FSC)
* Italy - Commissione Nazionale per le Società e la Borsa, CONSOB
* Latvia - The Financial and Capital Market Commission, FKTK (Latvian: Finanšu un kapitāla tirgus komisija)
* Lithuania:
* The Lithuanian Securities Commission, and
* Bank of Lithuania (Lithuanian: Lietuvos banko)
* Liechtenstein - The Financial Market Authority Liechtenstein, FMA (German: Finanzmarktaufsicht Liechtenstein)
* Luxembourg - Commission de Surveillance du Secteur Financier, CSSF
* Malta - Malta Financial Services Authority (FSA in Malta)
* Norway - The Financial Supervisory Authority of Norway (Norwegian: Finanstilsynet)
* Poland - Polish Financial Supervision Authority, PFSA (Polish: Komisja Nadzoru Finansowego)
* Portugal - Comissão do Mercado de Valores Mobiliários (CMVM)
* Romania - Romanian Financial Supervisory Authority, ASF (Romanian: Autoritatea de Supraveghere Financiară)
* Russia:
* FCFR in Russia (Russian: Федеральная служба по финансовым рынкам), and
* Centre for Regulation of Off-Exchange Financial Instruments and Technologies, CRFIN (Russian: Центр регулирования внебиржевых финансовых инструментов и технологий)
* Slovakia - National Bank of Slovakia, NBS (Slovak: Národná banka Slovenska)
* Spain - Comisión Nacional del Mercado de Valores
* Sweden - Swedish Financial Supervisory Authority, Swedish FSA (Swedish: Finansinspektionen)
* Switzerland:
* Swiss Financial Market Supervisory Authority, FINMA (German: Eidgenössische Finanzmarktaufsicht, French: Autorité fédérale de surveillance des marchés financiers, Italian: Autorità federale di vigilanza sui mercati finanziari),
* Association Romande des Intermediares Financiers (ARIF),
* Organisme d'autorégulation fondè par le GSCGI, L'OAR-G (French: Organisme d'autorégulation des gerants de patrimoine),
* PolyReg General Self-Regulatory Organisation (German: PolyReg Allg. Selbstregulierungs-Verein, French: PolyReg Association Générale d'Autorégulation, Italian: L'OAD PolyReg),
* Swiss Bankers Association, SBA (German: Schweizerische Bankiervereinigung, French: Association suisse des banquiers, Italian: Associazione Svizzera dei Banchieri),
* Swiss Federal Banking Commission, SFBC (German: Eidgenössischen Bankenkommission, French: Commission fédérale des banques),
* Swiss Federal Department of Finance, SFDF (German: Eidgenössisches Finanzdepartement, French: Département fédéral des finances, Italian: Dipartimento federale delle finanze),
* Swiss Federal Finance Administration, SFFA (German: Eidg. Finanzverwaltung, French: Administration fédérale des finances, Italian: Amministrazione federale delle finanze),
* Swiss National Bank, SNB (German: Schweizerische Nationalbank, French: Banque nationale suisse, Italian: Banca nazionale svizzera)
* United Kingdom:
* UK Financial Services Authority (FSA UK),
* The Financial Conduct Authority (FCA),
* The Prudential Regulation Authority (PRA),
* Financial Services Compensation Fund (FSCS)

### Asia

* Azerbaijan:
* State Committee for Securities (Azerbaijani: Azərbaycan Respublikası Qiymətli Kağızlar üzrə Dövlət Komitəsi), and
* Baku Stock Exchange (Azerbaijani: Bakı Fond Birjası)
* Bangladesh - Securities and Exchange Commission, SEC (বাংলাদেশ সিকিউরিটিজ অ্যান্ড এক্সচেঞ্জ কমিশন)
* China - China Securities Regulatory Commission, CSRC (Chinese: 中国证监会为国)
* UAE, Dubai:
* Dubai Multi Commodities Centre, DMCC (Arabic: مركز دبي للسلع المتعددة),
* Dubai Gold & Commodities Exchange, DGCX (Arabic: بورصة دبي للذهب والسلع),
* Dubai Financial Services Authority, DFSA (Arabic: سلطة دبي للخدمات المالية), and
* Emirates Securities and Commodities Authority, SCA (Arabic: هيئة الأوراق المالية والسلع)
* Hong Kong - Securities and Futures Commission (Chinese: 證券及期貨事務監察委員會)
* India:
* Securities and Exchange Board of India, SEBI (Hindi: भारतीय प्रतिभूति और विनिमय बोर्ड), and
* Reserve bank of India, RBI (Hindi: भारतीय रिज़र्व बैंक)
* Indonesia - Commodity Futures Trade Regulatory Agency, CoFTRA (Indonesian: Bursa Komoditi dan Derivatif Indonesia)
* Israel - The Israel Securities Authority, ISA (Hebrew: רשות ניירות ערך)
* Japan:
* Financial Services Agency of Japan, FSA Japan (Japanese: 金融庁),
* Japan Securities Dealers Association, JSDA (Japanese: 日本証券業協会),
* Japan Investor Protection Fund, JIPF (jJapanese: 日本投資家保護基金), and
* Tokyo Commodity Exchange, TOCOM (Japanese: 東京商品取引所)
* Kuwait:
* Ministry of Commerce and Industry in Kuwait (Arabic: وزارة التجارة), and
* Kuwait Chamber of Commerce & Industry, KCCI (Arabic: الكويت غرفة التجارة والصناعة)
* Lebanon - Bank of Lebanon (Arabic: مصرف لبنان, French: The Banque du Liban)
* Malaysia - Securities Commission Malaysia (Malaysian: Suruhanjaya Sekuriti Malaysia)
* Pakistan - Securities and Exchange Commission of Pakistan, SECP (Urdu: سکیورٹیز اینڈ ایکسچینج کمیشن آف پاکستان)
* Philippines:
* Securities and Exchange Commission Philippines (филип. Komisyon sa mga Panagot at Palitan), and
* The Bangko Sentral ng Pilipinas
* Singapore:
* Monetary Authority of Singapore, MAS (Chinese: 新加坡金融管理局), and
* Singapore Exchange, SGX (Chinese: 新加坡交易所)
* South Korea - Financial Supervisory Commission (Korean: 금융위원회, Geumnyung Wiwonhoe)
* Sri Lanka - Securities and Exchange Commission of Sri Lanka
* Thailand - Securities and Exchange Commission
* Turkey - Capital Markets Board, SPK (Turkish: Sermaye Piyasası Kurulu)

### North and Middle America

#### North America

* Canada:
* British Columbia Securities Commission (BCSC),
* Canadian Investor Protection Fund (CIPF),
* Financial Transactions and Reports Analysis Center of Canada (FINTRAC),
* Investment Industry Regulatory Organization of Canada (IIROC),
* Ontario Securities Commission (OSC), and
* Ombudsman of Banking Services and Investments (OBSI)
* United States:
* Commodity Futures Trading Commission (CFTC),
* Financial Industry Regulatory Authority (FINRA),
* National Futures Association (NFA),
* U.S. Securities and Exchange Commission (U.S. SEC),
* Chicago Board of Trade (CBOT), and
* Securities Investor Protection Corporation (SIPC)

#### Middle America

* Anguilla - Anguilla Financial Services Commission
* Antigua and Barbuda - Eastern Caribbean Securities Regulatory Commission (ECSRC)
* Belize - International Financial Services Commission (IFSC)
* British Virgin Islands - BVI Financial Services Commission (FSC of BVI)
* Cayman Islands - The Cayman Islands Monetary Authority (CIMA)
* Dominica - Financial Services Unit (FSU)
* Panama:
* The Securities Market Superintendence, SMV (Spanish: Superintendencia de Mercado de Valores),
* Ministry of Industry and Commerce, MICI - (Spanish: Superintendencia de Mercado de Valores)
* St. Vincent and the Grenadines - The Financial Services Authority (FSA)

### Africa

* Morocco - Autorité Marocaine du Marché des Capitaux (AMMC)
* Kenya - The Capital Markets Authority (CMA)
* Mauritius - The Financial Services Commission (FSC Mauritius)
* Nigeria - The Securities and Exchange Commission (SEC)
* Seychelles:
* Seychelles Financial Services Authority (FSA Seychelles), and
* Seychelles Licensing Authority (SLA)

### Australia and Oceania

* Australia - Australian Securities & Investments Commission (ASIC)
* New Zealand:
* Financial Markets Authority (FMA),
* Financial Service Providers Register (FSPR), and
* Financial Services Complaints Limited (FSCL).

## References

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