Forex broker regulation

Forex broker regulation When you choose a Forex broker, one of the important factors is its regulation. In Europe, regulation is carried out by the European securities and markets authority (ESMA). This authoritative body controls participants in the financial market, which is part of the jurisdiction of the European Union. And one of the last requirements for brokers that this organization set was to reduce the leverage from 1: 500 to 1: 30. Of course, these efforts in most cases are futile, because Forex brokers move their jurisdiction offshore and start offering clients high leverage again. Or there is an alternative option-brokers create opportunities to classify traders as professional market participants, and for such traders, the leverage can be provided higher than 1:30, as required by ESMA. This differentiation of traders into professional and non-professional is a trick of brokers and helps them, because if a trader considers himself a professional participant, he loses the protective functions that apply to retail traders who are not professional market participants. And the broker when working with a professional market participant has a lower degree of responsibility to them. If we talk about the us jurisdiction, the national futures Association (NSA) operates there. The maximum leverage for us brokers is 1: 50. The financial services Agency (FSA) operates in Japan. They allow you to use the maximum leverage of 1:25 and there is an active discussion of reducing the size of the leverage in General to 1: 10. In Australia, the Forex market is regulated by the Australian securities Commission (ASIC), which also serves as the country's Central Bank. The maximum leverage is 1: 100. One of the most famous brokers that have an ASIC license is FXOpen, which is a subsidiary of the Fibo group. EToro, IronFX, Oanda, Ava Trade, and FXCM brokers have the same license. In Russia, there is a Commission for regulating relations between financial market participants (croufr), and the main mega-regulator is the Central Bank. At the same time, the improving legislation in the sphere of providing services on the Forex market in Russia does not allow us to briefly describe the current situation. It is only necessary to specify that today the maximum amount of leverage is 1: 50. So, when you choose a Forex broker, you need to pay close attention to the size of the proposed leverage, because depending on the regulator under which the Forex broker operates, it can differ significantly. Again let me remind you that the higher the leverage used by the trader, the higher the risk of losing your money. By the way, according to the new ESMA requirements, brokers are required to disclose the percentage of traders who lose their money.