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Updated: 9-Feb-2024

Broker Regulation

Forex Broker Regulation

Regulation Authorities

The Forex market is very volatile at times, and it’s quite hard to keep things under control when it comes to such a market. Which is why you have to adhere to the right Forex Broker Regulation Authorities if you want the best results.

Without the Forex Broker Regulation Authorities, brokers would not have to adhere to any ethical business behaviors. That means they would do anything possible in order to reach the desired results. In order to avoid such an issue, there are multiple Forex Broker Regulation Authorities.

Is there a real need?

Yes, because these regulators make sure there are no major problems that will eventually bring in issues in the long run. They are the regulators that will institute a ban when necessary, and they will ensure all the rules are followed to the letter.

Some of the common measures is to limit the number of brokers on certain pairs. Otherwise every broker will go with a specific currency pair and the other ones would be forgotten. They can also do a ban on hedging. This means the broker can’t allow customers to open the sell position if they already have a buy position on the same currency pair. These two things are basically cancelling things out.

You will also find regulators that will hold currencies for security trades. This limits any risk like a credit default swap crisis. Every little detail is important here, and you really have to tackle the entire process meaningfully so you can get the best possible experience.

Which are the main Broker Regulation Authorities ?

Regulation Country Forex


Has no hedging, it comes with 1:20 for the exotic pairs and 1:50 leverage for the main currencies. It also requires securities for the Forex options.

Australia (ASIC)

Has a limit of 1:25 for every currency

Japan (JFSA)

Comes with the 1:25 limit for currencies

MiFID (Europe)

Requires brokers to hold 100% of the traded asset for the short position on commodities and stocks.

There are also some Forex broker regulation authorities that enforce segregated accounts, usually these are CTFC in the US, JFSA in Japan and ASX in Australia.

In the case of Investor compensation funds, you will notice that the regulators can require brokers to deposit a certain amount into the investor compensation fund, which is designed to secure the client interest. The process is very convenient and it makes it better for the client. It avoids any client losses, while also strengthening the power of that broker too.

As you can see, there are multiple regulators to consider when it comes to dealing with the FOREX market. It’s very important to understand the FOREX regulators in your country before you start trading. This will limit any problems and it will just make it easy to manage and handle any trade at a professional level in the long run. As long as you do that, the results can be more than ok!