If a decade ago the world of online trading was a real jungle, today all trustable brokers are regulated by one or more regulators who carefully monitor their activities. Before looking to find out if the spreads offered are interesting, first, make sure that the broker is well regulated.
Why are Forex broker regulations so important?
The web scam is a reality that online traders simply cannot ignore. Since the advent of the online trade, scammers have not hesitated to use a hand to seduce investors. The general public is the primary target of these online scams, mainly beginners who are often uninformed. These malicious brokers are, in fact, particularly clever and use enticing marketing arguments to attract traders. They exploit the weak points of investors to attract them more easily. Most of the time, they promise strong earning possibilities and give away unrealistically big welcome bonuses.
Their offers are supposedly the best in the market and are virtually unbeatable by other brokers. This is why these brokers continue to recruit traders who, unfortunately, sign the start of a big loss by signing up with them. But when it comes to withdrawing money, these scam brokers will no longer act on the trader’s request. And the worst of it is that traders are powerless in the face of this injustice.
Why regulate brokers?
As in any market, the establishment of rules is almost essential to achieving the stability of businesses. Thus, the regulatory institutions have set up criteria to be met by brokers. And when these conditions are met, they obtain a license to operate legally in the market. MultiBank Group is an example of a broker with multiple regulations. Not all brokers are regulated, but regulated ones allow for the most pleasant trading experience for their clients.
Among other things, securing investor funds is one of the main points imposed on these brokers. Any regulated online broker is required to apply the principle of account segregation, which consists of separating client accounts from the company’s operating accounts. Thus, investors’ funds always remain available, regardless of the financial situation of the broker. Moreover, a compensation system must also be applied, thus offering traders the guarantee of compensation in the event of insolvency.
Go with regulated brokers to avoid security concerns
The implementation of a state-of-the-art security system is also part of the broker’s responsibilities. In particular, SSL encryption allows traders to invest securely on portals without the risk of fraud or identity theft. Moreover, traders should note that a broker’s regulation constitutes the guarantee of a transparent investment for traders. All trading conditions should be explicitly indicated on the websites. Even the risks involved and warnings of losses are mentioned on the platforms of regulated brokers so that traders can get started knowingly.
The other advantage of a regulated broker is that the trader can turn to the regulatory bodies in the event of a dispute. Unlike with scam brokers, where the investor has no say, it is perfectly possible to sue the broker and seek redress in the event of damage.
