Forex rules and regulation

Forex rules and regulations are bodies of laws which guides trading in the forex market. They are usually written by a regulatory body and all forex traders are mandated to abide by its tenets if they are really interested in trading in that region.

The forex market which is a global online network where traders buy and sell currencies is controlled and regulated by some rules and regulations which are usually crafted by regulating bodies to help the traders safeguard their investments in the market. The market has no physical location and operates round the clock. 

Forex exchange trading is usually a contract agreement between two parties and it occurs in three types of trades with each trade coming with its rules and regulations. It should however be noted that forex rules and regulations vary from one bank and region to the other. These rules and regulations are crafted based on the type of trade engaged in by the trader. While several regions of the world like Cyprus requires the forex broker or company to be regulated or licensed, others, such as Europe are totally quiet on it. 

Before entering into trade with any forex broker or company, it is good to see their license or permits since there is every indication that only the licensed forex traders are those who can be trusted in the market. 

A very good knowledge guiding trading in forex in your region can also help you in knowing the best currency pair to trade in also which of the market hours will be best for you. It also helps you to know how to go about your business in the forex market.

CHARACTERISTICS OF FOREX RULES AND REGULATIONS

Forex rules and regulations ought to have the following characteristics;
1.    PROTECT THE CUSTOMER AGAINST FRAUD
One of the major reasons why forex rules and regulations are established is to assist the trader in avoiding fraud. They do this by setting up rules and regulations and also issue permits to the qualified brokers and companies in the region, this way they assist the trader in safeguarding their investments in the forex market. 

2.    REGULATE THE ACTIVITIES OF THE BROKERS AND COMPANY
The forex rules and regulations are put in place to check and regulate the activities of the forex traders in that region. Rules such as the issuing of permits and customer number by regulatory bodies have been put into practice to serve as a check and balance system for the forex traders.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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