Dealing The Forex Markets With UK FX Brokers
The UK is more popular among the general trading community as the undisputed financial capital of the world, which is aided by a unique time-zone advantage. The European/UK session witnesses the maximum amount of market volatility among all trading sessions, and is one of the main reasons why a majority of financial companies, hedge funds, and other leading banks have set up their headquarters in London. The UK is also particularly popular in the Forex trading industry that sees a high volume of FX transactions during the European session. The UK retains its throne as the most preferred destinations for Forex brokers and other allied financial dealers, even after the surge in popularity of other leading European Forex broker destinations such as Cyprus. Regardless of the fact that the UK has slightly more regulatory requirements and a higher tax environment, Forex brokers still prefer to revel in the unique advantages that are enjoyed by Forex brokers in the UK.
What Are The Advantages Of Choosing UK Forex Brokers?
Forex brokers from the UK offer several incredible benefits of Forex trading. For instance, Forex traders enjoy complete freedom of trading that is devoid of any unnecessary trading restrictions such as a maximum cap on leverage or any limitations to hedging/scalping strategies. Several other leading economies such as the US have very clear-cut trading policies that prevent brokers from offering any trading service that is in direct contradiction to the regulatory guidelines. The USA, with its CFTC intervention on Forex trading, has pretty stringent rules such as a maximum leverage of 1:50(with talks of lowering the leverage further), FIFO rules, a ban on hedging, and other trading restrictions.The UK regulated Forex brokers not only allows all types of trading strategies but is also conducive to innovative financial products such as spread betting and binary options trading. UK is one of the leading financial markets in the world that supports all types of gambling and betting products, which are in line with the UK regulations to ensure safe and transparent trading conditions. Spread betting enjoys numerous tax breaks in the UK such as the absence of any capital gains tax or stamp duties, where the Government has also legalized the concept of binary options and CFD trading.
Protecting Your Trading Capital By Trading With FCA Regulated Forex Brokers
The Financial Conduct Authority (FCA) is an autonomous financial regulatory body in the UK that oversees the regulation of all non-banking financial companies for retail and wholesale financial transactions. The FCA is the successor to the Financial Services Authority (FSA), which was introduced in the year 2012 after Royal Assent. 
The FSA has been the primary supervisory agency responsible for the entire UK financial market from 2001 to 2013, but the UK Government’s plan to split up the regulatory duties between the BOE and an independent regulatory organization led to the formation of the FCA. The BOE is responsible for the micro and macroeconomic factors of the UK economy, while the FCA is liable for the regulation of all banking non-banking financial entities. FCA regulated FX brokers fall under the UK’s regulatory framework of safe and integral financial operations, which are created with input from the European Markets in Financial Instruments Derivatives (MiFID). The UK was a part of the EU until the recent Brexit, which has led to the Britain’s exit from the EU. Despite the country’s referendum and the uncertainty of the future, the FCA has maintained its partnership with all the European regulatory organizations and is still considered to be a major contributor to the MiFID derivatives. Under the existing EEA (European Economic Area) agreement, Forex brokers in the UK are allowed to cater to clients in other parts of the EU until further notice. The Financial Conduct Authority is a highly responsible and proactive regulatory organization that has developed numerous policies for protecting the general interest of investors and the public at large. The FCA should be credited for creating some of the most innovative regulatory policies that are adopted by other leading regulatory organizations from around the world, even to this day. These FCA guidelines have certainly paved the way for creating a highly investor-oriented trading environment that guarantees the safety of clients’ capital against all types of broker malpractices.
How Does FCA Ensure Compliance For FCA Forex Brokers?
FCA is the primary authority responsible for Forex broker regulation in the UK and serves as a licensing as well as a disciplinary agency to ensure that FCA brokers conform to the regulatory standards implemented by the FCA. All Forex brokers that are located in the UK should have a valid FCA license before they are granted access to the UK and the European markets, while each FCA regulated company will be provided with a valid FCA registration number. The unique FCA identification code is the primary point of reference for potential investors to ensure the authenticity of FCA regulated FX brokers. Brokers that are authorized by the EEA passport are also required to be registered with the FCA and are given a unique registration number as well. Due to the extent of the partnership between the FCA and the other European regulators, FCA has complete authority to initiate regulatory or disciplinary action against all EU brokers for non-compliance. On the other hand, Forex brokers in the UK are also susceptible to regulatory supervision and judicial intervention from other member countries of the EU, especially if they fail to adhere to the local laws and regulations that are applicable in such jurisdictions. To create a better sense of security among investors and to prevent any types of broker default or insolvency issues, FCA has directed its regulated member firms to hold a minimum amount of operating capital that is directly related to the investments of its traders. Unlike competing regulatory organizations, the FCA does not have a fixed number, but the FCA will ensure the capital adequacy of each broker through routine auditing and a detailed analysis of the company’s financial transactions. Forex brokers are subject to the volatilities of the market, and there is a strong chance for broker insolvency or bankruptcy due to real-time market fluctuations. Several recent market eventualities have resulted in the foreclosure of several leading financial brokerages, which has led to the FCA formulating a financial adequacy plan for dealing with such emergencies. As a rule of thumb, all FCA regulated Forex brokers should hold their clients’ funds in segregated bank accounts, which is the first regulatory requirement to ensure that the broker cannot access its trader’s capital to meet its personal expenses. Segregated accounts are kept completely separated from the broker’s operating account, which does ensure that the broker can only use the said money for maintaining its clients’ position in the market. However, in the unfortunate event that a broker does fall into insolvency by filing for bankruptcy or premature liquidation, the FCA has created the Financial Services Compensation Scheme (FSCS), which is an insurance scheme designed to protect all qualified investors for funds up to £50,000. However, the FCA does take care to ensure that all of its regulated members do not deviate from the prescribed norms, which does help brokers to stay afloat during most market conditions.
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Does The FCA Have Any Conflict Of Interest With Traders?
The FCA is an autonomous regulatory agency that works entirely on revenue generated through license fees and penalties that are imposed on regulated member companies. The FCA does not use taxpayer money to meet its expenses; neither does the agency succumb to any external pressures. The FCA operates on a strict regulatory framework that is approved by the UK parliament and has the complete freedom to monitor and supervise financial companies as per the existing laws and guidelines. Regardless of the FCA’s policies for the protection of investors and the general public, the FCA does not interact with any individuals directly. In fact, there isn’t any customer service channel where traders can contact the FCA about any problems faced while dealing with FCA regulated companies. However, FCA Forex brokers are required by the FCA mandate to offer a professional and courteous customer service experience that address all consumer complaints in a fair and transparent manner. The FCA also grants free access to the Financial Ombudsman service that not only offers arbitration in all matters related to investments but also provides an excellent opportunity to keep all FCA regulated Forex brokers honest in their approach.
How Does UK Forex Brokers Compare To Brokers From Other Leading Countries?
Trading with an UK FX broker is considered to be far more reliable than investing in the markets with brokers that are typically located in other European, Asian, or American locations. Forex brokers in the UK have the distinction of being a safe investment alternative, which is protected by the mighty FCA regulatory organization. The FCA is not only committed to the welfare of the UK economy, but it also concentrates its efforts on ensuring a transparent market that allows investors to take advantage of the markets without any limitations. Forex brokers in the UK are primarily known for their investor-friendly Forex products and services, which offer the best trading conditions at an affordable cost. Despite the high barrier of entry and an increased cost of setting up a brokerage in the UK, FCA FX brokers are known to offer micro trading accounts that offer trading accounts for just $5. UK brokers are also known to provide the best ECN/STP trading accounts for direct market access trading, which does not have any conflict of interest with the traders. Even market maker brokers are carefully scrutinized by the FCA to ensure that such companies don’t indulge in any devious broker practices that might put traders at a disadvantage. Overall, choosing an FCA regulated Forex trading company is certainly one of the best options in the market, which can ensure complete peace of mind for investors of all caliber.
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