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Foreign Exchange Regulation

  • foreign exchange regulation sign

Global regulators are put in place to govern and overseas the business conducted by FX traders and financial companies facilitating and brokering speculative and transactional business on behalf of third parties. FX regulation is normally governed at local level but in many cases if a company is regulated in the UK they typically have the ability to trade in other locations.

Regulators are put in place to ensure a correct and moral approach is taken within the industry and compliance is followed by FX brokers, investment banks, payments specialists and FX trading platforms. The objective being that clients and investors are assisted in a fair ethical manor.

Due to the volume of trade and vast coverage the FX market as with any financial market can leave itself occasionally open to fraud.

Foreign exchange regulators

FCA

The FCA regulates the financial services industry in the UK. It works autonomously from the government and is financed by the fees it charges to the financial services industry. The financial conduct authority has three core objectives;

  • To ensure an appropriate level of protection to consumers
  • Proactively enhance and protect the UK’s financial markets integrity
  • And to actively promote for the benefit of consumers.

The FCA has considerable jurisdiction and has the ability to regulate the marketing and promotion of financial products and services.  Where appropriate it has the capacity to investigate companies, individuals and organisations.

At the end of 2012, the financial services act was approved by the monarchy and was implemented early 2013. The act provided more concrete foundations for the financial services industry, bringing together more sturdy regulation and a new regulatory process incorporating the Bank of England’s finance committee and the financial conduct authority.

FinCEN

Financial crimes enforcement or FinCEN as its commonly known is put in place to safeguard the united states financial system from inappropriate use. Its core aims are to

  • Combat money laundering
  • Endorse national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.

Part of the department of treasury Fincen has the following duties:

  • Sets and enforces regulation
  • Implements and enforces compliance with the set regulation
  • Handles data relating to the compliance and distributes to federal regulators
  • Maintains a US wide access to FinCENS data with departments with mutual interests
  • Supports law enforcement
  • Coordinates and assists the FIU (financial intelligence unit)
  • Conducts research to benefit policymakers, regulation, law makers, FIU and the financial industry.

MiFID

As the cornerstone of the European commission financial services action plan MiFID or Markets in financial instruments directive has jurisdiction over 31 member states including Iceland and Norway.

The plans main goal was to harmonise regulation, increase consumer’s protection and companies’ competition. Whilst undeniably aims to increase transparency on financial services pricing have been achieved, unfortunately, increased trading locations have had an unforeseen effect, whereby multiple parties can be involved in any one trade or transaction meaning a much great additional workload.

Core initiatives and responsibilities of MiFID also include:

  • Authorisation and regulation in the member’s home state
  • Categorisation of clients including counterparties, retail and professional consumers
  • Pre and post trade transparency
  • Best execution for clients ensuring all reasonable steps have been taken

NZFMA

The New Zealand Financial markets association is the main financial body of NZ ensuring professionalism throughout the wholesale banking and financial markets sector. Reformed in 2007 it is a not for profit organisation that overseas efficient operation of OTC markets.

ASIC

The Australian securities and investments commission regulates corporate and financial services as well as tradeable markets. Set up under the 2001 Australian securities and investments commission many of their tasks are carried out under the Corporations act dating from the same year.

The Australian securities and investments commission acts objectives include:

  • To maintain and facilitate the performance of the financial system
  • Promote confidence to investors and consumers in markets and financial sectors
  • Manage legalities effectively with minimal procedure
  • Relay receive and store information effectively and quickly
  • Make data about companies and other bodies available to the general public.

FINMA

FINMA is the independent financial markets regulator for Switzerland. Formed in 2009 its directive is to supervise exchanges, asset managers, securities dealers, funds, insurance companies as well as regulating distributors and intermediaries. Its role is to protect creditors, investors and policyholders.

Japan FSA

Established in 1998 as an administrative body whose main responsibilities included supervising and inspecting private sector financial institutions. In 2000 Japans Financial services agency was created more formally and its supervisory became much more advanced. Today the FSA’s role is an independent agency that ensures Japan’s financial system whilst inspecting and managing securities transactions.

Typical tasks handled by Japan’s FSA include

  • The financial systems planning and policymaking
  • Overseeing and when appropriate, investigation of Japan’s banks, institutions, insurance companies, financial instrument companies (derivatives, swaps etc.) exchanges and market participants.
  • Creation and integration of rules within tradeable markets
  • Implementation of accounting and corporate finance standards
  • Supervision of accredited public accountants
  • Participating in international organisations activities with the aim of improving mutually beneficial financial issues and process.

 If you are considering exchanging currency and would like guidance relating to regulation, please do not hesitate to email info@forexnewsshop.com.

By | 2018-04-24T18:54:19+00:00 August 4th, 2016|Forex Guides|0 Comments

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Forex News Shop provides currency-specific FX news, political updates affecting currency and insight to where foreign exchange trends may go.

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