One of the forms of financial regulations that are given out is regulation for foreign exchange. This is specially made for the foreign exchange market. One of the features about this iForex regulation is that it has no centralized house. Since the regulation does not operate with a centralized house, the market is more vulnerable to fraud and is actually not regulated as much as the other trading markets.

But the good news is that some countries provide stricter regulations on foreign exchange brokers through government and independent organizational policies. These are the organizations that conduct monitoring on the foreign exchange market while at the same time providing licenses and permits to companies that cooperate with the regulations they apply.

Goals of Iforex regulations

The main objective of Iforex regulations is to make sure that fairness and proper ethics are practiced in trading foreign exchange currency. The thing is that all foreign exchange brokers are to hold the regulations with deep respect and must comply strictly with it so that they can do their trades properly and fairly.  All brokers must have the proper license and registration. Licensed Plus500 brokers might be subjected to repeated monitoring and validations to see if they are compliant with the regulatory board.

One of the things that is usually mandated by these organizations is the compliance of the brokers regarding requirement for capitalization.  This regulation requires brokers to have a specific amount of cash at any given time so that they can freely execute their trades. The cash must be enough to cover for a clients’ losses in the event that he goes bankrupt.

Plus500 Regulation on Retail Forex

In the early days of foreign currency exchange, regulations were not yet needed then. But with the boom in the foreign exchange industry due to the emergence of trading in forex through individual retail investors, governments and independent regulatory organizations are now pitching in their ideas on how to regulate all Xtrade trading. There are a lot of bodies doing this. Then there those regulatory bodies that have control over specific aspects of the forex trading industry.

For those actively trading in the foreign exchange market, traders may actually fall victim to non Iforex regulations activities. These acts are automatically considered as fraud. One of the risks that might happen if there are no regulations to be followed is called ’churning’. This is a fraudulent act wherein a broker of trader collects excess amounts of commissions.  Other acts include misinterpretations and the Ponzi scheme, which is an operation where operators pay dividends to investors from new money collected from new investors.  Massive amounts of money have been lost through unregulated operations before. This is why it best to have regulations applied to brokers and traders of FXCM alike to limit or eliminate lost money occurrences.

Lately, iForex regulations have been very successful in keeping the clamps on fraudulent operations and activities.  However, there is still a long way to go since there are still some countries with no regulations to comply with.