Does Regulation really matter in Forex | Forex Factory

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Does Regulation really matter in Forex

  • #1
  • First Post: Jan 4, 2017 1:51am Jan 4, 2017 1:51am
There have been complaints by some Forex traders that their profits were wiped out by some brokers. What bothers me is that these brokers are regulated. Some give flimsy excuses why they remove the profits, while some don't even give the traders any reply why they did it. When Forex Tsunami happened in January on 15th January,2015 some brokers closed down, traders money still completely trapped. Why regulation, and what can regulation do to help traders? How can we lodge complaint?
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  • #2
  • Jan 4, 2017 6:43am Jan 4, 2017 6:43am
regulation gives confidence to a certain degree. but it doesnt make it foolproof.

we are not talking about major institutions such as regulated banks which are too big to fail, which are thus subjected to bailouts by the reserve banks.
bailout of brokers in the event of black swan events, are usually out of greed by other corporations. (EG: fxcm bailed out by leucadia, not the fed)

regulation merely spotchecks that a firm is acting in accordance to safeguard client's monies in best way it can. And that they are not a ponzi scheme. However this too sometimes fail. (EG: IRONFX)

regulations does not dictate how a firm should do it's business (A BOOK / B BOOK)

the swiss blackswan incident which u are referring to are in no parts wrongdoings on the brokers(perhaps some on b books). it was a market shock to the whole world.
a A-book broker could end up closing down because their LP demanded payment from them but they dint have the money because the client, already in negative balance doesnt want to pay.

a B-book broker could end up closing down because their client made huge profits and are unable to pay their clients because of lack of capital. refusal to pay client would be damaging to their firm, thus would be wiser for them to close shop and rebrand under a new name.

unless you are a big fish and have access to a direct line of credit with the LPs, this is a systemic risk which you have to undertake.
  • #3
  • Jan 4, 2017 7:12am Jan 4, 2017 7:12am
Quoting Bicarus
regulation gives confidence to a certain degree. but it doesnt make it foolproof. we are not talking about major institutions such as regulated banks which are too big to fail, which are thus subjected to bailouts by the reserve banks. bailout of brokers in the event of black swan events, are usually out of greed by other corporations. (EG: fxcm bailed out by leucadia, not the fed) regulation merely spotchecks that a firm is acting in accordance to safeguard client's monies in best way it can. And that they are not a ponzi scheme. However this too...
Great thanks for your education. It means that regulatory agents can't even help traders who find it difficult to withdraw profits/capital
Make all mistakes in demo and rain in pips in live account
  • #4
  • Jan 4, 2017 1:05pm Jan 4, 2017 1:05pm
Quoting 9jatrader
There have been complaints by some Forex traders that their profits were wiped out by some brokers. What bothers me is that these brokers are regulated. Some give flimsy excuses why they remove the profits, while some don't even give the traders any reply why they did it. When Forex Tsunami happened in January on 15th January,2015 some brokers closed down, traders money still completely trapped. Why regulation, and what can regulation do to help traders? How can we lodge complaint?
It also depends on where the broker is regulated. Not all regulatory bodies in the world are the same. Some regulatory bodies are joke and their resulting regulations are useless but some regulatory bodies DO have effective regulations that monitor brokers effectively to deter scams and have well-established procedures regarding recuperating client funds during broker insolvency. You just have to trade with the right broker that's regulated by the right agency.

Brokers who confiscate profit from traders; those are pure scam brokers. I don't care what excuses they use, they are not justified. Unless the traders obtained the profit by hacking into the brokers' system or outright stole them or through any illegal means, the brokers have no right to confiscate profit from traders. Once the traders earned the profit through legal means, it's theirs to keep. Any brokers who remove or confiscate profit are scam brokers because they have rigged their system so much that it's not possible for traders to profit with them and they literally do NOT allow you to make money with them; they are pure casinos. So if you ever made profit with them, they will confiscate the profit and kick you out as clients just like casinos do. No regulations is enough to stop those "brokers" except by warning traders to stay away from them in the first place.
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  • #5
  • Jan 4, 2017 1:25pm Jan 4, 2017 1:25pm
Quoting Forexia
{quote} It also depends on where the broker is regulated. Not all regulatory bodies in the world are the same. Some regulatory bodies are joke and their resulting regulations are useless but some regulatory bodies DO have effective regulations that monitor brokers effectively to deter scams and have well-established procedures regarding recuperating client funds during broker insolvency. You just have to trade with the right broker that's regulated by the right agency. Brokers who confiscate profit from traders; those are pure scam brokers. I don't...
I appreciate.
Make all mistakes in demo and rain in pips in live account
  • #6
  • Jan 4, 2017 5:27pm Jan 4, 2017 5:27pm
Regulation does not matter. I have been forced to experiment with unregulated brokers because of the terrible broker options in the US. I can confirm there's no difference . In fact, the most stressful Broker experience i had in the last 2 years was when FXCM blew up on the swiss event and my withdrawal with them was pending until they signed the deal and confirmed operations. If they had no deal and went under, i would have waited over a year for my money. It's all dependent on the broker and the people running the shop. If you start getting disputes about profitable trades on an unregulated broker then take your money and leave. My conclusion with this... my broker is unregulated and gives 500:1 leverage. I would rather trade with 500:1 unregulated and keep more funds in my wallet than trade at 50:1 with an NFA broker and have to put 5 times the amount of capital in the brokers bank to trade similar size
  • #7
  • May 14, 2018 1:54am May 14, 2018 1:54am
Quoting psperos
Regulation does not matter. I have been forced to experiment with unregulated brokers because of the terrible broker options in the US. I can confirm there's no difference . In fact, the most stressful Broker experience i had in the last 2 years was when FXCM blew up on the swiss event and my withdrawal with them was pending until they signed the deal and confirmed operations. If they had no deal and went under, i would have waited over a year for my money. It's all dependent on the broker and the people running the shop. If you start getting disputes...
I agree with you it doesn't matter. Mostly traders prefer to trade with the unregulated brokers.
  • #8
  • Jun 23, 2018 4:10am Jun 23, 2018 4:10am
A few years ago forex market is only dominated by the interbank parties, leading commercial and central banks. However, with the development of technologies, online brokerage houses are increasing and they are now taking the charge of providing floors to the retail, small scale traders. But forex is a decentralized market no one can ensure monitoring here. And for this reason, traders should work with reliable, regulated broker to ensure safe trading always.
  • #9
  • Last Post: Jul 27, 2018 4:29am Jul 27, 2018 4:29am
Quoting LorraineMor
A few years ago forex market is only dominated by the interbank parties, leading commercial and central banks. However, with the development of technologies, online brokerage houses are increasing and they are now taking the charge of providing floors to the retail, small scale traders. But forex is a decentralized market no one can ensure monitoring here. And for this reason, traders should work with reliable, regulated broker to ensure safe trading always.
I agree with you; but till now having regulation from a reputed company it’s a symbol of transparency according to me.
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