Forex Trading in Uruguay and BCU Forex Brokers
For those of you considering Forex trading in Uruguay, your first decision is going to involve finding the best Forex broker. Forex trading has gained a significant amount of interest and this has led to an increasing number of brokers offering their services. There are a number of things you will have to bear in mind but the most important is whether the broker is regulated and licensed. Countries in which Forex trading is possible usually impose their own regulations, as there is currently no single authority with ultimate control. In Uruguay, the regulatory authority is the Central Bank of Uruguay, otherwise known as the Banco Central del Uruguay (BCU). which means it also acts as the regulator for Forex brokers in Uruguay.
Introducing the BCU and its responsibilities
In 1967, a law was passed called the 196th Article of the República Oriental del Uruguay’s Constitution, and this led to the creation of the Central Bank. it was created as an autonomous state entity and took over the role of the Banco de la República Oriental del Uruguay as the issuer of currency and the management and supervision of the Uruguayan banking system. In 1995 a bank charter was passed which led to further responsibilities being given to the BCU. These included:
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- The issuance of the country’s currency
- Management of currency, monetary and credit exchanging in accordance with the law
- The administration of the country’s international reserves
- Acting as an advisor to the government in relation to the economy, and being the government’s financial agent and banker
- Being the government’s representative at international financial institutions
- The regulation and supervision of all financial services providers, which includes Forex brokers in Uruguay
What sort of rules do BCU regulated brokers have to comply with?
There are three sets of regulations for BCU Forex brokers to follow. However, the specifics which are going to be more relevant to you as a Forex trader are the Consolidated Rules for Capital Markets. This is because they relate to the offering and trading of securities.
The regulation process is ongoing, as the Central Bank’s board of directors or the Superintendency of Financial Services are able to make amendments. The Central Bank also has a department which controls and regulates the financial services sector, that is also able to make changes.
What is the purpose of regulating Forex brokers in Uruguay?
Countries which have gone to the trouble of regulating their local financial services markets do so for a number of reasons. But they tend to have the same goals in mind. For example, regulation is done in order to maximize transparency, correct operations, competitiveness, mitigation of risk, and above all to protect investors by giving them access to acceptable information levels.
As you are wondering about Forex trading in Uruguay why don’t we look at the role of regulation and the BCU? The main function of the BCU is to ensure the stability, proper functioning and solvency of any financial services providers. The Superintendency of Financial Services is the particular department within the BCU which has responsibility for supervision and regulation of the Uruguayan financial system. One further role is to disclose information relating to BCU regulated brokers.
The Banco Central del Uruguay performs a number of different functions in order to fulfill its role:
- Regulation of the country’s financial system
- Acting as an overseer of all financial market participants
- The promotion of transparency
- Helping in the fight against money laundering and the financing of terrorism
- Enabling consumers to be more confident
- Providing a powerful voice with regards international relations
- Performing processes of authorization
A good to tip for avoiding scams is to choose a BCU regulated Forex broker
The unfortunate side of Forex trading is that there are a number of unscrupulous providers which are nothing more than a scam. You’ll definitely be attracted by some of their enticing offers, promotions, bonuses and amazing promises, but signing up and opening a trading account will be the beginning of a whole heap of problems.
One way to avoid such a costly mistake is to choose a broker which is licensed and for those of you living and trading in Uruguay this will be a BCU Forex broker. A number of other factors are worth bearing in mind and will greatly reduce the chances of you being taken in by a get rich quick scheme.
Knowledge is a powerful tool
If you’re a complete novice there is a lot to learn before you start trading. It is possible to trade Forex without any knowledge at all, but you are going to be in a much better position if you gain at least the basic knowledge. There are a number of brokers who offer heaps of educational material, including seminars, webinars, and tutorials. But if the Forex broker in Uruguay you are considering has nothing at all it won’t be a problem because there is a wealth of online material available.
Does the broker offer a transparent service?
You should be looking for a broker that is willing to share all the important information with you, up front and in an open way. You want to be able to find out all the charges and fees you are likely to be paying, know whether the spreads are fixed or variable and what they might be, as well as be aware of how to make a withdrawal from your trading account and be aware of the terms and conditions attached to any trading bonuses.
Is the broker promising you an unrealistic return on your investment?
Any promises you are made with regards your investment will have to be looked at in a realistic way. Ask yourself whether the promises are too good to be true, and you will probably find that they are.
Check the broker uses secure systems
Only choose a BCU Forex broker that makes use of recognized payment security systems and internet connection. There will usually be some kind of reference to the security systems used in a broker’s trading information. Look for Verisign or SSL and you’re going to be heading in the right direction.