Forex Trading in Estonia and MTR Forex Brokers
Estonia is one of the European Union’s smallest countries, both in terms of presence and population. But this isn’t stopping Estonians from enjoying a popular form of investment, which is Forex trading. There aren’t all that many Forex brokers in Estonia, but don’t let that put you off, because the situation is much brighter than it seems. As Estonia is a member of the European Economic Area you are able to take advantage of the Markets in Financial Instruments Directive (MiFID). This gives brokers regulated in other EEA countries the right to offer their services in Estonia, by way of passporting rights. This Directive also works in the other direction, as passporting rights are also awarded to MTR-regulated brokers.
MTR is not actually a regulatory body in the strictest sense of the word. Regulation of the financial services industry in Estonia is undertaken by the EFSA, but licensed companies have to be listed in the MTR.
What does MTR mean?
MTR is an online resource developed by the Ministry of Economic Affairs and Communications, which is located in Tallinn. The initials actually stand for Majandustegevuse Register, and using a very simple search option you will be able to find the details of all MTR Forex brokers and any other registered financial institutions. The advice for anyone looking for Forex brokers in Estonia is to check with this register before you sign up with a particular broker and open an account.
What more can we say about MTR? Not a lot really, so let’s consider the work of the EFSA and Forex trading in Estonia.
What is the EFSA and how does it protect consumers?
EFSA stands for the Estonian Financial Supervision Authority, which is the official body responsible for regulating the country’s financial markets. Formed in 2000 in response to a perceived need for more formal regulation, its main goal is the protection of the consumer. However, it has also served to improve the transparency of the financial sector, which can only be considered a good thing.
A number of policies have been introduced which are designed to reduce financial abuse and malpractice, as well as to safeguard investors. All the regulations were introduced to comply with the European Directive, MiFID.
The EFSA is not run by the Government, but is an independent agency funded by membership fees and fines, rather than taxpayers’ money. It may not impose such strict regulations as other more renowned regulatory bodies, but nevertheless meets the minimum requirements of MiFID.
What is MiFID?
MiFID stands for the Markets in Financial Instruments Directive, which is a piece of legislation introduced in 2004 by the European Parliament and Council. It imposes certain regulations with regard to the provision of investment services across the European Union. It is currently under revision, but its initial aim was to provide an environment where the regulation of investment services is harmonised across all member states.
The choice of regulated Forex brokers in Estonia is still a little limited.
Unfortunately for those of you looking for EFSA- and MTR-regulated Forex brokers your choice is going to be limited, as there aren’t an awful lot of brokers looking to set up a base of operations in Estonia; not at this present time anyway. But don’t let this put you off, as you should still be able to find an MTR Forex broker that offers a more than adequate trading platform. You should even have a choice of more mainstream Forex brokers offering their services in Estonia.
The best advice we can give you when looking for regulated brokers is to always check any claims made by them. It has come to our attention that a number of brokers claim to be regulated when they aren’t, which means you should always perform due diligence and check any references to regulation of licensing on the website of the regulatory body in question. If you are looking at EFSA-regulated brokers it is possible to check the validity of a broker’s license with a quick search.
Does the EFSA or MTR offer any kind of support for Forex traders in Estonia?
The EFSA is really little different from a number of other regulatory bodies in that it offers no direct intervention between a client and their brokers. When there is a need for making a complaint there is no assistance or arbitration available for the investors. That doesn’t mean the EFSA is no help at all, though, because it has created an excellent education portal for consumers. There is plenty of helpful advice for consumers looking to make any kind of investment, not just those looking for Forex brokers in Estonia.
Muniraha.ee is the website to visit if you’re looking for more information relating to various types of financial products, insurance guidelines, calculators, investment advice, and lots of online tools to help you make the best financial decisions.
Why you should choose a regulated broker in Estonia
The reason is that, quite simply, not doing so is leaving yourself open to unnecessary risk. And do you really need additional risk when Forex trading is a risky enough investment?
If you take the sensible route and choose a regulated broker you can enjoy peace of mind because you can be confident they will follow recognised guidelines and provide you with an adequate level of service. Regulated brokers have to comply with a number of different regulations and restrictions, all of which are developed for your protection. The use of segregated accounts is one such requirement, which means a broker who is facing financial difficulties or bankruptcy will not be able to use your funds to repay debts.
If you are a resident of Estonia, your choice of regulated broker is a little wider. Not only can you choose an EFSA- or MTR-regulated broker, but you also have the option of choosing a broker that is regulated in another EEA member state.