Forex Trading in the Netherlands and AFM Forex Brokers
Not all countries have accepted Forex trading as readily as others, and there are still a number of countries where this form of investment is banned. In the Netherlands, Forex trading was viewed rather skeptically at first, but it seems that it has now gained acceptance, which is leading to an increasing number of potential investors looking for the best forex brokers in Holland.
It is possible to participate in Forex trading from almost anywhere in the world, as this is one form of investment that is conducted online. The industry as a whole is not regulated by a single regulatory body, but is overseen on a more local level. Each individual country tends to have its own regulatory body, which acts as a watchdog for the industry. As with many forms of regulation, standards can vary immensely, but most are able to meet certain basic standards. In Holland, the regulatory agency responsible for financial services regulation is the Autoriteit Financiële Markten or the AFM. The AFM has deemed Forex trading to be a legal form of investment, and issues licences to Forex brokers operating in or from Holland.
A brief introduction to AFM
Anyone living in the Netherlands will know that AFM stands for Autoriteit Financiële Markten. Those of you living outside of Holland will know it better as the Netherlands Authority for the Financial Markets. It took over the responsibilities of the Securities Board of the Netherlands when it was created in 2002. The legislation that was passed to create the Authority also increased its responsibilities. No longer was it just responsible for the securities markets; accounting, loans, savings, insurance and investment were added to its remit.
The AFM is an autonomous authority, but is the political responsibility of the minister of finance, which basically means its powers have been given to it by the minister. The AFM has a number of aims, including the following:
- Increasing the accessibility of the financial markets for everyone
- Promoting consumer confidence in the financial markets
- Allowing market participants to enjoy smooth operations, and the market to function efficiently and effectively
AFM-regulated brokers have to comply with certain requirements.
All Forex brokers regulated by the AFM are featured in a list that can be viewed on the Authority’s website. It is therefore very easy to check a potential broker’s regulatory status. It helps anyone looking for Forex brokers in Holland with the option to perform a simple online search. By doing so you will be able to check whether a broker claiming to be AFM-regulated is telling the truth.
All AFM Forex brokers have to meet certain financial reporting requirements, such as the submission of regular reports, which will include various items of information relating to trading volume and trading data.
If an AFM-regulated broker is found to be breaking the rules there are a number of things the AFM is able to do. It can impose sanctions, issue warnings, withdraw or cancel the broker’s licence, issue a fine, or start criminal proceedings against the broker.
A number of offshore brokers have looked at the Netherlands as a good base to set up operations. But in order to do so, it must establish a local branch and obtain a licence from the AFM.
AFM works to harmonise European Financial regulation.
The Autoriteit Financiële Markten is a member of the Committee of European Securities Regulators, which means that it is actively contributing to the harmonisation of financial regulation in Europe. It is also a member of the International Organization of Securities Commissions (IOSCO), which brings together securities regulators from around the world.
Something else the AFM takes part in is the Euronext stock exchange. This is a European stock exchange which has locations in Lisbon, Paris, London, Brussels and Amsterdam. From these locations, it provides a number of different services, including custody and settlement services, market solutions and a range of other products; for example, certificate and warrants, commodities, derivatives, equities, exchange-traded funds, bonds, and indices.
There is suitable recourse if you are unhappy with the services of your AFM Forex broker.
We wouldn’t wish a problem on any of our readers, but it will be good for you to know the procedure if you ever find yourself in an unhappy situation. Your first step will be to write a letter of complaint to the AFM Forex broker. In the letter, you must explain the problem and send a copy of the letter to the AFM. As an AFM-regulated broker, there will be a defined complaints procedure for you both to follow.
If you are unable to reach a satisfactory resolution after your communication with the broker, it is possible to take the complaint to the next level by writing a letter to the Financial Complaints Tribunal (Kifid). There are a number of other dispute resolution services available in Holland, but Kifid is the only one officially recognised by the minister of finance. The Financial Services Ombudsman and the Financial Services Disputes Committee are the two bodies that make up Kifid. The first step these bodies will take is to try and mediate with the aim of reaching an amicable solution. This won’t cost you anything, but if the problem is not resolved it will have to be taken to the Disputes Committee, which will cost €50.
The Complaints Tribunal may decide that it is unable to handle your complaint, which means you have the option of applying to the courts.
Your final option is to get in touch with the AFM’s Financial Markets Information Line and request an investigation to be instigated. This can only be done if it is considered that the broker has broken AFM rules. The powers given to the AFM permit it to liaise with the undertaking, impose a fine, or revoke its licence. However, it is unable to mediate on its behalf or determine whether the complaint is valid.
Choosing a Forex broker in Holland is an important decision, and one that can have a dramatic effect on your success.