For those of you considering Forex trading in Uruguay, your first decision is going to involve finding the best Forex broker. Forex trading has attracted 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 titled the 196th Article of the Constitution of the República Oriental del Uruguay was introduced, which 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 the following:
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- Issuing the country’s currency
- Managing the currency, and monetary and credit exchange in accordance with the law
- Administering 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
- Regulating and supervising all financial services providers, including 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 that 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 both the Central Bank’s board of directors and the Superintendency of Financial Services are able to make amendments. The Central Bank also has a department that controls and regulates the financial services sector, which is also able to make changes.
What is the purpose of regulating Forex brokers in Uruguay?
Countries that 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 maximise transparency, correct operations, competitiveness and mitigation of risk, and above all to protect investors by giving them access to acceptable levels of information.
As you are wondering about Forex trading in Uruguay? Then let’s 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 that has responsibility for supervision and regulation of the Uruguayan financial system. One further role of theirs is to disclose information relating to BCU-regulated brokers.
The Banco Central del Uruguay performs a number of different functions in order to fulfil its role:
- Regulating the country’s financial system
- Acting as an overseer of all financial market participants
- Promoting transparency
- Helping in the fight against money-laundering and the financing of terrorism
- Enabling consumers to be more confident
- Providing a powerful voice with regard to international relations
- Performing processes of authorisation.
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 that 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 that 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 also worth bearing in mind that 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 you are considering in Uruguay offers nothing at all in this regard it still 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 identify all the charges and fees you are likely to be paying, to know whether the spreads are fixed or variable and what they might be, and to be aware of how to make a withdrawal from your trading account as well as 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 regard to your investment will have to be looked at in a realistic way. If you have to ask yourself whether the promises are too good to be true, you will probably find that they are.
Check that the broker uses secure systems
You should only choose a BCU Forex broker that makes use of recognised payment-security systems and Internet connections. There will usually be some kind of reference in a broker’s trading information to the security systems used. Look for Verisign or SSL and you’re going to be heading in the right direction.
