Forex Trading in Kuwait and CBK Forex Brokers
Forex trading as a form of investment is becoming very popular in Kuwait. Much the same as in many other countries, ordinary people are looking to Forex trading as an exciting way to make money. This is possibly due to the fact that stocks and shares, real estate and equities are no longer as popular as they once were, and also due to the fact that online Forex brokers are now able to offer their services almost anywhere. If you’re looking for Forex brokers in Kuwait you would be wise to consider licensing and regulation as important factors in your decision; and as you are a resident of Kuwait you should firstly be considering CBK-regulated brokers.
What the CBK does for you as a consumer
The CBK, or Central Bank of Kuwait, is the official body with direct responsibility for maintaining a strict currency system in the State of Kuwait. It also regulates the stock exchange in Kuwait, the Ministry of Finance, and the Ministry of Commerce and Industry. It’s no newcomer to the world of financial regulation, as it was first established following the passing of Law No. 32 in 1968. The law was passed to formalise the organisation of banking business, to create the Central Bank of Kuwait and to be concerned with currency. The Central Bank of Kuwait may have started life as an issuer of banknotes and coins, as it took over this role from the Kuwaiti Currency Board, but it now has a much wider remit. All of these points are important for you as a consumer and resident of Kuwait.
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The Central Bank of Kuwait is responsible for the following:
- Issuing the country’s currency on behalf of the state
- Directing credit policy, which in turn contributes to the social and economic progress of the country, as well as improving the national income
- Helping to stabilise the Kuwaiti Dinar, so enabling it to be freely converted into other currencies
- Serving as the Kuwaiti Government’s banker
- Acting as a Government’s financial adviser
- Supervising the country’s banking system.
There are a number of supervisory functions performed by the Central Bank of Kuwait that will be of particular interest to those of you looking for CBK-regulated brokers. Some examples are as follows:
- The study and analysis of all new entrants into the financial and banking system
- Proposing and recommending remedies for problems encountered by CBK Forex brokers and other regulated entities
- Development and organisation of financial and banking operations in Kuwait, encouraging them to cooperate together for the enhancement of their economic roles
- Analysis of data and information provided by CBK-regulated financial services providers, and providing proposals and recommendations
- Conduction of investigations into the operations of all regulated providers to ensure they are complying with CBK law, as well as other relevant laws and resolutions
- Development of supervisory procedures and policies that are in line with international standards.
Is it important to choose a CBK-regulated broker in Kuwait?
Choosing the best Forex broker is one of the most important decisions you’ll have to make. To make things much harder you’re going to be faced with thousands of online Forex brokers to choose from. There are several features to bear in mind when looking at your options. The choice of trading platform, number of tradeable instruments, bonuses, and spreads are certainly worthy of featuring in your list; but at the top, you should place licensing and regulation. While the introduction of online trading has opened up this form of investment to a much wider audience, it has also led to a number of unscrupulous, fraudulent, and downright poor service providers entering the market and scamming investors out of their money. It is very likely that this type of broker will be unlicensed and unregulated, or without any form of bona fide supervision, which can only lead to them doing exactly what they want, and ultimately taking your money.
As there is no centralised marketplace for Forex trading, and it is able to operate online without the need for a central exchange or clearing house, its supervision is undertaken by country-specific regulatory bodies. It is completely up to the individual broker as to whether they decide to go the extra mile and become regulated, but should they offer their services in a country where regulation is required there could be substantial fines or costly penalties if they are found out. In Kuwait, it is the Central Bank that oversees the financial markets in Kuwait and provides licences to those that demonstrate good business practices and have the required amount of capital
If you’re wondering why Forex regulation came about, you only have to consider the currency size of the market, presently one of the biggest financial markets in the world. Nearly $4 billion in trades takes place every day. An increased need for surveillance and regulation has arisen because Forex trading is no longer restricted to banks and large corporations. Many more ordinary folks are now taking part, which means that a higher level of protection is needed for consumers.
One of the biggest risks you’ll have to face is not your choice of currency pair, but your choice of broker, and the risk of falling victim to an illegal activity or scheme. Some of the tactics an untrustworthy broker will employ include high-pressure tactics, Ponzi schemes, misrepresentation, and excessive commissions. You will be able to reduce such risks significantly by choosing a CBK-regulated broker. It’s only fair to point out, though, that you will not be afforded 100% protection – a certain amount of vigilance will still be required wherever you might be trading from.
CBK-regulated Forex brokers follow a set procedure for complaints.
Your first port of call with any complaints will be to try and resolve the issue by contacting the company concerned. If you are unable to find an amicable solution to the problem, it is possible to contact the Consumer Protection Unit, which is run by the CBK. There is an online complaints form that has to be completed, following on from which the issue will be investigated.
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