If you’re looking for a new way to invest some of your money you might want to consider Forex trading. It has become a very popular way to invest for those who enjoy a challenge and a certain level of excitement. There are Forex traders located all over the world and an increasing number are located in Portugal. The regulation of this industry is left in the hands of individual countries, rather than one regulatory body overseeing the whole of the industry. And for those of you trading Forex in Portugal, the regulatory body is the CMVM. we should point out that not all regulatory bodies offer the same level of service. In fact, some are really quite lenient. But as you are going to be trading from Portugal, you receive additional protection from MiFID.
The CMVM and its regulation of Forex brokers in Portugal
CMVM stands for Comissão do Mercado de Valores Mobiliáriosin Portuguese, or for English speakers you can refer to it as the Portuguese Securities Commission. It was founded in 1991 and was given responsibility for the supervision and regulation of financial instruments and securities markets in Portugal. It was also tasked with overseeing the operations of those participating in the markets and those providing financial services. As an independent organization, it enjoys financial and administrative autonomy, raising funds from supervision fees that are charged for its services. This includes fees paid by CMVM regulated brokers.
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The CMVM not only regulated brokers in Portugal, it is also responsible for participants of the securities markets, public offerings, and all financial market operators. As well as being involved in the local financial markets sector, the CMVM is involved in IOSCO, the International Organization of Securities and Commissions, and CESR, the Committee of European Securities Regulators. Both these organizations are involved in bringing together the insurance, banking, and securities across the world, and in Europe.
CMVM regulated brokers are required to comply with certain rules and regulations
The main goal of the CMVM is the protection of investors. But it also aims to help with the efficient and regular functioning of the markets, control information, reduce risk, and suppress as well as prevent illegal acts. The CMVM also serves to protect investors, which is a good thing because this section of the investment community is very likely to contain ordinary people who can sometimes be very vulnerable. It provides investor protection by way of constant supervision and regulation as defined by law. Also provided is a system of support for the general public but most particularly for different types of investor. The services include investor assistance, the creation of an investor compensation scheme, and conflict mediation.
CMVM regulated brokers have to comply with a variety of rules and regulations which are related to the way the financial markets function. It helps to keep consumers informed by issuing regular bulletins, which can be easily found on the CMVM website. Included in the bulletins will be news of new regulations, recommendations relating to individuals subject to supervisions, and by issuing instructions relating to the definition of procedures and internal processes.
How MiFID can benefit CMVM Forex brokers
There was mention right back at the beginning of something called MiFID. Some of you reading this will know all about this European Directive but there are also going to be a number who have never heard of it. It is actually a very beneficial piece of legislation for anyone trading Forex in Europe.
MiFID is short for Markets in Financial Instruments Directive which was implemented in 2007. This European Union legislation was created to provide a harmonized system of regulation that all investment services provided in the member states of the European Economic Area are obliged to abide with. And you’ll be pleased to know this includes Portugal. Other aims of this legislation include increased consumer protection and competition in the area of investment services.
Forex brokers which have achieved regulated status in Portugal are awarded passporting rights under MiFID. And this allows them to offer their services in other EEA member states while remaining regulated by the country in which it has a registered office.
MiFID is at present being reviewed with new legislation, MiFID II, coming into force in 2018.
Clients of CMVM Forex brokers have a complaints procedure to follow
One of the requirements of MiFID is for regulated Forex brokers to have in place a complaints procedure. The CMVM has introduced a specific department for this purpose which also provides investors with education and service information. The department is called the DAIC, the Departamento de Apoio ao Investidor e Comunicação. Which in English translates to the Investor Assistance and Communication Department. This service isn’t provided just because it is a MiFID requirement. It is provided to improve investor confidence in the securities markets and in those which offer related services. It helps consumers to gain a better understanding of investment matter and savings.
There is an online complaints form which can be completed if you have a complaint about a CMVM Forex broker, and there is also one if you want to report suspicious transactions. There is also the option of conflict mediation, should you be unable to reach a resolution with the provider. It is called the Conflict Mediation Service and it provides protection for private investors in respect of all activities of financial intermediaries, management bodies of securities markets or issuers, or independent consultants. Its aim is to mediate between aggrieved parties, to act as a pacifier and to resolve conflicts.
Something else the CMVM has introduced in the Investor Compensation Scheme. This Scheme is designed to protect investors should a regulated entity be unable to repay or return an investor’s money. It is only meant for smaller investors and the maximum compensation awarded is €25,000 per investor.
With all the information you are now ready to start looking for your own Forex broker in Portugal. The choice of CMVM regulated brokers is going to be rather limited but you do have the option of choosing a broker regulated in another EEA member state, by virtue of passporting rights awarded under MiFID.
