Don’t Worry About Looking for a Regulated Broker – Check out our Guide to FSPC Forex Brokers.
All over the world, ordinary people are becoming very excited about Forex trading as a new form of investment. If you’re one of these people there is an important decision waiting to be made before you start trading, and that is to find the right partner to help in your endeavours. Forex trading isn’t something you can undertake on your own, as you need a Forex broker to help you make your trades. If you’re looking for Forex brokers registered in the Cook Islands, the Marshall Islands, Mauritius, Saint Vincent and the Grenadines or the Seychelles, we think we can help.
The financial markets are a complicated place in which to invest your money. To protect those with little knowledge or expertise, regulation plays a vital role. As the world of Forex is so vast and trades aren’t conducted in one single place but are performed online, there is no one single entity charged with its regulation. Countries take responsibility for regulation on a more local basis, and most countries will have their own regulatory authority. Some of these authorities are better known and more respected than others, and a couple of examples are the FCA, CySEC, and BaFIN. One other name you may have seen mentioned is the FSPC.
What is the FSPC?
The Financial Service Provider Commission is represented by the initials FSPC. It is an independent company that maintains a registry of all individuals, firms and other bodies that have received accreditation or are registered with the FSPC. It also holds information on firms that are registered to conduct mediation by the FSPC, or licensed entities in recognised jurisdictions. The recognised jurisdictions include the Cook Islands, the Marshall Islands, Mauritius, the Seychelles, and Saint Vincent and the Grenadines. The firms that might be accredited or registered with the FSPC include stockbrokers, asset managers and financial advisers, investment firms, issuers of electronic money, debt collectors, firms operating an electronic system related to lending, and Forex brokerage firms.
What are the benefits of choosing FSPC-regulated brokers?
For a Forex broker to appear in the register provided by the FSPC it has to be reviewed by an independent organisation and be independently assessed. It will also be required to comply with certain standards relating to performance, transparency, and liquidity. In order to give you an idea of the specific requirements for FSPC Forex brokers let’s give you a few examples:
- $35,000 minimum company equity
- An expected level of competency, knowledge and skill in responsible managers
- Competency and training of representatives
- Conformity with recognised international corporation standards
- Risk management, compliance and management of conflicts of interest
- A sufficient level of financial, technological and human resources
- Offering of a dispute resolution service, or membership of such a service.
Should a registered entity receive more than three different complaints against it within a period of 3 months the FSPC reserves the right to revoke a company’s registration.
When these requirements are compared with other more recognised regulatory bodies, they seem little more than a generalisation of what you have come to expect from a bona fide company, in whatever industry they may be providing services. Nevertheless, a series of basic requirements is much better than no requirements at all, as that would allow a financial services provider to do exactly what they please. Yes, there are a number of far stricter regulatory bodies, and if you’re just a beginner you might be better protected by choosing a broker that is regulated by one of them.
FSPC-regulated brokers have to be part of a dispute resolution service.
The FSPC requires all regulated Forex brokers that appear in the list to be a member of a dispute resolution service (DRS). Should a listed company cease to be a member of a DRS it must inform the FSPC in writing within 3 working days. This includes instances where the DRS is no longer in operation, if DRS membership is not renewed, or if the DRS has terminated the company’s membership.
Another type of service available for FSPC Forex brokers is that of mediation. It is different to arbitration as it doesn’t involve an adversarial hearing and there is no official present to make the ultimate decision. Instead, the parties are encouraged to come together with a neutral third party who acts as the go-between. The idea behind mediation is for both parties to reach an amicable decision.
Why it’s important not to choose an unregulated broker
Generally, when you do some online research because you’re looking for the best Forex broker, the information you find will be related to licensed and regulated brokers operating in countries where regulation is well established. However, you are also likely to get a number of hits for offshore brokers who operate out of countries where the regulations and rules are a little lax. You may also get a few hits for brokers operating in countries where there is no regulation at all. You may find yourself seriously tempted by the service being offered, so let’s look at some of the reasons why a broker may decide to be unregulated and unlicensed.
Probably the main reason is to reduce operating costs, as gaining a licence and keeping it can be very expensive. Let’s give you an example so you can better understand why. The FCA, for example, requires licensed brokers to pay millions, which means a big dent in any profits. Capital requirements can also be prohibitive for many new brokers because they simply can’t raise such large amounts of capital. Unregulated brokers also tend to be located in offshore tax havens, further reducing their tax burden by a significant amount.
It could also be that an unregulated broker wants to offer a different range of products, or cater to the needs of a different type of customer.
However, there are also a number of unregulated brokers whose aim is a little more sinister. All they want to do is take as much of your money as possible and give nothing back in return. Put quite simply they are offering empty promises. It is possible to find the details of a number of cases where an unregulated broker has been proven to be operating fraudulently or unfairly, losing their clients a lot of money. With an unregulated broker, there is very little recourse, which is one of the main reasons for only choosing a regulated broker in the Cook Islands, the Marshall Islands, Mauritius, the Seychelles, or Saint Vincent and the Grenadines.