Looking for a Regulated Broker? Why Not Consider SIBA Forex Brokers?

SIBA logoForex trading is a risky form of investment, particularly for the novice trader. One way to reduce the likelihood of fraud and to safeguard your investment is to look for a regulated broker to do business with. There are a number of different regulatory bodies located in various locations across the globe. However, some regulators are better known than others; for example, the FCA in the UK, and BaFin in Germany. A relative newcomer to the Forex regulation industry is SIBA, which stands for the Seychelles International Business Authority.

A brief introduction to SIBA

SIBA itself is not a new name in the world of finance, but we have chosen to call it a newcomer because it only recently came to the forefront of Forex regulation. Prior to 2013, it was the Central Bank of Seychelles that had responsibility for regulating the financial markets, but in 2013 SIBA replaced the Central Bank as the country’s official regulator, and became the Seychelles Financial Services Authority. The responsibilities of the FSA include the licensing and monitoring of non-bank financial services in Seychelles, as well as registering international companies, limited partnerships, foundations, and a number of other financial services providers. As well as these regulatory roles, the FSA also organises conferences and seminars across Asia and Europe to keep investors up to date with the latest developments in the Seychelles financial markets. Of particular interest are Russian and Chinese investors.

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Does SIBA directly regulate Forex brokers?

SIBA is not directly responsible for regulating Forex brokers, so you will struggle to find a  true SIBA-regulated broker. Forex brokers are considered to be non-banking financial companies, and as such come under the regulation of the Seychelles Financial Services Authority. The FSA licenses, regulates and develops financial companies located in the Seychelles to ensure that consumers are protected as much as possible from a wide range of financial abuses and frauds.

SIBA Forex brokers (or should we be saying Seychelles FSA Forex brokers?) have to follow a set of rules much like any other regulated broker. In the Seychelles, these rules were developed as part of the Financial Services Authority Act, 2013.

Are there many SIBA regulated brokers to choose from?

As SIBA, under the guise of the FSA, has only been regulating Forex brokers for a few years, it has yet to gain a foothold as significant as that of other more established regulatory bodies. And unfortunately, the Seychelles isn’t really able to offer any great advantages or incentives for Forex brokers to set up base in the country. Forex brokers, on the whole, tend to stick with better-known regulatory authorities when it comes to licensing and regulation. Neither is the Seychelles considered to be a prime location; most brokers choose to base the headquarters in Europe or Asia. As well as location and reputation tending to put brokers off, there is also the question of Africa’s turbulent history. While things are getting better in some locations, Africa still lacks the appeal and economic stability of a number of other regions.

Are things going to get better for SIBA?

It isn’t easy for SIBA to compete against other more prominent and well-known regulatory agencies, which tends to make it more difficult for SIBA-regulated brokers. This is because SIBA’s lack of reputation brings various limitations, and traders tend not to trust companies that are relatively unknown.

So far, SIBA has struggled to protect clients and investors, as taking action against members would have an impact on their revenues. On the whole, it has tended to keep penalties and sanctions very minimal for companies found guilty of financial crimes, malpractice, and manipulation; which of course means that investors are not going to look very favourably towards those that could potentially take their money and then not have to worry too much about breaking any rules.

We spent some time on the Authority’s website, and when we compared it with other regulatory bodies’ websites we were very disappointed. There is very little information and very few online resources. There is also a lack of complaint-resolution portals or forums.

On a brighter note, SIBA FSA is very committed to the prevention of money laundering, and regularly updates the relevant regulations. However, it is likely doing this in order to prevent the country being labelled as one where money laundering is a serious issue. The Seychelles has managed to stay in the UN’s good books by modifying their regulatory guidelines to keep up with more developed countries; but it fails because there are very few initiatives to ensure that the rules are adhered to by SIBA-regulated brokers.

Is it a good idea to choose a Forex broker regulated by SIBA?

While we are happy to recommend that Forex traders only choose brokers that are licensed and regulated, unfortunately not all regulatory bodies are cut from the same cloth. Brokers regulated by SIBA are on the whole committed to the welfare of their clients, but we would advise anyone considering a SIBA-regulated broker to make the choice only after carefully weighing up the options. SIBA is a recognised authority, but it is still possible for companies to try and trick clients by committing financial fraud and siphoning funds off unsuspecting investors.

Given the choice, it is probably better to pick a Forex broker that is licensed and regulated by a well-known regulatory body. By making this choice a trader can feel more confident that their funds are safe and secure.

We do, of course, always mention whether a Forex broker is licensed when writing our Forex broker reviews, and we always check for the latest information. SIBA may be lagging behind in the popularity and reliability stakes, but the world of finance is ever-changing, and there is plenty of time for SIBA to catch up. Remember to come back and visit our site on a regular basis, as we will regularly add to and update the information.

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