What do you know about trading companies? How do you determine its trustworthiness?

POSTED ON2023-11-14 BY SOTALIRAQ

[size=52]What do you know about trading companies? How do you determine its trustworthiness?[/size]

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2023-11-13
The foreign exchange trading market known as Forex is a global market, characterized by being a decentralized market that includes the trading of major currencies such as the dollar, the euro, the British pound, and emerging market currencies such as the Turkish lira and the South African rand. The trading process is carried out through brokerage companies, which have become incredibly widespread these days thanks to the availability of easy technological solutions and advanced communication tools. The main role of Forex brokers is to facilitate retail traders' access to the Forex market and execute their trades via liquidity providers.[/size]
[size=45]While we have witnessed in recent years an amazing proliferation of brokerage companies, their desire is to seize a portion of the market in which the trading volume is estimated in the billions. We find that among these companies seek to operate under a legal umbrella in accordance with specific rules in this market, in the context of seeking to obtain an additional advantage for customers.[/size]
[size=45]The importance of brokerage companies operating in the Forex field obtaining a legal license[/size]
[size=45]Licensing ensures that the brokerage company operates within the legal framework set by the regulatory authorities in the country or region in which it provides its services. Primarily helping the company avoid legal problems and penalties resulting from violating the rules and regulations of trading in the market. At the same time, the license ensures that the brokerage company adheres to specific standards of financial and operational behavior, which guarantee the safety of clients’ funds. For example, the regulatory authorities, which we will detail, require basic conditions for all brokerage companies, most notably the segregation of client funds, maintaining sufficient capital, and implementing... Strong risk management practices, as well as undergoing periodic audits. This helps the company protect its reputation and enhance trust among its customers and partners.[/size]
[size=45]At the same time, the license enables the brokerage company to expand its market reach and its clients by reaching different jurisdictions that require a valid license to operate in the Forex market. This helps the company increase its revenues and profits by offering its services on a broader and more diversified scale. Licensing also facilitates the establishment of banking relationships necessary for the smooth and efficient operation of the brokerage company, especially since most financial institutions and liquidity providers prefer to work with licensed brokers, which ensures their credibility. This helps the company secure better terms and conditions for its transactions and banking services.[/size]
[size=45]Trading through reliable and licensed trading companies[/size]
[size=45]Although currency trading in the Middle East is not a new activity, it is a market that is expanding steadily, as many new traders enter the field periodically. In this regard, the basic advice is limited to learning before starting trading, and when making a trading decision, trading should only be done through trusted trading companies.[/size]
[size=45]Forex brokers regulators[/size]
[size=45]There are many authorities competent to regulate the work and oversight of brokerage companies operating in the field of currency and stock trading. Each regulatory body has a limited geographical scope, and the rules governing each body differ from the other.[/size]
[size=45]Some of the regulatory bodies for Forex brokerage companies in the world are at the forefront as an important guarantee for any company that falls under its banner. The most prominent of these bodies is the Financial Conduct Authority (FCA) in the United Kingdom. Its roles vary, supervising the conduct and precautionary standards of a large number of financial companies in the Kingdom. It acts as a safeguard for the financial system of financial companies operating in the country, imposing penalties and compensation on companies that flout the rules.[/size]
[size=45]The Cyprus Securities and Exchange Commission (CySEC) is in an advanced position as a regulatory and supervisory body for many Forex brokers, as it has a resonant name with a good reputation for traders looking for licensed brokerage companies, while at the same time representing an attraction for these companies due to low taxes and favorable regulations. The most prominent rules by which the Cyprus Commission obligates Forex companies to adhere to the MiFID II directives, which set standards for investor protection, market transparency and financial stability in the European Union. The Cyprus Securities and Exchange Commission also operates a compensation fund that covers clients up to €20,000 in the event of a regulated company failing.[/size]
[size=45]Regulating Forex Brokers in the Middle East[/size]
[size=45]Dubai is at the forefront as a destination for Forex companies in the Middle East and the Arab world, with the authorities in Dubai interested in developing laws to attract investment companies in all fields, as the emirate seeks to maintain its current leadership as a major financial center in the Middle East region. In the UAE, we find the Dubai Financial Services Authority (DFSA) as the main regulatory body for Forex brokers in the Middle East, as it supervises the activity of financial companies in the Dubai International Financial Center. With the aim of strengthening financial markets and adding a kind of stability and transparency.[/size]
[size=45]The DFSA sets standards for licensing, conduct, capital, risk management and reporting, and administers a compensation fund that covers clients up to $250,000 in the event of a regulated company going bankrupt.[/size]
[size=45]Also located in Dubai is the Securities and Commodities Authority (SCA) which is the main regulatory body for forex brokers in the UAE, with the exception of the Dubai International Financial Centre. Aiming to protect investors, the SCA also administers the Investor Protection Fund, which covers clients up to AED 500,000 in the event of a regulated company going bankrupt.[/size]
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