Can Regulators close down a forex broker?

forexjudge

Junior member
19 2
If a forex broker is found guilty of extorting money or scam practices, I want to know what the regulators can do. Do they have the power to close down the Broker.

Here is what I am thinking: A new forex broker can register under a regulatory body voluntarily to get traders attention. All a regulatory body has to do is give the broker a license number. I think this is a voluntary action by the broker because we have unregulated brokers today. If it is compulsory for all brokers to be regulated, then there won't be any unregulated brokers.

My debate is this: How can a regulatory body exercise total control over a broker when the broker is voluntarily asked to be regulated. Or do I not get the sense of this? Please I need someone to explain better.
 

Giovan

Active member
163 7
""All a regulatory body has to do is give the broker a license number. I think this is a voluntary action by the broker because we have unregulated brokers today"""
Many of the unregulated are just bucket shops. Soon or later they either go under without a word or get closed down due to illegal practices.
 

bigmistake

Well-known member
264 1
I don't know the answer but seems I have neverr seen a case like that. A lot of scam brokers are still alive and no one close it.

I recommend every trader stick with STP/ECN NDD broker.
 

Black Jack

Junior member
37 1
If a forex broker is found guilty of extorting money or scam practices, I want to know what the regulators can do. Do they have the power to close down the Broker.

Here is what I am thinking: A new forex broker can register under a regulatory body voluntarily to get traders attention. All a regulatory body has to do is give the broker a license number. I think this is a voluntary action by the broker because we have unregulated brokers today. If it is compulsory for all brokers to be regulated, then there won't be any unregulated brokers.

My debate is this: How can a regulatory body exercise total control over a broker when the broker is voluntarily asked to be regulated. Or do I not get the sense of this? Please I need someone to explain better.

All firms trading Forex in the UK have to be regulated by the FCA under the Financial Services and Markets Act of 2000 (FSMA) since December 2001 and any Forex trader operating from the UK whilst not being regulated are acting illegally. If a regulated firm breaches the regulations set out by the FCA then it has the authority to fine them or suspend their permissions if they decide that the breach is serious enough to do so.
 

highbury fx

Well-known member
338 114
All firms trading Forex in the UK have to be regulated by the FCA under the Financial Services and Markets Act of 2000 (FSMA) since December 2001 and any Forex trader operating from the UK whilst not being regulated are acting illegally. If a regulated firm breaches the regulations set out by the FCA then it has the authority to fine them or suspend their permissions if they decide that the breach is serious enough to do so.

They don't have to be regulated by the fca just because they're doing business in the UK.

Under mifid they can passport their European regs into the UK and operate as a branch or subsidiary of the holding company.
 

Black Jack

Junior member
37 1
They don't have to be regulated by the fca just because they're doing business in the UK.

Under mifid they can passport their European regs into the UK and operate as a branch or subsidiary of the holding company.

That may well be the case, but seeing as there is no mention in the original query of the broker being based in a nation other than the UK, my response was based on the assumption that the forex broker in question was based in the UK.
 

highbury fx

Well-known member
338 114
That may well be the case, but seeing as there is no mention in the original query of the broker being based in a nation other than the UK, my response was based on the assumption that the forex broker in question was based in the UK.

Cool. Only trying to help.

But your post did start 'All firms trading forex in the UK have to be regulated by the FCA'

That's wrong and I was correcting your error as there is no point in posting information that is meant to help if it is incorrect.
 

forexjudge

Junior member
19 2
I think if a country requires all trading firm to register under a regulatory body, then it is very necessary. However, if a broker is located in another country, I don't see any reason why it has to register under another regulatory body from another country. This might partly why offshore brokers have refused to be controlled by another country. Just my thought...
 

highbury fx

Well-known member
338 114
I think if a country requires all trading firm to register under a regulatory body, then it is very necessary. However, if a broker is located in another country, I don't see any reason why it has to register under another regulatory body from another country. This might partly why offshore brokers have refused to be controlled by another country. Just my thought...

A Forex firm can set up pretty much anywhere. If that firm decides to set up business in an unregulated environment then they would find it very difficult to market themselves directly in to a territory that does demand its brokers are regulated.

An FCA firm cannot for example go over to Australia and begin holding seminars or other marketing tactics in order to acquire Australian clients. However, Australian people can find the website of the unregulated broker (unregulated in their country) and make an application for an account.

There is no central regulator for all forex brokers and therefore there is no single regulatory body that will take responsibility for all forex brokers. Bear in mind though that there is no easy route to getting a license number - they aren't just dished out and in most cases the application process takes months of preparation.
 

Lele191

Newbie
1 0
A firm using European passporting that is regulated in another European country will still have some 'host state' regulation by the FCA. Financial regulation is harmonised across these countries under MiFID however services such as the FSCS and the FOS will only be available for clients of a UK firm.
 
 
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