FCA Regulated Forex Brokers

FCA Regulated Forex Brokers

fcaThe FCA stands for the Financial Conduct Authority. This is the organization which replaced the Financial Services Authority (FSA) as the regulatory body which oversees and regulates the activities of forex brokers operating in the United Kingdom.

As the name implied, the FSA was responsible for the regulation of all financial services in the UK, and this description included regulation of banks, forex brokerages, insurance companies, and other associated institutions. The FCA was thus born out of the desire to fragment the FSA’s job and provide for more unique regulatory function and better management of the process of regulating forex brokerages. Thus, the FCA is now specifically in charge of the regulation of forex brokers in the UK, while the regulation of banks and insurance companies has been taken over by another succeeding agency (Prudential Regulatory Authority).


FCA Regulated Forex Brokers 2017:

We have put out a comparison table on who we feel are the best FCA regulated brokers. However, it is good to study this article very well just in case you are given a cold call from a broker claiming to be a FCA regulated broker. Lately, many unscrupulous elements have attempted to clone websites of FCA regulated brokers, and the FCA has issued plenty of warnings in 2014. DO not get caught out.

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About the Regulator

The Financial Conduct Authority (FCA) supervises and regulates the conduct of over 50,000 firms not covered by the Prudential Regulation Authority, including forex brokerages. The FCA is mandated to intervene when forex brokerage firms do the following:

a)    treat consumers unfairly

b)    behave in ways that risk the integrity of the market

The FCA’s mandate includes regulation, investigation of complaints and enforcement of the laws regarding broker infractions. In particular, two components of the FCA’s regulation which are meant to increase client protection are:

–       Account segregation, which mandates that brokers must place funds belonging to clients in an account which is totally separate from the company’s accounts which house operational funds.

–       The Financial Services Compensation Scheme (FSCS) which is a scheme to provide full refund of trading capital up to 30,000 pounds, and 90% protection for account capital up to 20,000 pounds, in the case of broker bankruptcy.


Guidelines for FCA Regulated Brokers

The Financial Conduct Authority has put in place certain guidelines to ensure that brokers it regulates comply with best industry practices.

a)    FCA has what it calls the “best execution” policy, where the broker is expected to shop for the best possible deal as the counterparty on behalf of its clients. FXCM was fined by the FCA for withholding profits accruable from favorable slippage to its clients, while it passed along the full cost of losses from unfavorable slippages to clients. This practice of asymmetrical slippage contravenes FCA rules on best execution, which states among other things that “positive price movements between the submission of an order and its execution are passed on to the client, and that firms are not seeking to retain any slippage in the clients’ favor”.

b)    The guidelines on sequestration of clients’ trading funds are being enforced now more than ever before.

c)     FCA regulated brokers are required to submit periodic reports to the FCA with certain data such as their capitalization, value of segregated clients’ funds, etc. Lack of transparency or withholding of information from the FCA is usually penalized heavily.

The measures mentioned above serve as effective client protection in case anything goes wrong on the side of the broker. Traders who use these FCA regulated brokers can therefore be sure of getting at least the protections account segregation and financial compensation from the FSCS.


Confirming the Standing of a FCA Regulated Broker

The FCA maintains a register known as the Financial Services Register. This register is a record of all firms, individuals and other entities that are regulated by the FCA. It has information regarding firms that are registered with the FCA to conduct regulated activities or to provide regulated products. FCA regulated forex brokers therefore fall into this category.

As a trader, if you want to find out the status of each broker, you need to understand how to search the register on the status of the FCA regulated brokers. Each status has specific terms attached to it to describe what it means. The “status” of FCA regulated brokers can thus be described as follows:

There are several terms used on the Financial Services Register to describe a firm’s status. This can help you find out what sort of firm you are dealing with and how you might be protected if things go wrong.

a)    Appointed representative

This describes a firm that may be acting on behalf of an authorized firm (the principal).  The activities of the appointed representative have to be accounted for by the principal.

b)    Appointed representative – former

A firm is no longer allowed to carry out business that we regulate.

c)     Authorized

A firm that the FCA has authorized to carry out regulated activities in the forex and other markets.

d)    Authorized – applied to cancel

This refers to a previously authorized firm that has applied to cancel its previously issued authorization. Usually such a firm must have ceased regulated activities six months prior to the application.

e)    Authorized – in liquidation

A firm in liquidation intends to stop doing business in the future or has already stopped.

f)     Authorized – suspended

A firm is still authorized by the FCA but has been suspended all of its permissions for a period of time.

g)    No longer authorized

A firm with this label is no longer allowed to carry out certain types of business that the FCA regulates.



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Adam is an experienced financial trader who writes about Forex trading, binary options, technical analysis and more.

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