A financial market is very diverse and multifunctional that consists of many different industries. Activities on the financial market are different and it depends on what are your main interests or purposes of becoming involved in it. For example, if you want to become involved in stocks, then you will be interested in the stock market, if you want to generate some financial profits with crypto and hold a valuable asset, then the crypto market is for you. Due to the market diversity, there are many groups involved, those who want to start becoming involved in it, also the group that helps the newcomers to become aware of the market-specific and called brokers and some organizations that control activities on the market named regulators.
Due to the fact that the financial market is very vast and billions of dollars are circulating there is a need for regulation to ensure the protection of the rules and regulations, and there are not only one but several regulators. The article will review some of the main regulator bodies and CySEC will be discussed thoroughly as it is very demanded and popular lately.
Forex Major Regulators
Even though the financial market is the market without borders and is the united space for everyone around the world, every country has its own regulations on financial activities as well as taxes and requirements. In this case, we can divide the main regulator bodies like those that are operating in Europe, the US, UK, Australia, South Africa, etc.
The vast number of forex brokers in the UK are regulated by the European Regulatory body and they are different in several countries, for example:
- Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) in Germany,
- Swiss Financial Market Supervisory Authority (FINMA) in Switzerland,
- Finanstilsynet (FSA) in Denmark,
- Autorité des Marchés Financiers (AMF) in France,
- Comisión Nacional de Mercado de Valores (CNMV) in Spain,
- Financial Market Authority (FMA) in Austria,
- Comissão do Mercado de Valores Mobiliários (CMVM) in Portugal,
- Malta Financial Services Authority (MFSA) in Malta.
In the UK, to protect the traders from any certain not authorized activities, scams, or money laundering, the main regulatory body is the Financial Conduct Authority (FCA). In order to operate on the UK’s financial market, brokers need to have a license from the FCA, then ensure the customer protection and integrity of the financial market.
In the US, the National Futures Association (NFA) helps investors to feel more protected on the market and is actively fighting against scams, fraudulent activities and ensures the reliability of Forex firms, which are regulated by them.
The Forex Broker Firms are required to have the Australian Financial Services (AFS) license, in order to operate on the market. The criteria for the firms are that they should have an office in Australia, capital must be at least AUD 1 million, should provide with the proper report, etc.
CySEC Regulator
Other than those well-known and trustworthy regulators, we also have the CySEC forex regulator that is based in Cyprus. The Cyprus Securities and Exchange Commission (CySEC) is a regulatory body that oversees the operations of financial institutions in Cyprus. Due to the fact that Cyprus is a member of the European Union, CySEC Forex regulation is following the MiFID Directive. It was founded in 2001 and was largely extended in 2008.
For the companies, in order to obtain the cysec license is necessary to be registered in Cyprus, all branches and agents should be located in Cyprus and many companies are attracted by the easy laws and jurisdiction with the easy registration process, tax laws, and anonymity. And what does the regulator body does is the following:
- Supervision and control over the activities of financial market participants licensed by the regulator;
- Control over transactions that are carried out on the Cyprus stock exchange;
- Collection and analysis of information from companies reporting to the regulator;
- Consideration of complaints from clients of investment companies
In order to get the license from CySEC, the company needs to provide the proper documents, information about the company and pay the membership fee. In this case, companies are required to undergo sim[lier procedures than in the case of FCA or NFA license. It is a perfect opportunity for the firms, as is not as strict as other European regulators but is following the European directive at the same time. In other words, CySEC has more means to monitor its counterparts than other offshore regulators. On the other hand, investors are given a little more security and the chance to access facilities that meet European expectations.
Summing It Up
Finally, to sum up, the financial market is very vast and diverse and in order to ensure the proper service for the clients and hinder the fraudulent activities, countries have created regulatory bodies to control the activities. It will not be a surprise to say that those regulators are much more restrictive in Europe and the US than the CySEC that is based in Cyprus. However, the demand for this regulator is very high as it has two major advantages, one that does not require a strict procedure to obtain the license and on the other hand, is following the European directives which means that it is admitted by the other regulators and European Countries.