Financial Conduct Authority (FCA) is a UK regulatory body that oversees the activities of all financial organisations working within the country. These services were entrusted to it by the UK government to monitor the conduct of financial institutions for an ethical marketplace for investors. The organisation replaced the Financial Services Authority (FSA) IN 2013, which was responsible for monetary services, including forex brokerages, banks and other associated institutions.
FCA expects forex brokers to have at least one million Euros while operating. Despite the organisation requiring smaller capital than that of NFA, it has various regulatory frameworks that guarantee client funds safety. Also, it is very hard for a broker to attain a licence from FCA, which is unlike the case with other organisations such as ASIC. It is, in fact, considered to be a highly credible regulatory body of forex trading.
Identifying Credible Forex Brokers
Every broker that is licensed by the FCA is expected to hold a unique number for the identification of their company. A regulated broker will tend to display their FCA license details on their website and broadly talk about the benefits of trading under the organisation’s regulatory framework. Also, FCA’s website offers valuable information about regulated brokers to help investors make informed decisions.
In the website, you can get information about brokers under the EEA umbrella. This is a clever way of distinguishing brokers who falsely claim to be regulated by FCA. From the organisation, you can be offered weekly newsletters about member firms, and this is a good way of being warned about potential fraud.
How to Find FX Brokers
Before comparing brokers, you must know what to look for in the first place. Do your research and ask yourself the following.
• Is the broker registered with FCA? If they are not registered, you must think twice before signing up with them.
• Are they dealing or non-dealing desk brokers? Will you be offered non-fixed spreads and how wide are they?
• How much leverage will you receive? Research well before deciding which leverage would be suitable for your trading style, while keeping in mind that less is more.
• Does the broker debit or credit rollover interests on a daily basis? There are brokers who deduct interests on both debit and credit. If you hold positions overnight, this information is very important for you.
Once you have researched, it is time to pick at least two brokers and open demo accounts. Be sure to trade in different market environments and understand various features of the trading platforms. The difference that comes in with brokers is slippage, speed in execution and reliability. Once you are ready to get into a live account, be sure to begin small and see if the broker you choose suits your trading needs.
The Efforts it takes to find a Regulated Broker
With sufficient research, it is easy to find the best regulated trading brokers in the UK. As a result of the low operating capital of doing business in the UK, many brokers prefer to work with FCA. What the organisation does is that it supports healthy competition among brokers by ensuring a secure environment is provided without giving room to compromises on transparency.