Forex broker – Forex broker practices to be monitored


Forex BrokerForex broker practices are being closely monitored by the Australian Securities and Investments Commissions (ASIC), which released the results of its investigation into client money handling and reconciliation practices by issuers of OTC, CFD’s and margin FX.
The ASIC embarked on an industry wide investigation in December 2011 that is throwing its latest results. The ASIC is the first major regulator in the world to undertake a relevant review of its registrants after the 2008 financial crisis.
So far, the ASIC has detected some issues with several registrants, especially regarding money handling by the designated forex broker. Eight firms failed to allocate client money into the designated trust account, while six firms failed to pay money into the appropriate account within the allowed time.
Reason enough for traders to be extra careful when choosing a forex broker to trade with. One of the best ways to avoid being robbed in the forex market is to select only registered brokers with good reputation. Be it by visiting forex forums or asking people familiarized with the market, always make sure to check the broker`s info, history and current activities.
The ASIC has not yet released which firms were in violation of the rules, however, they have followed up educational procedures to properly handle client money and what is considered good practice.
The ASIC commissioner Greg Tanzer stressed that ASIC regulated firms are bound to comply with the client money provisions:
“The client money provisions are an important safeguard to protect the interests of retail investors. ASIC expects issuers to know and comply with their obligations under the law and to put in place effective measures and supervisory arrangements to ensure these obligations are met”.
Mr Tanzer said the announcement should serve as a warning to those issuers who aren’t complying with the law.
A respected forex broker is always a registered broker. Check your broker’s liquidity at the Commodity Futures Trading Commission (CFTC) or the National Futures Association (NFA) website, in the case of U.S registered brokers.
The CFTC monthly report shows the minimum required and actual capital on hand for any broker; the most liquid brokers have actual capital far in excess of the minimum requirements.
In the past, the NFA has conducted similar investigations to prevent forex malpractices. One of said investigations dealt with 16 forex firms and possible signs these firms were designing computer systems to take advantage of what’s known in the industry as “slippage”.
The forex broker industry still remembers the $459,000 fine against Gain Capital for abusing its Virtual Dealer plug-in and configuring it to unfair trading settings.

Forex broker practices are being closely monitored by the Australian Securities and Investments Commissions (ASIC), which released the results of its investigation into client money handling and reconciliation practices by issuers of OTC, CFD’s and margin FX.The ASIC embarked on an industry wide investigation in December 2011 that is throwing its latest results. The ASIC is the first major regulator in the world to undertake a relevant review of its registrants after the 2008 financial crisis. So far, the ASIC has detected some issues with several registrants, especially regarding money handling by the designated forex broker. Eight firms failed to allocate client money into the designated trust account, while six firms failed to pay money into the appropriate account within the allowed time.  Reason enough for traders to be extra careful when choosing a forex broker to trade with. One of the best ways to avoid being robbed in the forex market is to select only registered brokers with good reputation. Be it by visiting forex forums or asking people familiarized with the market, always make sure to check the broker`s info, history and current activities. The ASIC has not yet released which firms were in violation of the rules, however, they have followed up educational procedures to properly handle client money and what is considered good practice. The ASIC commissioner Greg Tanzer stressed that ASIC regulated firms are bound to comply with the client money provisions:“The client money provisions are an important safeguard to protect the interests of retail investors. ASIC expects issuers to know and comply with their obligations under the law and to put in place effective measures and supervisory arrangements to ensure these obligations are met”. Mr Tanzer said the announcement should serve as a warning to those issuers who aren’t complying with the law. A respected forex broker is always a registered broker. Check your broker’s liquidity at the Commodity Futures Trading Commission (CFTC) or the National Futures Association (NFA) website, in the case of U.S registered brokers. The CFTC monthly report shows the minimum required and actual capital on hand for any broker; the most liquid brokers have actual capital far in excess of the minimum requirements. In the past, the NFA has conducted similar investigations to prevent forex malpractices. One of said investigations dealt with 16 forex firms and possible signs these firms were designing computer systems to take advantage of what’s known in the industry as “slippage”. The forex broker industry still remembers the $459,000 fine against Gain Capital for abusing its Virtual Dealer plug-in and configuring it to unfair trading settings.

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