In early 2015, the application for insolvency by Forex broker Alpari UK ignited a spotlight on the way Forex brokers operate and how they are regulated in the United Kingdom.
It is estimated that the foreign exchange, or the Forex market, is the world’s largest market, and with daily trading volumes exceeding $5 trillion each and every day, there is no question as to why. The sheer size and liquidity of the market, coupled with 24×5 trading make the Forex market an appealing choice for novice and experience traders alike.
However, different from conventional commodities and stocks, the Forex trading market is without a central exchange. This means that transparency is often lacking, and as a result there are many unscrupulous brokers, instances of malpractice, and severe manipulation. In the UK, the FCA, or Financial Conduct Authority, serves as watchdog to guarantee ethical and fair business conduct. Brokers that are regulated by the FCA must strictly follow industry standards. One of the most important regulations entails that broker firms must, under all circumstances, keep company funds entirely separate from client funds. This means that these funds cannot be used as business assets in the event that the firm becomes insolvent.
January 2015 and the Swiss National Bank
In early 2015, the Swiss National Bank scores the weight of working with an FCA-regulated broker. In a rare ‘black swan’ event, the financial market was thrown into disarray and several Forex brokers experience significant losses, with many having to declare bankruptcy. Luckily for the traders at Alpari UK, the firm was FCA-regulated.
Major FCA Regulated Brokers in the United Kingdom
Listed below, in no particular order are the UK`s major FCA-regulated and compliant Forex brokers. Each offers varying degrees of financial stability, service quality and trading systems. Prior to selecting the best from the bunch, it is important to weigh the pros and cons of the markets available, the trading platforms offers and the spread favor.
10. OANDA
9. Interactive Brokers
8. City Index
7. FOREX.com
6. FXCM
5. FxPro
4. IG Markets
3. CMS Forex
2. ActivTrades
1. HY Markets
Look for Reputable Brokers Who Are FCA Regulated
The vast majority of all major UK Forex brokers that are FCA regulated are headquartered overseas. As a result, these brokers are monitored and regulated by other governing agencies in whatever location they are based in.
