What are the legal Forex regulations by region?

June 3, 2019

Written by FinanceAdvice

The Forex activity is controlled and regulated by different institutions, but it changes depending on each country or region. Take note of the regulations around the world.

As we explained here, every time you change currencies in another country you are performing an operation in Forex Trading. This is an ordinary activity, which is legal and allowed all over the world. But, what happens when someone has the intention of making profit through currency exchanges? For this kind of activity there is a specific regulation which varies from one country to another. Where is this activity allowed or restricted? Which is the best country to practice Forex Trading?

The most recognized Forex brokers around the world are in the USA, Europe (Cyprus and the UK), Asia (Australia, Japan, and Singapore) and the Middle East. In the following lines, we´ll give you a short breakdown of the main legal regulations of each country. Let´s start…


The National Futures Association (NFA)is the body which regulates this activity in the USA, and “offers a variety of resources to help investors perform due diligence prior to making any investment decisions”.

Also, the Foreign Assets Tax Compliance Act (FATCA) provides some of the US tax law in order to regulate Forex Trading. This institution demands that US citizens declare all of their incomes, including the profits gained through Forex trading with foreign brokers. FATCA also gives sanctions on foreign companies that fail to provide information to the IRS on US traders who have trading accounts with them. As part of the HIRE Act, FATCA requires that foreign financial organizations and other non-financial foreign institutions report on the foreign assets controlled by their U.S. account holders.

The Commodities Futures Trading Commission (CFTC) polices the derivatives markets in order to avoid various abuses. It additionally seeks to lower the chance of the futures and swaps markets and therefore the public.


    In the United Kingdom, the Financial Conduct Authority (FCA) is the most important regulatory body in charge of regulating Forex brokers. This organization is tasked with overseeing the legality of all UK financial companies as well as individual investors who participate in Forex trading.

    Under these regulations, the UK is one of the best places to practice Forex trading activity. Here, the financial market boasts innovative regulatory guidelines which are almost tailor-made for the professional Forex trader. Why?

    In the first place, the laws are more permissive. There are no strict trade restrictions provided that there is no breach of laws preventing money laundering. Hence, UK Forex brokers have long been at the head of the queue when it comes to customer service, dedication to keeping transactions safe and, at the end of the day, helping traders make a profit.

    Traders in the UK will have piece of mind when it comes to trading because there are some bodies which ensure that traders will be offered fair conditions and that their funds will never be subjected to scams and frauds.

    The other country which has the regulation needed in this market is Cyprus, considered one of the leading international forex jurisdictions.

    The Cyprus Securities and Exchange Commission (CySEC) regulates the market, in order to ensure investor protection and the healthy development of the securities market. Its website provides a full list of regulated entities, investment firms, and regulated markets, Alternative Investment Fund (AIF), Administrative Services Providers, among others. Thus, they ensure traders operations.

    Trading in a regulated market is always convenient for two reasons: your investments are safe, depending on the country, you could be compensated by the governing body; and no matter if the market is rising or falling, the regulation gives you the chance of making a profit.


    In this area, the Australian Securities and Investments Commission (ASIC), is the most important body in charge of the regulation and control of the Forex Trading activity.

    ASIC regulates different activities around the financial field: integrated corporate, markets, financial services, and consumer credit regulator. Its mission is to change behaviors to drive good consumer and investor outcomes as well as act against misconduct to maintain trust and integrity in the financial system. They cater to both consumers and finance professionals, providing a huge variety of tools and tips to help them in their finances.

    The only legal restrictions set by ASIC and imposed on the trading platforms is that they limit credit card deposits to $1,000 when you open an account. Apart from tax obligations, they don´t impose leverage restrictions – like in the USA – or other legal obligations. Most Forex trading platforms offer a leverage of up to 500:1, and this happens because leverage is awarded per the account history and positions that every person want to trade, so the new traders always will have less expectations to be high.

    The other organism in charge of the regulation in Australia is the  Australian Prudential Regulatory Authority (APRA), an independent statutory authority that supervises institutions across banking, insurance and superannuation. The most important mandate of this body is to protect the Australian Community by “establishing and enforcing standards and practices designed to ensure that, under all reasonable circumstances, financial promises made by institutions we supervise are met within a stable, efficient and competitive financial system”, as they explained on their website.


    Although the government of South Africa doesn’t have regulations regarding the legality or illegality of Forex Trading platforms, the South African Reserve Bank (SARB)oversees the cash outflow from the country. So, South African citizens could make operations in Forex trading but with a specific limit per person which is of 10 million Rands (about $788,694 in USD currency)..

    Also, the Financial Sector Conduct Authority (FSCA) -known as the Financial Services Board (FSB) a few years ago – is a very respected organism in the region. Its mandate is to provide financial products and financial services, financial institutions that are licensed in terms of a financial sector law, including banks, insurers, retirement funds, and administrators, and market infrastructures.


    There´s something you must know: trading CFDs, FX, and cryptocurrencies involve a high degree of risk. All providers have a percentage of retail investors accounts that lose money.

    In short, although most of the regulatory bodies protect you as a trader by giving pieces of advice and regulating the activities, they don’t protect money losses. So, it´s indispensable to read all the disclosure terms before you start trading. Otherwise, any risk-taking will be entirely the responsibility of each trader.

    Most regulatory bodies protect traders by giving pieces of advice.

    Once you have read all the disclosure terms and feel confident to start trading, you can choose the one suitable to your investment profile. Here, we gathered the full reviews of the Top Brokers of 2019.

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