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FCA regulation: Good for markets and consumers

It’s taken 10 years for the embers of the global financial crisis to dim and cool. For those who were economically active when global debt markets ignited, the burns may still feel fresh. Jobs and homes were lost, and even institutional ivy-leaguers – thought to be immune to market hiccoughs – closed their doors. No-one could have predicted that behemoths like Lehman Brothers would file for bankruptcy, while Merrill Lynch, AIG, and Royal Bank of Scotland also stood glumly in line at the casualty ward.

 

While the years following 2008’s crisis represented a period of enormous disruption for major global economies, the regulatory initiatives that emerged from the ashes have made the global financial system more resilient to systemic flaws. When the smoke cleared, a furry of legislation was passed to protect consumers and ensure that the gross misconduct by those in power could not be repeated. Martin Couper, a director at leading global forex broker FXTM, says, “In this improved regulatory environment, more top-level firms are applying for appropriate licensing to give their clients peace of mind that they are dealing with firms that have checks and balances in place.” Following this trend, FXTM applied for and earned its UK FCA licence, opening its doors to traders on April 4th, 2018.

 

Couper says, “Applying for the FCA licence was a logical next step for our brand. We are regulated in many jurisdictions, but the UK is an important milestone for us. We want to provide a trusted environment for our clients, so they are secure in the knowledge that they are dealing with a fully compliant and regulated broker in the UK.” Another motivator, says Couper, is the uncertainty around Brexit in terms of passporting rights between the EU and UK. “We applied for the licence even before the outcome of Brexit was known. We wanted to ensure that, regardless of any decisions made, the services we provide to our clients remained consistent and uninterrupted. How international companies will operate post-Brexit is unclear, but applying for and being awarded the FCA licence means that it’s business as usual for FXTM’s clients.”

 

The reams of draft regulation and watchdog bodies that emerged after 2008 are starting to get some traction as various authorities agree to consistent standards and protocols. A significant change in the regulatory body landscape emerged with the closure of the Financial Services Authority (FSA), the judicial body responsible for the regulation of the financial services industry in the United Kingdom between 2001 and 2013.

 

Due to the perceived regulatory failure of the banks during the financial crisis of 2007-2008, the UK government decided to restructure financial regulation and abolish the FSA. Its responsibilities were split between two new agencies: the Financial Conduct Authority and the Prudential Regulation Authority of the Bank of England.

 

Since its introduction, the FCA has been continually assessing the suitability of products and client communications – this means that acquiring the appropriate licences is high on the priority list of all financial services firms. For obvious reasons, the FCA licence has particular gravitas for firms wanting to operate in the UK. Currently the FCA regulates 56,000 companies and 125,000 approved persons. As a collective, the industries regulated by the FCA contribute around 12% to the UK gross domestic product.

 

The FCA works closely with other European regulatory bodies to impose financial initiatives like MiFID II and GDPR (General Data Protection Regulation). Recently the FCA has been working on a set of regulations pertaining to CFDs (Contracts for Difference) and Binary Options in conjunction with ESMA, the European Securities and Markets Authority. Close collaboration with European partners ensures that the regulators have a consistent and united front.

 

Couper says, “FXTM is already licenced in a number of jurisdictions, including Cyprus under CySec and South Africa under the FSB. The Financial Conduct Authority (FCA) licence complements FXTM’s existing operations in Cyprus and other countries, providing broader infrastructure and access to a wider market.”

 

As a brand, FXTM documented exceptional growth in the last year. Its client base grew by 77% year-on-year in 2017, and active clients grew by 64% in the same period. This growth can be attributed to a client-centric approach, exceptional customer service and a reputation as a trusted broker in the forex industry.

 

Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

 

Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.

 

NOTES TO EDITORS

 

The FXTM brand provides international brokerage services and gives access to the global currency markets, offering trading in forex, precious metals, Share CFDs, ETF CFDs, and CFDs on Commodity Futures. Trading is available via the MT4 and MT5 platforms with spreads starting from just 1.3 on Standard trading accounts and from 0.1 on ECN trading accounts. Bespoke trading support and services are provided based on each client’s needs and ambitions - from novices, to experienced traders and institutional investors. ForexTime Limited is regulated by the Cyprus Securities and Exchange Commission (CySEC), with licence number 185/12 and licenced by the SA FSB with FSP number 46614. Forextime UK Limited is licenced with the UK FCA, number 777911. FT Global Limited is regulated by the International Financial Services Commission (IFSC) with licence numbers IFSC/60/345/TS and IFSC/60/345/APM.

 
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