It goes without saying that it is vital for potential investors of HFX trading to take out time to read and carry out in-depth research. It is also essential to check out various trading platforms in order to choose not just the most popular brokers but those who are highly regulated and reliable.
These research and reviews ensure an investor’s safety from fraudulent activities and shady dealings.
Although there are so many unlicensed brokers and platforms trading illegally and manipulating investors, HFX Trading is a legal and licensed form of trading with Government approved and regulated brokers offering their platforms to investors.
High-frequency trades or algorithmic traders have been regulated in so many countries globally. It is very important for investors to choose a broker or a platform that has been licensed and authorized by a certified regulatory body.
This is necessary because licensed brokers and platforms are being regulated and monitored to avoid investors being manipulated or exploited and to avoid fraudulent activities.
An unregulated broker may manipulate the movement of trade in his favor when he is about making a significant loss which results in loss of profits on the side of the investor. This risk can be curbed by trading only with licensed and authorized brokers.
Regulated brokers are also required to have insurance for the funds on their platforms and this ensures the safety and security of an investor’s fund.
Investors are also advised to work with brokers under a Tier-1 regulatory body or agency only like the CFTC in the USA and the CySEC in Cyprus.
Trading regulatory agencies
Agencies involved in the issuing of licenses to brokers and monitoring their platforms to ensure the safety of investors are called the Regulatory Agencies and they are located in different regions globally. Some of them include;
- The CySEC
The Cyprus Securities and Exchange Commission (CySEC)was founded in 2001 with their headquarters in Nicosia, Cyprus. The CySEC is the financial Regulatory Agency of Cyprus and Dr. George Theocharides is the Chairman.
On the 4th of May 2012, the CySEC adopted a policy that stated that all Binary Options Platforms had to be regulated and this made them the first financial and regulatory body to recognize binary options as a financial asset.
The CySEC is responsible for the supervision of the Cyprus Stock Exchange. They also issue licenses to investment and brokerage firms.
- The Autorité des marchés financiers (AMF)
The AMF was founded on the 1st of August, 2003 with its headquarters in Paris, France. This is an independent public body with Robert Ophèle as the Chairman of this agency.
It is under the European Regulatory Umbrella and is in charge of protecting investments under the financial markets as well as ensuring a well-ordered financial market. They also provide investors with financial information on the market.
This agency came into play from 31st January 2007 – 2nd January 2008. They are a sub-agency under Europe’s Regulation of Financial Markets. They monitor the supply of financial services by investment firms and banks. In addition, they observe the financial processes of the traditional stock exchange market.
- The Commodity Futures Trading Commission (CFTC)
Founded April 15, 1975, with their headquarters at 1155 21st Street, NW, Washington, D.C. They are an independent body under the United States Government that monitors the US Derivative Market. They ensure the promotion of the integrity and dynamism and flexibility of the US derivatives market by monitoring and regulating it. The goal is to ensure transparency and optimal regulation of the financial market.
- Financial Markets Relations Regulation Centre (FMRRC)
They are an uncommercial agency aimed at monitoring and authorizing the quality of service offered by brokers and their platforms as well as the trustworthiness of the Foreign Stock Exchange and its market.
The FMRRC aims at providing clients with transparency and maximum security of their trades on the foreign and stock exchange market. They are an Impartial Regulatory service and they give access to up-to-date legal information to prove their transparency.
Some legally authorized regulated brokers
PepperStone is highly regulated by the Financial Conduct Authority (FCA) in the UK, the Australian Securities and Investments Commission (ASIC) in Australia, and the Dubai Financial Services Authority (DFSA) in the UAE.
PepperStone is a very popular and reviewed broker for HFX Trading. It also works in conjunction with MT4 and MT5 brokers for professional traders.
They are considered as one of the best HFT trading platforms open mainly to experienced or professional traders that offer a level of 400x on most currency pairs.
AvaTrade is regulated and licensed by Cyprus Securities and Exchange Commission (CySEC), Polish Financial Supervision Authority (PFSA), Australian Securities and Investment Commission (ASIC), British Virgin Islands Financial Services Commission, etc.
Working in over 140 countries under regulations and licenses, eToro is considered one of the best HFX Trading platforms. They offer trades on over 20million assets which include stocks, ETFs, commodities, and cryptocurrency.
They are regulated by the Cyprus Securities & Exchange Commission (CySEC) in Cyprus and Financial Conduct Authority (FCA) in the United Kingdom.
This is one of the popular HFX Trading platforms regulated by the Australian Securities and Investments Commission (ASIC) under Australian Financial Services License number 513393, Financial Conduct Authority (FCA) under register number 793714, and Cyprus Securities and Exchange Commission under the license number 319/17.
Regulations are rules set by the government or agencies to steer, limit or watch over the affairs of a person, persons, or organization. The setting up of trading regulations and their implementation by different regulatory agencies globally are very important to keep brokers and their trading platforms in check.
These regulatory agencies watch over and monitor the affairs of brokers to ensure that trading on their platform is done legally and the funds of potential or already existing investors are secured and insured. They achieve this by placing restrictions, supervising, and controlling every activity carried out on the Financial Stock Exchange Market.
Due to their significant power and authority over the financial stock exchange market, they normally impose levies or fines and sometimes even place sanctions on brokers who go against the rules guiding financial investment firms. This goes a long way to ensure legal financial marketing transparency of brokerage firms.