Choosing a Forex Broker


In Russia, the benchmark of quality work in the Forex market for financial companies are the major western brokerage house. Serious investors choose these are the ones in the first place, for reasons of safety. In many ways, these preferences are due to psychological causes. Historically, all western (whether jeans, a bank or broker) seems to Russian citizens who have lived for decades for the "Iron Curtain", a high quality, reliable and prestigious. However, the bankruptcy of such giants of the forex market as the U.S. and Swiss Refco Sovereign Financial Group has forced many people from selling international currencies, for a fresh look at the issue of choosing a broker. So, what should we look for when deciding on a collaboration with one or another financial company?

Let's start with safety.

Reliable financial intermediary is usually considered a broker with a long history of work, license and is supervised by the regulatory authorities, with the security of their responsibility to clients, well-functioning system of risk management within the company, legal transparency, protection of the contractual relationship. The company has yet to be sufficiently respectable, even though each of us understands the term differently.

By itself, life has no guarantees: the above-mentioned large Western companies have existed for quite a long time. However, the risk of losing money in the firm one-day is much higher than that of a broker that provides its customers access to financial markets for years. The long history of work - is well-established mechanisms of risk management (otherwise, the company would have gone bankrupt), qualified staff, reliable partners, financial reserves, etc. In short, the history of the company have the advantage over newcomers to the market.

Documents and regulators. Unfortunately, in practice, licenses and control by regulatory authorities, whether government or industry, also does not guarantee the safety of your money. However, this is a serious plus in choosing a broker.

First, the licensing process itself cuts obvious scams. Company is required to disclose to the state of their owners, to provide statutory documents, financial statements. In addition, regulators in some form of control over operational activities, financial performance.

Secondly, there is always a business where the client can file a complaint or claim. In the U.S. the control of brokers involved in the Forex market CFTC (Commodities Futures Trading Comission - Commission CFTC) - the government commission in the status of the federal agency. In England - is FSA (Financial Services Authority - Financial Services Commission). In Russia, the controlling body for margin transactions in the OTC market yet. However, if the Russian deputies will this problem, then we can assume that it will be the Federal Service for Financial Markets. FFMS currently controls the activity of brokers in the stock and commodity markets and derivatives market. So when choosing a broker you should pay attention to what he has a license, who issued it, and for how long.