The role of regulators in financial trading

The role of regulators in financial trading

binary-823343_960_720Trust is good, control is better. This principle also applies to the international financial markets. Especially the events leading up to the financial crisis, when many companies have been received too much risk and therefore had to subsequently realize huge losses, have once again shown that a functioning financial supervision is absolutely necessary.

It controls the financial services in their area of competence, monitor compliance with the applicable rules and laws and licensed these works. Especially in business with binary options, the state regulation of a provider for the customers is extremely important. Because the entire trade is conducted online and you never enters with his broker in direct personal contact or can visit his office, you have to find a partner who is demonstrably trustworthy.

Licensing to brokers for binary options

Cyprus was recognized the first country within the European Union in the binary options as financial products and the competent broker were accordingly licensed as financial services. For this reason, most of the well-known brokerage firms resident on the Mediterranean island. Later moved to Malta the next EU country gradually defined binary options as investment instruments.

Responsible for the supervision of financial markets and their participants is in Cyprus the Cyprus Securities and Exchange Commission (CySEC). This checks the its subordinate companies and regularly publishes warnings about brokers that do not comply with the applicable regulations or the same have no license. Some licenses granted for violations of rules previously also be revoked.

EU law as the basis for legislation

In Germany, the Federal Financial Supervisory Authority (BaFin) is responsible for monitoring the sector in Österreicht the Financial Market Authority (FMA) and in Switzerland, the Swiss Financial Market Supervisory Authority (FINMA).

The legal basis for the law in the individual EU countries provides the EU MiFID Markets in Financial Instruments Directive (MiFID), which was later updated to MiFID II. A Financial Market Authority or Financial is basically there to control the online scam various active in the financial market business. Their main concerns are the stability of the markets and ensuring a fair and efficient business processing. Therefore fraud and manipulation should be prevented. To be able to achieve these basic goals there are requirements on which compliance is particularly respected.

The general duties of care related to verification of their customers and their activities. These include:

  • Determining the customer’s identity
  • Storage of documents for identification
  • customer risk assessment related. money laundering or terrorist financing
  • Notification of suspected cases

For a financial company requires a sufficient capital base, whose scope is laid down in each national. The capital shall be such that client funds are easily cashable regularly. The company’s capital must be independent of the client funds are held in order in the event of insolvency account content not easily flow into OnlineScam the bankruptcy estate.

In this case, it is also important to be a participant of an Investor Compensation Fund, the customers their money back, up to a certain extent, be refunded if a company is in trouble.

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