Regulations and Standards Regarding UK Forex Brokers

Regulations and Standards Regarding UK Forex Brokers

The UK is perhaps the largest trading destination for Forex investors owing to its friendly economic policies and the accommodating trading environment that offer the most favorable environment for investors. In the past, UK Forex brokers had a reputation for offering substandard products and services and even forex brokers in the UK were accused of facilitating unfair trading practices. However, in the wake of these allegations, the UK government has imposed tough new regulations that have effectively cleaned up the trading industry.

According to the recent regulation amendments, all UK Forex broker offers are now required to offer services in a fully automated manner. Also, a new regulation requires brokers to allow their clients free access to a free practice forex demo account for a stipulated time period. The practice account allows the customer to sharpen his trading skills without having to use any cash or deposit funds. With the help of the practice account, customers are able to practice the fundamental and technical aspects of forex trading while earning virtual money that can be withdrawn when the trader feels he/she is ready to make a real trade.

It is also mandatory for all brokers to provide their customers with a range of trading platforms to choose from. These trading platforms allow the customers to execute one-click trades by using an online form. Customers can execute multiple trades at the same time and have the freedom to decide when they are comfortable enough to exit the position. This feature is also available with some of the top forex brokerages that allow their clients to trade from anywhere in the world.

Another regulation that has come to the forefronts of UK foreign exchange business is the tightening of credit thresholds that limit the amount of leverage that a retail investor can apply to their account. As a result of this regulation, many retail traders who hold forex accounts have reduced their leverage to small levels. The limit of ten times leverage was put in place to limit the risk of trading on small positions. Tight spreads is another regulation that has restricted the amount of leverage that a trader can apply. Trading on tight spreads will result in losses for the investor if prices move against them.

The third regulation is the introduction of the ‘guaranteed trade’ feature on some of the UK forex brokerage sites. Under this feature, brokers offer a free demo account to new and active traders. The aim is to get these new traders familiar with the trading platform and the basic mechanics of the forex market. This helps reduce margin calls by inexperienced traders learn how to implement stop-loss orders, which are necessary to protect themselves from the losses that occur as a result of extreme margin situations.

The last regulation is the establishment of a regulatory body known as the HMRC (HM Revenue and Customs). This body has the power to fine or brokers who fail to register with it. It also has the power to order the closure of a trading platform if it is suspected of facilitating illegal activities. As an inexperienced trader, you may find it difficult to be compliant with all of these measures, but with time and experience, you will eventually learn how to comply and you will be able to start trading profitably online.

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