Unregulated Forex brokers, are brokers that operate without the supervision of a regulatory authority. Trading or investing money with such brokers comes with very high risk as there is no guarantee that this broker acts in the interest of its clients.
Brokers that are regulated need to submit regular audits and evidence as well as submitting accounts in a timely manner and adhering to criteria set by the body. On the other hand, unregulated Forex brokers are free to behave however they wish, without complying with rules.
For regulated Forex brokers, being regulated adds to their trustworthiness and so they often boast about their memberships on their pages. It helps investors to see that they are credible. Even so, many brokers still operate without being regulated.
Unregulated Forex Brokers List
MAS, JFSA, DIFC
Why brokers decide to be unregulated?
Brokers choose to remain unregulated to save on operational costs. Getting and maintaining their license means putting up more money, and this often works as a barrier when market makers are just setting out in the business. A further reason is the fact that they are based offshore, in tax havens so-to-speak, to save on their costs even more. The unregulated companies can also offer more products or services which are not allowed with regulated brokers.
The Risks of trading with an Unregulated Brokers
Any trader who opts to use an unregulated broker takes a huge risk. Investors are often protected from fraud and mistreatment if they choose regulated brokers, which is crucial if things start to go wrong. There’s the added bonus of financial compensation too if their broker goes bust. In some, being regulated means that your broker should treat you right. They might not always, but the regulators are on your side.
As with all investments, many traders get scammed by unregulated brokers. This is simply down to their lack of awareness in choosing a regulated broker or they failed to notice the difference when they made their choice. If you want to be sure that you choose a broker that is regulated and reputable, it is important to check the website thoroughly and to check out whether their regulatory body membership is true before any funds are added to your account.