Forex trading in the UK

In the United Kingdom, operations of Forex brokers are regulated by FSA - Financial Services Authority.

The Financial Services Authority is non-governmental, independent body, whose primary function is to make financial retail markets that is, the markets that most of us use for trading-- work more efficiently. Their main goal is, essentially, to ensure that retail customers (that is, the little guys on the bottom of the financial dog-pile) get a fair deal.

Starting in 2004, the FSA has created a UK-wide strategy to build up the country's financial capability (in all markets, not just Forex), as well as raise confidence among consumers. In other words, they've put plenty of rules in place that make consumers more comfortable taking part in the market.

This affects UK brokers who work on behalf of residents in the UK in several ways. For one, according to FSA regulations, all legit Forex brokers must meet strict financial standards. These brokers are required to work with FSA financial regulators, submitting regular financial reports and proving that they follow regulations at all times. Brokerage firms who are found in violation are either fined or, in extreme cases, have their regulatory status terminated.

While strict rules may keep some good brokerage firms from operating in the UK, these harsh rules are generally pretty good for you. Since the FSA keeps records of any formal proceedings they've had to enter into against regulated firms, any information about rule breakers (that is, Forex brokers that you shouldn't trust) are kept on record. Simply by visiting the FSA website, you can find out if the firm you're considering using has had any serious problems or infractions. And that's very useful information - after all you can lose your money on the Forex market because of a bad broker.