Top 10 Forex Brokers in the UK (FXCM, GCAP)
In January 2015, the foreign exchange (forex) broker Alpari UK applied for insolvency after the Swiss National Bank's surprise decision to abandon the peg against the euro. The event put the spotlight on forex brokers and their regulation, especially in the United Kingdom. In this article, we'll review the leading forex brokers in the United Kingdom and the basics of how they are regulated. With a daily trading volume of over $5 trillion a day, the foreign exchange market, also called forex or FX, is the world's largest market. The size and deep liquidity of the forex market, along with 24-hour trading 5 days a week, make it an appealing choice for traders.
However, unlike stocks and commodities, forex trading has no central exchange or clearing house. The lack of transparency in the FX market has left it vulnerable to numerous instances of malpractice and manipulation. In the United Kingdom, the Financial Conduct Authority (FCA) acts as a watchdog to ensure fair and ethical business conduct. FCA-regulated forex brokers must adhere to a number of industry standards. Of particular importance is the FCA requirement that firms keep client funds separate from company funds. These segregated deposits cannot be used as company assets if the brokerage firm becomes insolvent.
The January 2015 event involving the Swiss National Bank (SNB) underscores the importance of using a broker that is regulated by the FCA. Totally unexpected events – sometimes referred to as black swan events – can happen at any time and cause chaos. The financial markets were thrown into turmoil by the Swiss decision and a number of forex brokers suffered severe losses with some going bankrupt. ...