Foreign Exchange

Forex Education

Forex Regulators

Regulatory authorities control Forex brokers in order to ensure the implementation of proper business practicesAs the Forex Exchange Market is a non-centralized OTC market, proper brokerage regulation is a top issue for all Forex traders and partners. An effective regulation requires a reliable regulatory authority with sufficient resources, capable of closely monitoring its members.

Regulatory authorities control Forex brokers in order to ensure the implementation of proper business practices. They can impose high penalties or even withdraw a license at any time. This means Forex brokers have a serious incentive to conduct business with ethics and transparency.

MiFID and MiFID2

MiFID is the European Markets in Financial Instruments Directive (Directive 2004/39/EC)European Investment Services and Regulated Markets (MiFID)

MiFID is the European Markets in Financial Instruments Directive (Directive 2004/39/EC) and it is active since November 2007, this directive governs the provision of investment services in financial instruments by banks and investment firms and the operation of traditional stock exchanges and alternative trading venues.

 

EU Rules for the Financial Sector

The first set of rules adopted by the EU helped to increase the competitiveness of financial markets by creating a single market for investment services and activities. However, after the 2008 financial crisis, it became clear that a more robust regulatory framework was needed to

  • further strengthen investor protection
  • address the development of new trading platforms and activities

 

Markets in financial instruments directive - MiFID

MiFID is the markets in financial instruments directive (Directive 2004/39/EC). In force since November 2007, it is a cornerstone of the EU's regulation of financial markets. It governs

  • the provision of investment services in financial instruments by banks and investment firms
  • operation of traditional stock exchanges and alternative trading venues

While MiFID created competition between these services and brought more choice and lower prices for investors, shortcomings were exposed in the wake of the financial crisis.

 

MiFID 2 and MiFIR

In October 2011, the European Commission tabled proposals to revise the Markets in Financial Instruments Directive (MiFID 2) with the aim of making financial markets more efficient, resilient and transparent, and to strengthen the protection of investors.

Institutional Forex

The Forex market consists many different categories of participants (Central Banks, Commercial Banks, Large Corporations, Retail Traders, Institutional Traders, etc.)

Institutional Forex Trading

The Forex market consists of many different categories of participants (Central Banks, Commercial Banks, Large Corporations, Retail Traders, Institutional Traders, etc.)

When we refer to institutional traders we are referring to Interbank Traders such is Banks and Large Investment Firms. Institutional Traders enjoy several advantages over retail traders when trading the Foreign Exchange. These advantages are in terms of lower trading costs (spreads) but sometimes also in terms of better information.

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