Mastering transparency in the foreign exchange market
The foreign exchange market is one of the largest and most liquid of all financial markets. Its daily trading volume reaches $6.6 billion. Recently, it has become more easily accessible to potential traders, as it offers a wide variety of trading possibilities. Brokerage firms play a vital role in this type of market by providing traders with platforms to trade on, special trading courses, educational materials, trading advice, and much more. However, in a world that deals with the exchange of capital; security, trust and reliability are paramount, but not always enforced. Thus, two types of brokers emerge – regulated and unregulated.
Unregulated brokers have always been an opposition that regulated brokers, like LegacyFX, face, as they often lack the same levels of professionalism, respect, and concern for resources, time, and client needs. Therefore, it is important for every trader to fully understand each before deciding which type of broker to trade with.
The preference of one broker over another mainly depends on the safety and protection of the invested capital against fraud and risk. However, there are other points to consider which include the main differences between a regulated broker and an unregulated broker; why unregulated brokers exist; how it influences lead generation, verification and driving; what this means in terms of transactions; how this affects the offers provided; and how our brand ensures a better trading experience by adhering to a core value of transparency, which is important when dealing with a broker.
Regulated versus unregulated
Unlike an unregulated broker, a regulated broker is duly registered, licensed and governed by a local financial conduct authority – depending on the region of registration, if any, depending on where the broker wishes to operate. activities and attract customers.
For example, as a regulated broker, the LegacyFX brand is registered with several regulatory bodies such as VFSC, CySEC, BaFin, and FCA. Due to the absence of rules, laws, supervision and monitoring, an unregulated broker is free to conduct itself and execute trades and transactions as it sees fit. As regulators have no control over the actions of an unlicensed broker, trading with them comes with many inconveniences and higher risks as trading capital, accounts and shares are not secure with the methods traditional.
Why do unregulated brokers exist?
The answer is simple. A major hurdle for many brokers is obtaining licenses, which is a costly and arduous process. Additionally, bypassing licenses allows unregulated brokers to avoid paying taxes, service fees, and audits. Some brokers even go so far as to obtain fraudulent licenses for generic activities unrelated to the financial services and products they actually provide. Knowing this, why then do traders choose to use the services of an unregulated broker? There are several reasons, one of which is that many unregulated brokers rely on promises of immediate results and guaranteed profits.
This resonates with traders who are solely influenced by emotion and greed, those with a get-rich-quick mentality. Additionally, some unregulated brokers offer a wider range of products and services because they can afford high-risk trades.
Finally, these brokers generally do not limit who they solicit or place geographic restrictions on client accounts.
Classification and Conduct of Clients
Therefore, there is no comparison when it comes to classifying and conducting customers through a regulated firm versus an unregulated firm. Since the former are controlled by regulatory bodies, they must follow and take into account specific rules regarding the solicitation and conduct of customers if they aim to provide them with financial services. For example, regarding potential merchants targeted by our company, we avoid soliciting and accepting customers from high-risk countries such as Iran, Iraq, Sudan and Afghanistan, to name a few. some. Another restriction for us comes from the strict regulations of the United States on financial services. As such, we avoid customers with proven ties to the United States. These restrictions are provided to us not only by the regulators who govern our actions, but also by the various financial institutions, banks and credit card processors with whom we work.
Now more than ever, interaction in financial markets requires full disclosure
In accordance with our regulatory requirements to maintain KYC (know your client) compliance, when a client opens a demo or live account through us, LegacyFX collects personal data. KYC is a term that refers to the process of verifying the identity of a person or a company in the financial sector. To maintain the highest levels of control, we use SumSub – an automated KYC reviewer using machine learning and artificial intelligence to automate checks and verification of identity documents, proof of residency and proof of compliance of payment.
Another rule with which our company complies is the fight against money laundering and the financing of terrorism. According to this requirement, LegacyFX has the right to block money transfers or accounts if it has sufficient reason to believe that internal transactions are in violation of the law.
Finally, regarding traders, we, as a regulated broker, are not permitted to take actions that could influence a trader’s decisions. Any trading signals presented by us are not, and are never intended to be, a proposal to enter into any trade or forex transaction. They should not be construed as direct trading advice. Any recommendations offered by our agents do not constitute official opinion or a call to action, as our representatives are presented in an advisory capacity only.
In short, whatever information we relay to our clients to support them in their business, the final actions taken are ultimately the sole choice and approval of the client – terms that all of our clients must inherently understand and are informed throughout their interactions. with us.
The same ideology applies to transaction operations managed by a regulated and an unregulated. Often, unregulated brokers do not follow and disregard specific rules regarding client transactions. A regulated broker is sensitive to processing requirements, transaction quality control, and verification checks. An example related to the quality control of a regulated broker is to verify that its clients’ transactions originate from the client itself and can be completed with sufficient liquidity. With LegacyFX, traders can use a variety of payment methods such as credit cards, wire transfers, e-wallets, and cryptocurrency exchanges, all of which are carefully screened and reviewed by our dedicated compliance department.
Another prerequisite that regulated brokers maintain is that they must be sufficiently liquid to be able to reimburse their clients in the event of withdrawal requests. Maintaining proper accounting and bookkeeping practices, as well as opening separate accounts between company money and client funds, allows licensed brokers to maintain withdrawal options and transaction security. These accounts are mostly held at top-tier financial institutions, protecting the funds by being held securely. We exercise various security checks when processing withdrawals. We only process withdrawals related to the source of initial deposits, to protect all parties involved from fraud, money laundering and terrorist financing. Thanks to all these means, traders know where they are with their transactions.
Another advantage of investing with a regulated broker, rather than an unregulated broker, is that the former is more motivated to provide traders with a better and smoother experience. A licensed broker is more inclined to offer more conveniences and customer service, to satisfy and meet customer needs and requirements. We support our clients with information on spreads, available trading information and tools, and even help with technical trading issues. For example, we have dedicated customer support available 24 hours a day to assist customers with connection issues, installation issues, trading conduct, tool information, or deposit and withdrawal issues. Merchants can get in touch with our helpdesk by phone, email or online chat.
In addition, our site offers educational materials, videos, e-books and online training sessions, which help even the most novice traders. Moreover, we offer one of the most advanced trading platforms – MetaTrader 5 (MT5) – where different instruments, risk management features and price discovery tools are available to the trader. We also engage our customers through our social media presence by launching campaigns with informative content, as well as emails and pop-ups. Finally, LegacyFX offers traders various promotions such as PAMM services, a loyalty program, and affiliate and IB offers, to name a few.
Make an informed decision
Overall, regulated brokers are more transparent than unregulated brokers. but what does that mean? As a core value of LegacyFX, we have really mastered the concept of transparency. To do this, we ensure that our clients receive all the information necessary to make a reasonable and informed decision regarding trading or interacting with us.
We offer detailed and up-to-date web pages about our products and services and remain open and readily available for any questions or concerns. Our legal documentation covers all policies and regulations intended to protect our own assets and those of our clients. By providing this essential information, we adequately warn traders before doing business with us that trading involves risks.
Today more than ever, interaction in financial markets requires full disclosure. Poor or non-transparent information can be detrimental not only to traders but also to brokers. Studies have shown that when quality assurances are not properly used, customer loyalty, transaction and fulfillment rates drop by 80-40%. Overall, it is clear that LegacyFX (int.legacyfx.com) adheres to industry standards and tries to be as transparent as possible for our clientele, following global trends and adapting to change every times as needed.