With a market so large – the most liquid market in the world with more than $5.3 billion traded daily – it’s no wonder that so many traders have a strong attraction towards entering this marvelous cash extravaganza. Albeit the large size of it, it is a market that still doesn’t possess an extensive regulation law, or a global body agency, that monitors all activities in this 24/7 arena. For such a large market that carries a heavy risk on its investors, as well as the unlimited amounts of profits that can be earned, it’s doesn’t come to a surprise when regulations aren’t as strict as other markets – everyone wants a slice of the cake, and don’t want anyone breathing under their noses on how much they can delight on.
As you continue to embark on your journey through this enticing, yet risky, market, you should keep in mind on the broker that you choose to use. Keeping your trading capital safe as you make your investments is a top priority – without it, all of your profits, hard-work, and time will all have been for nothing.
The Foreign Exchange Market
The world’s largest financial market to date; with more than $5.3 trillion dollars, there aren’t that many other markets that can compare to its grandeur. As the world economy continues to expand and globalize, the significance that the foreign exchange market has on the everyday business transactions cannot be taken lightly. The rate that your country’s domestic currency can be exchanged in your daily purchases determine what the prices for a large number of products sold at the markets, price tag for commodities and the ROI on your investments (not to mention the interest rate on our loans and deposits)
There are many roles that the foreign exchange market plays in our society today, and having a strong security force to monitor it sounds like due diligence. Yet, albeit this common fact – where the rate of a currency can dictate the very fortunes of everyone in every country – this business still remains unregulated.
Shouldn’t Someone Do Something About This?
As a matter of fact, there is a third party that has stepped forward (rather placed by the government) to have some type of monitoring towards the rapid growth of this market. The Commodity Futures Trading Commission (CFTC) has been given the jurisdiction over the leveraged transactions that US retail clients make. This has removed a large percentage of money fraud that occurred in the US alone.
In other countries, this is a different story. In Japan for example, the Financial Services Authority (FSA) are proactive in the regulation of this market i.e. reducing the maximum leverage that traders have available to them (25:1).
On the other side of the business, non-regulation on the institutional market i.e. banks, has contributed towards the large odds that are stacked against the retail investor. There are still changes being made towards making the investment market a better environment, but it is still in progress and will continue to improve as time moves on.