Jump to content
AskTraders Trading Community
  • 0

Is Forex trading illegal?


Daniel Carter

Question

4 answers to this question

Recommended Posts

  • 0

Hello, thanks for asking.

No, it is a common misunderstanding that Forex trading is illegal and banned in some countries. Forex markets are part of the approved and regulated financial markets. The trading process and investments are regulated by countries and international financial institutions, hence all operations must be done according to their laws.

Link to comment
Share on other sites

  • 0

Hello, thank you for your question! 

One of the most common misconceptions about Forex trading is that it is illegal. Individuals in various countries get confused because they think that Forex trading is similar to gambling, which is not similar to.

Numerous bodies control and regulate Forex trading in various countries, they do the necessary background check of the trader and his credentials. By doing so they make sure that regulations enacted by laws in their countries are respected, and that Forex is kept free from immoral traders.

In the USA these regulators are SEC, CTFC, NFA, FINKA, and SIPC. They all concern themselves with different parts of Forex trading such as securities, market regulation, protection of investors, and independent overseeing roles.

Other larger countries, which have a large volume of trade like Switzerland (FINMA), UK (FCA), Australia ( ASIC), European Union (ESMA, MIFD) all have their regulating bodies, which are put in place to control and regulate trading, and new traders.

People often think that Forex is banned in the USA, but that is not true. It is very tightly and carefully monitored which in some segments makes the trade harder and more complicated.

Also, there is a requirement that demands that those companies which want to provide Forex trading services need to have a security deposit of $20 million. Which deters some providers, and they do not provide this service to US citizens.

In Islamic countries, which adhere to the Sharia Law, parts of Forex trade that contain interest have been removed, but Forex trade is still available interest-free, also without the use of leverage that is forbidden in accordance with the Sharia Law. 
 

Link to comment
Share on other sites

  • 0

Hello, thanks for asking! 

Forex trading is not illegal in any country, it is only more regulated in some countries than it is in others. There is an issue of Forex trading being legal by religious standards, more specifically, by Sharia law in Islam, which prohibits any kind of interest and leverage when trading, but that has been resolved, by removing those components for Forex trading in Muslim countries.

Link to comment
Share on other sites

  • 0

Hi, thanks for your question! 

Because of the strict and heavy regulations imposed on Forex trading in the U.S., it is a common misconception that Forex trading is in fact, illegal. In other countries, because of the complex Forex structure, it is hard for legal institutions to effectively keep track of trades that take place in Forex, which leads people to think that Forex is some kind of black market or illegal.

In some places, it has proven as a nice ground for scammers, which have tricked or scammed several Forex traders, leading people to conclude that Forex is unsupervised, and this leads to the occurrence of scams, but it is not so, in the USA Forex is supervised by Futures Trading Commission (FTC) and, National Futures Association (NFA). 

These organizations serve as regulators and providers of certification to brokers which wish to operate in Forex, so it is always safer to cooperate with Brokers that have received authorization from these organizations, than with those which haven’t, as they may be scammers.

Another thing that may lead people to think that Forex is illegal, is that because of the presence of interest in some segments of Forex, it is restricted and not fully operational in some Islamic countries which adhere to the Sharia Law.
 

Link to comment
Share on other sites

Join the conversation

You can post now and register later. To reply to this question, sign in or create a new account.

Guest
Reply to this question

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

×
×
  • Create New...