Understanding Forex Regulation

Understanding Forex Regulation

The foreign exchange market, despite being the largest financial market in the world, has no formal exchange or centralized location.

With the exception of currency futures and options markets, such as the IMM in Chicago, the trading of currencies has usually been conducted on a global telephone network and more recently via Electronic Communication Networks or ECNs.

Because of the global nature of currency trading, this allows banks and other forex participants to trade currencies 24 hours a day during each day of the business week.

Relative Lack of Regulation in the Interbank Forex Market

Perhaps because of its huge size, the Interbank forex market remains one of the last unregulated markets on the planet. This means that no international agency or watchdog organization regulates the ongoing trading activities of the professional Interbank forex market.

Because of this relative lack of regulation, professional forex traders benefit from being able to use a number of strategies which cannot be implemented in the stock market.

Various Regulating Organizations Protect Forex Customers

Irrespective of the lack of a central regulating agency for the Interbank forex market, many countries have agencies which oversee the foreign exchange operations conducted within their respective nations.

These agencies and their regulations primarily apply to companies doing business for or with customers, such as online retail forex brokers.

Such regulatory agencies also usually prosecute cases that involve fraud and other violations of the financial services laws in their respective countries. They include the following agencies:

  • S. Regulatory Agencies

Because currencies are treated as commodities, and the two-day delivery on spot value trades puts them into the futures category, brokers doing business in the forex market in the U.S. must register as Commodity Trading Advisors or Futures Commission Merchants with a regulating agency. Other types of registration include Commodity Pool Operator and Introducing Broker. The relevant U.S. regulatory agencies include:

  • National Futures Association (NFA)

The NFA consists of a self regulatory organization specifically for the U.S. futures industry. The objective of this agency is to protect investors and maintain the integrity of the futures markets.

  • Commodity Futures Trading Commission (CFTC)

An independent government agency of the U.S. government, the CFTC oversees all brokerage companies doing business in the forex market that are based in the United States. The agency enforces its regulations and actively prosecutes fraud in the forex and other markets.

  • European Regulatory Agencies

The European Union makes each of its member countries responsible for the regulation of its financial markets to conform to its Markets in Financial Instruments Directive or MiFID. In addition, the MiFID “passport” allows companies regulated in one E.U. country to be able to offer services to customers in other E.U. countries.

One especially influential European agency is the U.K. Financial Services Authority or FSA that acts as the United Kingdom’s chief regulator of the financial services industry. The FSA performs a similar role to the U.S. CFTC in Britain.

  • Swiss Regulatory Agencies

The Swiss Federal Department of Finance is a government agency that regulates and oversees financial institutions in Switzerland. The Swiss PolyReg consists of a self-regulatory organization recognized by the Swiss Federal Money Laundering Control Authority.  The agency regulates all persons and legal entities with a Swiss domicile that act as financial intermediaries.

  • Australian Securities and Investments Commission

The ASIC regulates all financial markets and services in Australia. The ASIC is the Australian version of the U.S. CFTC and the U.K. NFA combined.

Weighed down by Student Debt? 7 tips to get out of it, quick!

People around the world are becoming increasingly dependent on student loans to finance their studies, and so, IMMFX is happy to share these 7 tried-and-tested tips to help anyone fast-track their way out of student debt:

People with degrees can earn 56% more than high school graduates, which makes the decision between continuing your studies or setting off on your own after high school a no-brainer for many. 

We get it. As living costs increase and more employers seek degree-holders, we all want to secure the best opportunities to guarantee comfortable and stable futures for ourselves and our loved ones.

However, the cost of pursuing a degree has also grown drastically over time, with students today paying 213% more than what their parents did back in the 1980s. Resultantly, students have increasingly become dependent on student loans to finance their studies, to the point where there is now around $1.5 trillion of total student debt in the United States.

Each graduate owes an average of $37,172 of student debt as of 2018, making it much more difficult to become truly financially independent. With the cost of higher studies extending far beyond simple tuition fees to include dormitory and living expenses, textbooks, and specialized materials to consider, it may come as no surprise that around 2 million graduates end up owing more than $100,000.

Here are some of IMMFX’s best tips to help you fast-track your way out of student debt:

1. Don’t rush to ‘upgrade’ everything all at once

You did ityou’ve graduated and landed your first job! Congratulations for finally getting yourself out into the ‘real world.’ But that doesn’t necessarily mean that you have to stop living like a student. 

Wait, what? Fresh graduates tend to want to make it on their own quickly, but you might not necessarily want to ‘upgrade’ your lifestyle too fast if you want to be able to save more cash and eventually pay off student loans sooner. 

While we don’t suggest that you go back to living on an instant ramen-based diet, try to remember to prioritize essentials and invest in items that will bring longer-term benefits. As with the modest-but-functional scientific calculator that never once failed you throughout the years, you don’t necessarily need to replace your smartphone every year. And that latest model might not be spectacularly different from your current phone, anyway.

As for rent, the biggest regular expense that people have, you might want to consider saving a few hundred dollars each month by forgoing that brand-new downtown apartment to seek a more affordable place or move back in with your parents. This can give you the time to figure out and grow comfortable with your finances. Your mother might even be glad to have you back at home… for now.

2. Create (and stick to) a budget that’s right for you

If you’re one of the 40% of adults who don’t actively keep a budget, then the time to start is NOW. Budgets don’t have to be complicated labyrinths of numbers—they’re simply meant for you to keep better track of where your money is going.

One of the tips we’ve found to be highly effective, especially when actively trying to work down student loans, is taking a ‘bottom-up’ approach to creating a budget. This means immediately setting aside a portion of your monthly budget toward savings and repayments on student loans, and then working with the remainder for your day-to-day expenses. (ex. $100 salary – $10 for student loans – $15 for savings = $75 for rent, food, etc.)

Simply put, if you start with the assumption that you are paying X amount toward your student loans every month, then you begin to develop the habit of making regular payments (which will be great for your credit rating down the line), nudging yourself toward making smarter spending choices by working with a slightly-smaller monthly budget.

3. Always try to pay more than your minimum dues

Paying off student debt can sometimes be a 20-year commitment. And as with any bad relationship, it’s in your best interest to get out of it as quickly as possible, which may mean making bigger payments (but only where it wouldn’t hurt to do so).

Whenever circumstances allow, try to pay more than the minimum amount due on your student debt. A difference of 5-20 dollars made by simply rounding up to a higher amount each month can go a long way in helping you pay off your student loans a few months, or even years, earlier than expected. This can potentially save you thousands in interest payments.

Now, there are two common ways to go about this if you find yourself trying to balance multiple debts at once:

  • Prioritize debts that carry the highest interest rates, as higher-interest debts are usually more expensive and getting them out of the way earlier leaves you with smaller, more manageable debts to deal with.
  • Prioritize debts with the lowest principal amounts first. This method works under the more modern assumption that quick ‘wins’ with smaller debts would give you the confidence and momentum to tackle progressively larger debts.

4. Consider student debt consolidation (or forgiveness!)

The average federal rate for student loans stands at 4.5% for undergraduates and 6.3% for graduate studies. These interest rates may not mean much at the start, but steep rates can cause headaches when you realize that it adds up quickly down the line. And even if you do feel like these are manageable, it’s always a good idea to shop around among private lenders, some of whom would offer refinancing options at considerably lower interest rates.

However, be aware that while private lenders may offer attractive consolidation packages that allow you to focus on one larger (and less expensive) loan instead of several smaller loans, they are often not as flexible as federal financing.

Also, some states actually offer student debt forgiveness to qualified graduates, but make sure to do your research, as these programs often only cover people in public service, who have especially repayment histories on student loans.

5. Leave your credit cards at home (if you can)

People with steady incomes and bank accounts are the prime targets of credit card companies, and having an available credit line is undoubtedly practical in cash-tight situations. However, studies show that consumers can spend 100% more on credit than with cash. 

So, while your credit card company may offer attractive ‘rewards,’ be very careful to avoid adding another battlefront to your war against student loans. Remember, you’re not saving 20% on that credit card deal if you’re actually still spending 80%.

The easiest way to prevent this from happening is by paying for everyday transactions with cash or your debit card and strictly reserving your credit card for emergencies. This may take some getting used to, but by directly spending the cash that you already have in your bank accounts, you maintain a stronger psychological connection with your money. 

This, in turn, makes it easier to not only monitor your expenses, but also save yourself from yet another monthly bill (with so many fees!) to keep track of.

6. Look for ways to earn (and save) while having fun

Nope, we’re not talking about taking on an extra job or necessarily going back to your part-time student gig waiting tables at that café down the street. We’re talking more about exploring options that 1) don’t take away from your precious ‘me-time’ and 2) don’t make you feel like you’re working a second job.

Think of how modern technology and lifestyles have allowed millions of people to monetize their hobbies, free time, or other resources by driving for Uber, putting up spare rooms on Airbnb, or walking their neighbors’ dogs every weekend, for example. 

The payout might likely be modest, but could still contribute substantially to your savings, if not just your direct spending budget. This also has the not-insignificant bonus of knowing you’re actually helping other people go about their own busy lives. 

And hey, at the very least, you’d actually get paid to hang out with cute little doggos!

7. BREATHE. Don’t overstress yourself about your loans.

Yes, this is our final piece of advice. As we mentioned at the start of this article, we get you. Dealing with student debt can involve ridiculous (even scary) timescales and monetary amounts, but it’s important to understand that you are always in control of the situation

Getting out of student debt is a process, and not a race. Different solutions will work for different people, and your mission is simply to mix the right cocktail of solutions to fit your needs and lifestyle.

So, if you’re struggling to make this month’s payment, then try to find ways to make up for it next month (or the next). Remember that you took out these loans to improve your life, and so they shouldn’t take over how you live it. 

Don’t be afraid to splash (or at least sprinkle) some cash to take care of yourself by getting enough exercise and eating right, or to simply enjoy by engaging in hobbies and going out with family and friends once in a while.

Speaking of friends, you’re not alone in this fight. Reach out to other people to see how they’ve been dealing with their own student loans and exchange advice. And with almost any type of content being accessible through the internet these days, student debt management tips and resources (like this IMMFX article!) are always available for you to consult in order to find ideas to try out. 

There may not be a magic perfect solution, but approaching its challenges with the right attitude is already a great start.


You’ve got this!


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