A licensed forex broker is a firm that is licensed and regulated with a forex license by a supervisory body. This licensed broker is permitted to offer forex services to clients. The supervisory body that the brokerage firm is licensed by ensures that all work carried out by the firm complies with all legal and anti-money laundering regulations in an ethical and proper manner.
Licensed forex broker explained
A licensed forex broker is a financial institution that has acquired all the necessary documentation required in order to enable it to conduct business legally and with complete integrity. Following the application process, the completion of a fit and proper test and validation of the necessary funds, a forex company will become licensed. This company must also acquire essential services such as corporate bank accounts and forex company insurance.
The licensing of a forex broker ensures that the foreign exchange company is regulated and audited, both externally and internally on a yearly and twice yearly basis, respectively. An external audit takes place once per year and is completely independent of the company. It entails thorough internal checks to ensure all work conducted by the FX broker firm complies with the financial authorities requirements of that country. An internal audit involves more guidance and support for the company, in order to help the forex broker excel in a reliable and ethical manner.
Being a licensed forex broker is an absolute necessity in today’s vicious and competitive FX market. If an individual or company is looking to trade with a forex broker, they are highly likely to select a company that is fully licensed and regulated.
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