When it comes to Forex broker regulations, there are two polar extremes. On one end is the NFA and CFTC that make it nearly impossible for US Forex brokers to become regulated without paying through the nose for regulatory fees and restricting their Forex trading conditions to protect traders from devastating losses (though some would argue that it also prevents US retail Forex traders from earning substantial profits). On the other end of the spectrum are brokers such as SunbirdFX that accept traders without any regulation at all.
In the middle somewhere are regional regulatory bodies such as CySEC, Cyprus's highly popular regulatory agency, FSB, South Africa's regulatory body, and ASIC, the Australian Securities and Investment Commission. Though most brokers opt for regulation in the country within which they are based, some do create shell companies in a specific country in order to take advantage of a more relaxed regulation.
Nevertheless, regulatory agencies are endeavoring to tighten the reigns, and ASIC is the next one to make such a change. Earlier this week ASIC announced that as of January 31, 2013 it will require all regulated OTC derivatives brokers to maintain a minimum of $500,000 in net tangible assets, or 5% of its revenue. In 2014 this sum will rise to $1 million and 10% of the company's revenue. The new regulation was widely lauded by the country's leading brokers as a way to prevent scammers from entering the marketplace with little capital to cover their investors.
It would not be surprising if Forex regulations worldwide continue becoming stricter, as traders demand protection against Forex brokers. Though there remain some conniving brokers out there, we will continue to report on those worth trading with – and those worth staying away from, and to update you on the regulatory changes that will protect you during your trading career.