A British broker refers to a broker who solicits customers in Britain. Not only local CMC, but also British branches in other countries, such as FXCM UK. The latter category is "foreign companies" in Britain. They are all bound by the British regulator FSA.
Different levels of capital security
Open an account with an American broker, and deposit the money in another account opened by a foreign exchange broker in a bank, which is separate from the account operated by the American broker himself.
According to GAPP (Generally Accepted Accounting Principles) in the United States, a customer is a creditor of a foreign exchange company when he deposits money into a "customer fund account" in its name. In addition to the profit and loss of the transaction, how much money is owed to the customer by the foreign exchange company in the customer's account will be paid back one day.
To put it simply, if American securities firms go bankrupt unfortunately, traders, as creditors, may not be able to get back the principal in full!
The situation of British brokers is more complicated. There are two kinds of brokers in Britain. One is a broker authorized by the Financial Services Authority (FSA) to hold clients' funds. Customer accounts are protected by the FSA compensation plan by opening accounts through authorized British brokers. Once the broker goes bankrupt, you can get protection of up to 50 thousand pounds. This is also the best type of capital security.
It is worth noting that another kind of British brokers, who are not authorized by FSA and hold FSA passports, can develop British clients, but their clients' funds are not protected by FSA compensation plan. Some overseas brokers have set up branches in Britain, but they are vague about FSA's compensation plan.
In fact, traders need to ask this question very carefully-is opening an account protected by FSA compensation plan?
The leverage ratio is different.
Leverage also plays a powerful role in foreign exchange transactions. As long as a few hundred dollars, you can mobilize tens of thousands of dollars through "leverage". Levers also have different "multiples". The highest leverage ratio in the United States is 50 1, and the leverage ratio in Britain is mostly 200 1 and 100/. What kind of leverage you choose depends on your trading preferences.
American platforms can't lock orders.
Lock orders refer to the long and short positions of the same currency pair in the same account of traders. China readers also refer to "locking orders" as "hedging". The United States prohibits lock orders, and Britain is not subject to this restriction.
The variety of transactions is different, and the UK is more extensive.
The United States prohibits the trading of contracts for differences (CFD), which accounts for half of the trading platforms, so the trading varieties of American platforms are relatively small, usually limited to dozens of currency pairs and precious metals.
The transparency of financial disclosure is different.
CFTC, the regulator, will disclose the assets of US foreign exchange brokers every month. In addition, it will also disclose the number of active accounts, customer profit-loss ratio and order execution speed of American brokers.
British brokers are secretive about this.
Different regulatory mechanisms
The United States implements a dual regulatory mechanism.
Commodity Futures Trading Commission (CFTC) is a U.S. government department and a heavyweight regulator. CFTC is very active in the supervision of foreign exchange deposits and has maintained good interaction with the industry for a long time. The company and CFTC have fixed windows and contacts, and the policy implementation is also very efficient.
The National Future Association (NFA) is a non-profit industry self-regulatory organization in the United States. 199 1 year recorded about 150000 futures practitioners and about 10000 commission companies in the United States at that time, and all the data were made public for public or investors to inquire. By 1998, all the data have been digitized, and a system called background ownership status information center, commonly known as BASIC, has been established to facilitate the public to search for information on NFA websites. All members' basic information, the company's shareholder structure, the record of licenses, the cases complained about and the final judgment of cases, as long as they are NFA members, have a membership number, which can be easily found by the investing public on the website. In recent years, all regular foreign exchange companies have also been included in this system.
For accepting customers' complaints and complaints, NFA can also make its own judgment according to the seriousness of the case, or make a settlement for both parties in private. This is undoubtedly a great progress in financial supervision, which shows that NFA not only leads the development of the industry and collects membership fees, but also plays a role in standing on the side of investors and cracking down on unscrupulous financial institutions.
Britain is a unified mixed supervision.
Whether we are in the securities industry, trust industry, insurance industry or retail foreign exchange industry, as long as they belong to the financial field, they are all under the supervision of the Financial Services Authority (FSA).
British regulators are particularly concerned about unfair trade, and the government has set up an educational website to teach customers how to save themselves and protect themselves when they are treated unfairly.