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Choosing a regulated forex broker if you are in Malta – The Malta Independent

If you are in Malta and considering forex trading, it is important to choose a broker that is permitted to offer forex trading services within Malta. Ideally this means choosing a forex broker regulated by the Malta Financial Services Authority (MFSA).

Unfortunately, there are very few online forex brokers regulated by MFSA. Fortunately there are other legally acceptable options so you don’t need to use an offshore or unregulated broker.  


Who is the MFSA And why use a regulated broker

MFSA provides regulates and supervises financial markets and activities in Malta. As a Forex trader, using an MFSA regulated broker means the broker complies with the operating standards of the Maltese financial market.

Financial regulators use various means to protect your finances with the broker they oversee so play an important role in protecting you as a client of a forex broker. Ways regulators protect you include the requirement for:

1. Keeping clients accounts segregated accounts

2. Ensuring brokers hold a minimum capitalization

3. Making brokers provide a dispute resolution process

Regulators cannot force offshore and unregulated brokers to offer these protections so cannot help you if you choose one of these brokers and something goes wrong. For this reason you should also choose a regulated broker.

While MFSA is a well respected regulator that sets rigorous standards, it is not yet a widely popular choice for brokers to be regulated with. Fortunately, Malta is part of the European Union meaning MFSA must comply with directive set by ESMA.


Who is ESMA?

The European Securities and Markets Authority (ESMA) role is to enhance investor protection and promote stable and orderly financial markets” for all 28 members of the European Union (EU). In short, ESMA sets directives for and oversees the compliance for all members of the EU so that marketsconsistency across all EU financial markets.

As part of its role of protecting investors, ESMA include specific directives the EU regulators must require of the brokers they regulate. Known as MiFID II, these directives are why brokers legally operating in the EU must:

1. Limit leverage when trading forex to 30:1 for major currency pairs

2. Broker must provide negative balance protection

3. Brokers must provide insurance protection

MiFID II also sets out rules to ensure traders receive the most favourable conditions on price, cost, execution speed when trades are executed.


Choosing a Broker if you are in Malta

Justin Grossbard of compareforeforexbrokers says that since EU regulators and brokers must comply with the requirements set out by ESMA (including as part of MiFID II directives), any broker regulated by the financial regulator of a country in the EU is suitable.

This means you can choose brokers regulated by more popular financial oversites in the EU to expand your options as legally suitable brokers despite being located in Malta. The two most popular regulators with forex brokers are:

1. Cyprus Securities and Exchange Commission (CySEC) based in Cyprus

2. Financial Conduct Authority (FCA) based in the UK



Since ESMA ensures uniformity across all regulators in EU countries, you can be sure any broker using a national regulator within the EU is a suitable choice to trade with and operates to the high standards you expect.



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Read More : Choosing a regulated forex broker if you are in Malta – The Malta Independent

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