Advantages Of Utilizing a Forex Broker That Also Licensed Bank

When choosing the right Forex broker many factors are usually considered. This happens due to the availability of different Forex brokers in the market who are willing to accept your registration. While there are stand alone Forex brokers in the market, there are also a good number of brokers which are licensed bank. Initially, the Forex brokerage services were provided largely by commercial banks. However, series of developments have taken place in the Forex market resulting in emergence of several brokers which are not banks. When choosing a Forex brokerage firm, it is pretty wise to deal with licensed banks. Having a Forex broker that is also a licensed bank has several benefits to the trader. Below are some of the benefits to a Forex trader

Regulation

As you know there is regulatory requirement for every Forex broker. Forex just like any other financial markets should be regulated to keep off fraudsters and illegal operators. You should not be surprised to find that there are several unregulated brokers in the market although this is primary requirement. This puts the trader at bigger risks of losing his investments. In addition, the traders' interest and goals are not protected. A trader will benefit from this high level regulation when he or she chooses a broker this is a licensed bank. This is because in the financial institutions banks are given the best regulation.
Minimal risk exposure

The subsidiary benefit of using brokers which are regulated banks is low risk exposure due to intensive regulations given. There are slim chances of exposing your investments to greater company specific risks when dealing with licensed banks. Although there are chances of involving in unethical, fraudulent and illegal activities, their chances are very minimal. You thus enjoy the ultimate peace of mind when trading in the Forex.

Accuracy and transparency

Forex brokers which are not licensed bank always partner with banks to provide the service to their clients. Besides keeping funds with the licensed banks, the trading quotes are provided by their banks. They also receive trading quotes from the banks which they relay to their clients. This creates allowance for broker to interfere with quotes. It is possible for the broker to alter the quote in a way that favours. In addition, they can choose to withhold the quote until a favourable market condition is reached. This subsequently lowers the profitability of the trader.

Low fees and commissions

Dealing with a Forex brokerage firm which is not a licensed bank often proves to be very expensive and less profitable. This is due to the high commissions and fees involved. Since the trader is dealing with an intermediary firm. These brokers cannot operate without partnering with banks. On the other hand, you will be dealing directly with the bank without the need of intermediary- the Forex broker.

Conclusion

It is a good idea to choose Forex broker which is also a licensed bank. This way a Forex broker will enjoy many benefits. Apart from what is discussed above, you will enjoy trading in the Forex market. If you want to reduce the level of risks involved marginally, this is the right decision to make. Lastly, a bank is very reliable and will provide every tool you need to realize your investment goals.

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