How the UK regulated brokers helps to minimize the traders’ risk?
The Financial Conduct Authority is a regulator that safeguards the interest of traders.
They limit the leverage that is offered by brokers and in so doing, the FCA control the amount of risk the traders are exposed to.
The financial regulator as well does its utmost to handle financial abuse and misconduct in the Forex trading.
All FCA regulated brokers must comply with the strict regulations in the UK.
If any customer is financially abused or defrauded, the FCA conducts an inquiry and carries out investigation accordingly.
If companies act in an irresponsible and reckless manner, they then can revoke its license and inflict severe punishment against the company.
With the requirement of the maintenance of segregated accounts, client money is held separate from the broker’s money.
This is an essential precaution when traders make claims against the company or when for any reason the company is liquidated, goes bankrupt or is defrauded.
Also, the maximum leverage of (1:30), helps to minimize traders’ loss from a high of 1:500 leverage as it was set earlier.
High leverage boosts traders’ loss when trades go against the trader. The FCA effort is to prevent such occurrences.