Mastering transparency in the forex market

There are many things to take into consideration when choosing a forex broker, though probably the most important challenge faced is, are they properly regulated? writes LegacyFX


The forex market is one of the biggest and most liquid of all financial markets. Its daily trading volume reaches $6.6trn. Recently, it has become more easily accessible to prospective traders, as it offers a wide variety of possibilities in trading. Broker companies play an essential part in this type of market by providing traders with platforms through which to trade on, special trading courses, educational materials, tips on trading, and much more. However, in a world that deals in the exchange of capital; security, trust, and reliability are paramount – yet not always enforced. As such, two types of brokers emerge – regulated and nonregulated.

Nonregulated brokers have always been an opposition that regulated brokerages, like LegacyFX, face, as many times they lack the same levels of professionalism, respect, and concern for client resources, time and needs. Therefore, it is important for every trader to fully understand each one before deciding which type of broker to trade with.

The preference of one broker over another mainly depends on whether invested capital is safe and protected against fraud and risk. However, there are other points to consider which include the main differences between a regulated and a nonregulated broker; why nonregulated brokers exist; how this influences lead generation, verification, and conduct; what this means in terms of transactions; how this affects supplied offerings; and how our brand ensures a better trading experience by adhering to a core value of transparency, which is significant when it comes to using a broker.

Regulated versus nonregulated
Contrary to a nonregulated one, a regulated broker is duly registered, authorised, and governed by a local financial conduct authority – depending on the region of registration, wherever applicable, based on where the broker wishes to conduct business from and draw clientele.

For instance, as a regulated broker, the LegacyFX brand is registered under multiple regulatory bodies such as, VFSC, CySEC, BaFin, and FCA. Due to the lack of rules, laws, supervision, and monitoring, a nonregulated broker is free to conduct themselves and execute transactions and trades as they see fit. As regulators have no control over the actions of an unlicensed broker, trading with them comes with many disadvantages and higher risks with capital, accounts, and trading actions not being secured with traditional methods.

Why do nonregulated brokers exist?
The answer is simple. A major hindrance for many brokers is obtaining licenses, the process of which is costly and arduous. In addition, circumventing licenses allow nonregulated brokers to avoid paying taxes, service charges and audits. Some brokers even go as far as to obtain fraudulent licenses for generic activities unrelated to the financial services and products they actually supply. Knowing this, why then do traders choose to use the services of a nonregulated broker? There are a few reasons, one of which is that many nonregulated brokers rely on promises of immediate results and guaranteed profits.

This resonates with traders who are influenced solely by emotion and greed, those with a ‘get rich quick’ mindset. Also, some nonregulated brokers provide a broader range of products and services, as they can afford to make higher-risk transactions.

Finally, such brokers typically do not limit who they solicit nor have geographical restrictions on client accounts.

Client classification and conduct
Following this, there is no place for comparison when discussing client classification and conduct via a regulated firm versus a nonregulated one. Since the former is monitored by regulatory organisations, they need to follow and consider specific rules regarding customer solicitation and conduct if they aim to provide financial services to them. For instance, concerning potential traders our company targets, we avoid soliciting and accepting clients from high-risk countries such as Iran, Iraq, Sudan, and Afghanistan, to name a few. Another restriction for us comes from the US’s strict regulations on financial services. As such we steer clear of clients with proven connections to the US. Such restrictions are supplied to us not only by the regulators that govern our actions, but also the various financial institutions, banks, and credit card processors that we work with.

Now more than ever, interacting in financial markets requires full disclosure

In accordance with our regulatory requirements to maintain KYC (know your client) compliance, when a client opens a demo or real account through us, LegacyFX collects personal data. KYC is a term that refers to the process of verifying the identity of a person or a business in the financial industry. To maintain the highest levels of scrutiny, we employ the use of SumSub – an automated KYC reviewer utilising machine learning and artificial intelligence to automate checks and verification of ID documents, proof of residence, and proof of payment compliance.

Another rule that our company complies with is anti-money laundering and counter-terrorism financing. According to this requirement, LegacyFX has the right to block money transfers or accounts if it has sufficient grounds to believe that the internal transactions are in breach of the act.

Finally, concerning traders, we, as a regulated broker, are not authorised to take any actions that may influence a trader’s decisions. All signals for trading that we present are not, nor are ever intended to be, a proposition to enter any trade or forex transaction. They should not be construed as direct trading advice. All recommendations offered by our agents do not constitute an official opinion or call to action, as our representatives are presented in a consultative capacity only.

In short, regardless of the information we relay to our clients to assist them in their activities, the final actions carried out are ultimately a client’s choice alone and require client approval – conditions that all our clients must inherently understand and are notified of throughout their interactions with us.

Transparent transactions
The same ideology applies to transaction operations handled by a regulated and a nonregulated one. Nonregulated brokers many times do not follow and consider specific rules regarding customer transactions. A regulated broker is responsive to processing requirements, transaction quality control and verification checks. One example related to a regulated broker’s quality control is verifying that its customers’ transactions originate from the customer themselves and can be completed with sufficient cash. With LegacyFX, traders can use a variety of payment methods such as credit cards, wire transfers, e-wallets and cryptocurrency exchanges, all of which are thoroughly screened and reviewed by our dedicated compliance department.

Another prerequisite that regulated brokers maintain is they should be liquid enough to be able to repay their clients in case of withdrawal requests. Maintaining proper accounting and bookkeeping practices, along with opening segregated accounts between business money and client funds, allows licensed brokers to maintain withdrawal options and transaction security. Such accounts are primarily held in top-tier financial institutions, protecting funds by being securely held. We exercise various security checks during withdrawals processing. We only process withdrawals that are related to the source of the original deposits, as a protection for all involved parties against fraud, money-laundering, and terrorist financing. Through all these ways, traders know where they stand with their transactions.

Supplied offerings
Another advantage of investing with a regulated broker, rather than a nonregulated one, is that the first is more motivated to offer traders a better and smoother experience. A licensed broker is more inclined to deliver greater amenities and customer service, to satisfy and meet client needs and requirements. We support our clients with information about spreads, available trading information and tools, and even help with technical trading issues. For instance, we have a dedicated customer support department available 24 hours a day to assist clients with login issues, installation problems, trading conduct, tools information, or deposit and withdrawal issues. Traders can get in touch with our support department either by phone, email, or online chat.

Furthermore, our site provides educational materials, videos, e-books, and live webinar training sessions, that assist even the most novice of traders. In addition, we offer one of the most advanced trading platforms – MetaTrader 5 (MT5) – where different instruments, risk management features, and price discovering tools are at a trader’s disposal. We also engage our clients through our social media presence by running campaigns with informative content, along with email and pop-up blasts. Finally, LegacyFX offers traders various promotions such as PAMM services, a loyalty membership programme, and affiliate and IB deals, to name a few.

Making an informed decision
Overall, regulated brokers are more transparent than nonregulated ones. But what does this mean? As LegacyFX’s core value, we have truly mastered the concept of transparency. We do this by ensuring that our clientele receives all the necessary information to make a reasonable and well-informed decision about trading or interacting with us.

We offer detailed and up-to-date web pages about our products and services and remain open and easily available for all queries or concerns. Our legal documentation covers all policies and regulations intended to protect our own and client assets. By supplying such essential information, we adequately warn traders before entering into business with us that trading involves risk.

Now more than ever, interacting in financial markets requires full disclosure. Poor or nontransparent information can be detrimental not only to traders but also to brokers. Studies have shown that when quality assurances are not properly employed, customer loyalty, transaction, and execution rates drop from 80 to 40 percent. Overall, it is clear how LegacyFX ( adheres to industry standards and attempts to be as transparent as possible for our clientele, by keeping track of global trends and adjusting to change whenever needed.