Forex Trading in The Philippines with BSP Brokers

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Banko Sentral ng Pilipinas is the central bank of the Philippines that monitors the performance of the Philippines economy for a safe and stable business environment. The Philippines financial system is relatively new to the global Forex markets, and the country faces stiff competition in the financial sector from its immediate neighbors, especially Japan, Singapore, Hong Kong, and Malaysia. The Banko Sentral ng Pilipinas (BSP) has received numerous accolades from financial experts throughout Asia for being one of the most effective regulators in the world.

BSP Forex brokers are subjected to the various regulatory guidelines imposed by the central bank on Forex transactions and the Peso Dollars (Pilipino Currency). Although the BSP plays an integral role in the regulation of financial entities, Forex brokers in Philippines are regulated by the Securities and Exchange Commission (SEC) according to the policies implemented by the government authorities regarding the operations of brokers and allied financial firms. The SEC has a dedicated framework of rules that govern the operation of all BSP regulated brokers for dealing in a wide range of OTC financial products such as Forex, commodities, CFDs, and other ETFs.

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Powers & Functions Of SEC On BSP Regulated Brokers

The SEC has a highly elaborate list of powers and functions that allow the SEC to control the activities of Forex brokers in Philippines. Here are the main powers entrusted with the SEC for safeguarding the integrity and stability of the Pilipino financial markets:

The SEC has been assigned total control over all types of financial organizations that are either directly or indirectly licensed by the Philippines Government. All financial companies and BSP regulated brokers are required to follow the instructions and guidelines imposed by the SEC without fail. SEC can issues licenses to companies and has the power to renew, cancel, suspend, or terminate licenses according to the conduct of the regulated member firms. SEC is the ultimate authority that determines whether a company is qualified to receive a valid license to operate in the Philippines and has complete authority over company registrations and licensing.

SEC has the power to come up with regulatory guidelines and recommendations that can improve the transparency and integrity of the financial markets. SEC has the right to advise the Government, the Congress, and other federal authorities on the latest recommendations for regulating companies dealing with the securities and exchange market. The SEC takes care of enforcing its policies on member firms by actively supervising companies for compliance with its rules. The SEC in its right can suspend businesses or individuals for breach of guidelines and can impose heavy sanctions and penalties on regulated firms through direct means without the intervention of any other Government agencies or other Self-Regulatory Organizations. BSP regulated Forex brokers also face punishment and severe consequences if they are found to be in direct violation or contempt of the guidelines issued by the SEC.

Unlike the other leading regulatory agencies from across the globe, the SEC has absolute power over companies as well as individuals and can seek help from civil, military, or independent enforcement organizations for carrying out its duties of regulations. Some industry experts consider that the SEC has been granted way too much power to enact its rules, and believes that the SEC to have dramatic effects on regulating financial companies in the nation. The SEC is also one of the very few regulatory agencies that can issue a ‘cease and desist’ order against a company or an individual if the SEC believes that they can cause harm to the general public by way of fraud or malpractices.

The SEC can approach the court for problem resolution and can also issue subpoenas, summon witnesses, and initiate search and seizure of all evidence that can help in their investigation into the alleged misconduct by an individual or a regulated company situated in the country. SEC has powers that are usually reserved for higher authorities in several countries of the west, which makes the SEC a highly influential organization in the Philippines.

What Is The BSP’s Role In Forex Broker Regulation?

The BSP is a central bank that has its responsibilities that are aimed towards maintaining the overall financial stability of the Philippines, rather than regulating Forex brokers directly. Nevertheless, the BSP does have several responsibilities and powers that are aimed at streamlining the process of money exchange and other financial dealings happening in the retail trading industry. BSP is the largest Government organization in the Philippines that determines the exchange rate policy for its base currency against other global currencies.

The BSP also has the duty of overseeing the management of its foreign currency reserves, which helps the country to meet its obligations in the international market to bridge the gap between the demand and supply. Having sufficient currency reserves and a sound exchange rate policy is vital to the Peso-Dollar, which ultimately assists the Philippines in meeting its international financial viability. BSP regulates all banking as well as non-banking financial institutions that act as a financial participant in the Philippines economy. BSP is supposed to serve as a bank, a lender, a financial advisor, and as an agency that can maintain the liquidity in the markets by providing aid to other banks as well as Government agencies. BSP should extend loans, raise capital, issue advances, and offer discounts as well as act as a depository for financial institutions if the economy of the country is affected in any manner.

Therefore, BSP acts as a major stabilizing component of the Philippines’ economy to ensure that the country can withstand any economic turmoil. As the central bank, BSP issues the currency and keeps the money supply as well as the liquidity in the market in tune with the demands of the economy. BSP is the sole organization responsible for price stability, issuing legal tender, and creating monetary policies for the Government. BSP should implement all policies introduced by the agencies for the continued development of the economy of the Philippines. BSP operates according to the policies set forward by the Government and the Ministry of Finance, which prevents manipulation from independent parties or large third party organizations.

Investing Your Money With BSP Regulated Brokers

BSP Forex brokers regulated by the SEC provides a high amount of regulation to protect your investments, but these brokers are not considered as effective as other mainstream brokers from established countries such as the US, the UK, Australia, and other important countries from the EU. Traders from the Philippines are free to trade with overseas brokers as there are no restrictions imposed on traders by the BSP or the SEC. Therefore, traders are not compelled to trade with Forex brokers in Philippines, which enable them to open an account at any international brokers, including those from the neighboring regions such as Japan, Singapore, or Malaysia.

You can indeed hire the services of an expert financial consultant to go through your different options before choosing a Forex broker. Nevertheless, your proactive approach in finding the best-regulated broker can go a long way to protecting yourself from broker scams that are rampant in the industry.

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