Trading With CBI Forex Brokers From Ireland

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Dublin is considered as one of the favorite financial hubs in the world, and Irish financial companies do enjoy several privileges in the industry. Ireland is a part of the European Economic Area (EEA) agreement and an integral member of the EU. Therefore, companies incorporated in Ireland is free to carry out its business activities to all regions of the EU, which provides a great incentive for companies to base their operations out of Ireland to cater to their European clientele.

The Central Bank of Ireland (CBI) acts as the primary regulator for all financial companies in Ireland, including Forex brokers. The CBI had initially devised a separate regulatory agency during 2003 known as the Irish Financial Services Regulatory Authority, which was dissolved after the ECB’s intervention into the operations of all European central banks to minimize the impact of the financial crisis of 2008 and the consequential failure of the CBI. CBI regulated brokers are regulated according to the MiFID derivatives and all Forex brokers in Ireland are required to conform to the regulatory guidelines as outlined by the EU and the CBI.

The EU’s MiFID changes its regulatory framework periodically to ensure that all member firms follow the most ethical and transparent guidelines for maintaining the integrity of the European financial markets. The CBI is also seen as following in the MiFID’s footsteps for broker regulation and is keen on keeping brokers in line with the standard rules and guidelines that are adopted by EU brokers. CBI is one of the very few central banks that have the direct responsibility to regulate financial firms in the country. Although the CBI had initially attempted a move towards introducing a separate regulatory authority, the effects of the financial crisis were far reaching into the Irish economy, which required massive support from the ECB. However, the CBI is indeed considered to be a competent regulatory authority that offers a thriving regulatory environment for protecting the rights of the consumer and ultimately protecting the Irish economy against financial malpractice.

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The Functions Of CBI In Supervising CBI Forex Brokers

The CBI has issued a circular to all CBI regulated brokers to follow the guidelines issued by the MiFID and the ECB on the proper functioning of brokers as well as other financial entities to ensure that the European economy is not affected by any financial crimes or investor abuse. The CBI works proactively with its member firms on the following aspects of regulations:

Financial Stability: Forex brokers regulated by the CBI should be financially stable and should hold a minimum amount of capital that is directly proportional to the trading capital held in client accounts. Brokers must be able to meet the minimum capital requirements and should be able to maintain its customers’ positions even during highly volatile market conditions, which is essential to safeguarding the interest of the traders.

Pricing: CBI regulated brokers should be highly transparent in its pricing structure, and should not interfere with the markets that will directly or indirectly result in unfavorable conditions for the traders. Brokers should always ensure that traders will receive accurate feeds of pricing from the interbank markets, and the platforms, as well as the trading environment, are free from any manipulation.

Consumer Protection: The MiFID and ECB have instructed all EU brokers to hold their client funds in segregated accounts. Therefore, Forex brokers in Ireland are expected to keep their clients’ funds in segregated accounts at the top financial institutions in Europe. CBI regulated Forex brokers are also supposed to keep such funds away from their corporate accounts and are unable to access the funds for any other purposes than to maintain a trader’s position in the market.

How Does CBI Enforce Its Regulation On Forex Brokers?

CBI has many duties for regulating member firms and has created a regulatory framework that incorporates all aspects of regulations as provided by the MiFID derivative.

Enforcement of Rules & Regulation: The CBI has the authority to enforce all existing rules on its member firms, and has the freedom and the power to impose sanctions or award penalties against any member company that fails to adhere to the strict CBI regulations. CBI supervises the conduct of all businesses and is proactive in its efforts for ensuring a safe and secure marketplace.

Auditing: The financial transactions of a company play a vital role in determining the authenticity of a company concerning its integrity and adherence to regulations. The Central Bank of Ireland along with the ECB requires all brokers as well as regulated financial companies to submit detailed and routine audit reports to the CBI, which is verified by third party sources and independent audits.

Broker Insolvency: The central bank of Ireland has a detailed insolvency procedure in place to ensure that all Forex brokers in Ireland follow a predetermined line of action to ensure that all traders are compensated fairly in the event of broker liquidation. Distressed financial firms should follow all existing rules without fail, and should work with the CBI by following its directions and policies for a smooth insolvency process.

Forex Brokers In Ireland

CBI regulated brokers don’t enjoy the immense popularity and market exposure as experienced by brokers from other parts of Europe such as the UK and Cyprus. Being a part of the EU, Ireland has to follow all rules and guidelines enforced by the ECB, and since the country does not have external sources of revenue, Ireland does not offer any significant benefits to entice brokers into relocating to Ireland.

The proximity of Ireland to the UK also prevents companies from setting up their brokerage in Ireland, as the costs of setting up a brokerage firm are broadly similar to the UK. Several CBI Forex brokers have a global presence by being incorporated under different regulatory agencies, and these brokers usually provide high-quality Forex trading products and services due to their global reach. While choosing Forex brokers from Ireland, always make sure that the broker is indeed regulated by the CBI, as there are instances where companies can set up a brokerage in Ireland without being regulated by the CBI. CBI only requires companies to adopt a valid license if a broker wishes to provide its services to the EU, albeit, companies may choose a standard services license to cater to an international audience.

Therefore, non-regulated Forex brokers in Ireland may pose a serious threat to a trader’s capital, especially if a trader does not confirm the regulatory status of the broker. CBI provides a list of al regulated members through its website and offers a list of broker scams and other financial news by updating information on its website. If traders are not sure about the authenticity of a CBI Forex broker, they can always check the official Central Bank of Ireland website to determine whether the facts provided by the broker coincides with the information submitted by the CBI. The trader is ultimately responsible for the decision that he makes while choosing a broker to trade the Forex markets.

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