Forex Market is a cross-border transactional business. Thus like every other stock exchanges forex market does also require a regulation for the common interest of the traders & Government Bussiness Policies.This Regulation gets enforced on the brokers so that brokers can not cheat traders or investors. Forex brokers usually get regulated or licensed from the operation country or also from the different other countries.
Following are the all listed Forex regulatory bodies from different countries:
How Can Forex Regulatory Bodies Help Traders?
Some top-level regulatory bodies hold the right to insured trader fund from brokerage bankruptcy. Thus if a broker got bankrupt then the trader can retrieve their money back from the broker with the forex regulatory authorities legally. Plus in case of any kind bad practice from the brokerage site, trader or investors can file a case against that broker.
But there is one thought if your live in Australia & your broker got regulated from Europe. Then in case of any scam, you need to file a case under European law in a European court. In such scenario, case maintaince will be costly. Thus it is better to open an account with a brokerage service who have an office in your country. So that you can easily reach over there in case of any dispute.
Forex Market Decentralization
Forex Market is a decentralized market, unlike stock market which is a centralized market. Decentralization means there is no head of this market. Thus for same currency pairs, price quotation can be varied from trader to trader. There is no control on what price quotation will be executed among all traders across the globe. More clearly, as this market pricing has no control, thus it is riskier than the stock market. Somes during any black swan event currency price can change drastically. Also, different bank or liquidity providers can also manipulate market pricing according to their needs. For example, during SNB Swiss franc flooring decision(2011) market moved 1000 pips in 1 minute. Some traders made the fortune of out it, some exactly the opposite. Generally, it is always wise not place any trade during any big event.
Different forex brokers have a different quotation for same currency as they use different pricing technologies & data center. The only plus point of this kind of market structure is high liquidity.