Are you thinking of opening a forex account?
Although the procedure itself is pretty straight forward, there are certain aspects of it that need to be considered carefully when you decide to open a Forex account.
There are 2 types of information that you will need to check when opening an account with a Forex firm – legal regulations and brokers features. In Part I of this article we will look at the legal regulations and how these might apply to your situation.
Regulations
If you are a resident of the Canadian province of British Columbia or any of the countries listed below, then you might have trouble opening a Forex trading account unless it is with a company which is properly regulated.
Here’s the full list of countries and districts where extra caution is in order when opening an account:
- Afghanistan,
- British Columbia, Canada
- Angola,
- Belarus,
- Burma (Myanmar),
- Cote d’Ivoire (Ivory Coast),
- Croatia,
- Cuba,
- Democratic Republic of Congo,
- Iran,
- Iraq,
- Libya,
- Macedonia
- Montenegro
- Nigeria,
- North Korea,
- Slovenia,
- Sudan,
- Syria,
- Serbia
- United Kingdom (England, Northern Ireland, Scotland, Wales)
- Zimbabwe
So why are these countries “blacklisted”? Well, it’s not exactly a blacklist. In many cases the authorities are trying to protect the investors from unauthorized and potentially problematic dealers and investment practices. These restrictions may be imposed by the authorities in the trader’s country of residence (which is the case with Canada-BC and the UK) or by the broker’s financial regulating authorities (this is usually the case with US brokers, whereby U.S. governmental restrictions prohibit the US brokers from opening accounts for residents of certain countries, such as for example Iraq or Afghanistan).
Ironically, of the above list, the British Colombians are probably at the biggest disadvantage as in their case both restrictions apply: local BC regulations require that all brokerage companies operating in BC or accepting BC clients be registered with the British Columbia Securities Commission and on top of that, knowing of this restriction, most US and many international brokers will not accept clients from Canada, BC. I will go over the BC situation in a special article on opening a Forex account in BC.
As a general word of caution – wherever your place of residence it is always a good idea to check with your local regulatory authorities. An even better idea is to ask your chosen broker if they are regulated and what is their regulating authority. Although Forex scams are no longer common, safety is always advisable when it comes to your investments.