Regulators Must Leverage Technology

Regulators and Technology

Regulators and Technology

One of the most significant failures by Forex regulators was the NFA’s complete miss on Forex broker PFG.  For years one individual was able to perpetuate a 200 million Dollar fraud by merely faxing in his bank statement.  Since PFG was a relatively large firm, the NFA felt they should be given the benefit of the doubt when it came to reporting. A simple use of technology would’ve been able to prevent the ongoing fraud that happened at PFG.


Regulators Need to Verify Broker Data in Real Time

Forex regulators need to implement Technology that can verify and validate a broker’s operations. Merely submitting a financial statement is not sufficient and has proven to be ineffective in keeping brokers in line. If a Forex regulator has the capability in real-time to validate the broker’s bank accounts, this will be a giant step in ensuring the solvency of the regulated Forex broker.

Technology can ensure Fair Trading Practices

Technology can also be leveraged in enforcing fair trading practices on the part of brokers. Instead of random audits of individual accounts, forex regulators what get it in real-time can make sure that the broker is following all regulatory guidelines.

As more regulators like FCA look to add additional asset classes like binary options to their jurisdiction oversight with the use of technology will be essential.

Technology Means Less Regulatory Burden for Brokers

The addition of technology Will also lessens the burden on the brokers themselves. If they are directly tied to the regulator, then there is no longer the need for audits and reporting. One of the problems with reporting is that there is such a gap between reporting periods the complete nature of any condition of the firm could change.  Real-time oversight this Is not an entirely new concept and has been implemented in equities and futures exchanges. There is no reason that a similar model could not be applied in the Forex market.