The Forex markets are still booming worldwide and regardless of its unfriendly policies towards some other financial instruments, Holland is no different here. The Netherlands is a friendly environment for both domestic and the offshore Forex brokers in Holland with the Authority for the Financial Markets as the head national authority.
What Does AFM Stand For?
The AFM, short for Autoriteit Financielle Markten, was founded in 2002 as part of the legislation taking out Securities Board of the Netherlands and moving the responsibilities for all financial products to this agency. The AFM is fully independent administrative body under the political jurisdiction of the Ministry of Finance. The authority is thus drawn for the agency to become the policymaker, enforcer of the laws, and the market regulator in the Netherlands. The AFM regulated brokers thus have strict regulation and have obligations when receiving the authorization and license, which include financial reporting for trading volume and data on regular basis, as well as disclosures on any major changes. While the foreign companies are invited to do business, such brokers will have to establish Netherlands-based executive and fully functioning offices.
AFM Regulated Brokers Guarantee of Fair Practices
The AFM official site provides access to a register of all licensed Forex companies in Netherlands. The search engine makes it easy for anyone interested in a particular company to quickly find if it is listed and if there are any past or current issues with their licensing and general practices. AFM regulated brokers are required to observe very strict rules if they wish to maintain their licenses. Any breach of these terms can cause a broker to be de-listed and their license revoked. This means that finding a regulated Netherlands Forex brokers is pretty much a guarantee you will be in good hands and treated with the full respect you deserve as a trader.
What Does it Take to Maintain an AFM License?
Every regulatory body has a checklist of sorts that every single broker needs to follow closely if they wish to keep offering their services and maintain the license. These items may be similar for most financial regulators, but every particular body has its individual stipulations as well. When it comes to AFM registered brokers, these are the things they must observe:
- Regular financial reporting
- Capital disclosure
- Establishing a local branch
Financial reports for brokers in Netherlands need to be submitted to the AFM regularly and whenever the Authority specifically requests such a report. These reports include the full information about their trading activities, available funds, client data, and more. Regular reports ensure transparent and fair business conduct. Together with financial reports, Forex brokers in Netherlands also need to notify the AFM if there is a change in their issued capital which exceeds 1%. This is another instrument which ensures only the best Netherlands Forex brokers can keep offering their services, while those who have liquidity issues are weeded out. Finally, the only way for a brokerage company to operate within the country is to have a physically located office there. This applies equally to domestic and foreign Forex brokers. By setting up this requirement, the AFM ensures safety of all Holland traders who do not need to send their money abroad, to a company they know nothing about. Every single Forex broker in Netherlands has a physical office there, and that’s a big reassurance in otherwise highly volatile market.
Highly Diversified Market Regulations
The AFM takes regulation matters very seriously. They are not keen on giving out one-fit-all licenses that cover a broad spectrum of activities. Instead, they issue highly specific licenses for various types of activities connected to Forex trading in Netherlands, and those companies offering various types of services need to apply for different licenses separately. Some of the diverse activities covered by these licenses include providing recommendations and advice to clients, receiving and processing the orders, executing orders on clients’ behalf, financial analysis, and more. This diversification of market on the legal level makes it much harder for shady Forex brokers to somehow wiggle their way into receiving a license. They need to provide specific details and reports about their activities and make a full disclosure before they are granted a legal right to set up a shop within the country’s borders.
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Why Sign Up With an AFM Regulated Broker?
As you can see from everything we mentioned in this article, AFM regulated Forex brokers in Netherlands are under a heavy scrutiny and watchful eye of the Authority at all times. For you as a trader, this means that you can put all your energy and efforts into your primary interest, which is trading, without having to worry that you will get scammed out of your money in any way. By ensuring Netherlands Forex brokers are liquid at all times and there are no dodgy items on their financial reports, the AFM basically guarantees that your broker of choice will always have to act in your best interest. With all risks inherent to Forex trading in general, this kind of reassurance truly comes as a welcome refreshment. Furthermore, the AFM will always happily answer any and all questions you may have about a particular broker and assist you in situations where there is a dispute. One must understand that, despite all the effort, three are always those who manage to slip under the radar. However, the Authority will be quick to react to your complaints and warn the public if there are merits to your allegations.
Trade Safe with Netherland Forex Brokers
If safety is your primary concern, then seeking out and registering with an AFM regulated Forex broker is a great move. The AFM is one of the strictest regulators out there and their brokers are certain to comply with essential rules of fair trading practices. A few bad apples that happen to fall through the cracks shouldn’t worry you too much. There will always be companies looking to swindle their way into the market and represent themselves as fair and honest. Even when these rare occurrences happen, you can rest assured that the AFM will be quick to deal with such entities.