Switzerland has been known as the world’s safest and most well regulated countries in the financial sense for many decades and it remains such in today’s volatile market. A big reason for the trust that investors of all sorts have in Swiss financial institutions is the extremely thorough regulations that the country imposes on such institutions.
FINMA is the Swiss Financial Market Regulatory Agency, which has the absolute authority over all financial institutions in Switzerland, issued directly by the Swiss parliament, making it one of the most powerful financial regulators on the planet. All financial institutions, including banks, insurance companies and Forex brokers must be licensed and regulated by FINMA if they wish to do business in Switzerland.
How Does FINMA Work?
FINMA was first formed back in 2007 by the Swiss government with the aim of streamlining all Swiss financial regulation under one regulating company. Seated in Bern, FINMA now regulates, licenses and has the authority to penalize all financial institutions in the world’s leading banking jurisdiction.
FINMA does not have to account to the Department of Finance or Central Federal Administration, and the Swiss parliament is the only one who this regulatory body has to answer to. As such, FINMA is extremely powerful, but their actions can of course be taken to Swiss courts if they are deemed unjust.
The standards FINMA sets for financial institutions are far above those most other regulators impose, making it a lot more difficult for Forex brokers to get this license which is the reason there are so few FINMA regulated brokers.
These strict regulatory protocols are held in place to ensure that the powerful Swiss banking system does not undergo the same economic failure many other countries have recently experienced, and so far it has been doing a wonderful job of this, preserving the safety of consumers and companies alike.
Enforcement of FINMA Regulations
FINMA sets regulations for financial institutions that dictate how they are to operate and conduct their business. Such regulations make sure that all financial transactions are done transparently and safely and with no malicious intent, protecting consumers from potentially fraudulent activity.
The body is allowed to regularly do audits and investigations on all financial institutions it regulates and once any sort of anomaly is found it will investigate it deeper. If any breach of protocols and rules is discovered, FINMA has the authority to sanction the institution with limited fines or license suspensions.
This regulatory body may also initiate civil legal action against a company if it is found to be conducting in malicious ways, but may not directly initiate criminal actions. The power of FINMA over financial institutions is great and their decisions are usually final, but every institution has the absolute right to take the matter to Swiss courts if they believe FINMA’s actions were not reasonable.
How Effective Is FINMA?
While FINMA exists in part to protect the financial institutions, its main goal is to protect the investors and general public from any malicious actions by these institutions. FINMA is easily reachable by any such individual through telephone lines and emails and anyone who doubts one of the FINMA regulated brokers is doing anything shady is encouraged to bring it up with FINMA, who will take appropriate actions.
The regulator has been extremely useful in protecting Swiss public from frauds, constantly adding new companies to their black list, sending out newsletters with warnings against any fraudulent companies and shutting down the operation of such institutions on Swiss soil.
FINMA is also very helpful with helping the consumers further pursue legal actions if they so choose, by directing them in the right direction, finding them proper attorneys for the job etc. Overall, FINMA lives up to the expectations the general public has from them in every way and makes banking and trading in Switzerland as safe as it can get.
As you probably know, Switzerland is also a country where consumer privacy is taken very seriously and where your financial data will never be disclosed. The only case when FINMA succumbed to pressure and had to give up the information happened when the US government pressured them into releasing American citizen’s information, but this too was quickly stopped by the Federal Administrative Court.
Overall speaking, there is hardly a country in the world where you can feel safer about trading Forex than Switzerland nor are there many places where your financial information will be better protected.
Finding FINMA Forex Brokers
FINMA regulated Forex brokers are few and far between. The extremely strict regulations and tight grip FINMA keeps over all Swiss financial institutions make it difficult to become a FINMA Forex Broker. While there are relatively few FINMA regulated Forex brokers, you can bet your house that these brokers are some of the finest in the industry and trading with them will be as safe as humanly possible.
It is important to note that some very solid Forex brokers do avoid trying to get licensed by FINMA because the rules are just so strict and hard to follow in full but this does not make every broker who is not FINMA regulated necessarily a bad one. Some brokers simply choose to avoid going for this license.
Finding FINMA Forex Brokers should not be too difficult and no matter where in the world you live you can be sure that a broker with FINMA license is at the absolute top of the industry.
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Conclusion: FINMA Runs Like Clockwork
Everything about Switzerland seems kind of perfect to the rest of the world and the reason is the fact that for the most part it is. Swiss have a tendency to use strict regulation to make sure every operation in the country runs smoothly and this is the case with financial transactions as well.
FINMA is probably the financial regulator with the most power in the world but it has proven to use this power for good and wellbeing of all the consumers of Swiss financial services. If you are looking to get into Forex trading, than finding a FINMA regulated Forex broker is certain to keep you safe and well protected, whether you are Swiss or not.