Wondering Whether it’s Possible to Trade Forex in Uruguay? Read our Guide to Uruguay Forex Brokers
Forex trading is taking the world by storm, and the number of Forex brokers entering the industry increases every day. Which makes choosing one a little more complicated. One important consideration is whether a broker is licensed and regulated as this is the best way to protect your investment and safeguard your funds. Every country has its own regulatory body which oversees financial markets and operations, and in Uruguay, it is the Central Bank of the Uruguay, or the Banco Central del Uruguay (BCU).
An introduction to the BCU
The Central Bank of the Uruguay (BCU) was created in 1967, following the passing of the 196th article of the República Oriental del Uruguay’s Constitution. It was declared an autonomous state entity and took over from the Banco de la República Oriental del Uruguay, in terms of issuing currency, and managing and supervising the banking system. Its responsibilities were expanded following a bank charter in 1995. The responsibilities it was charged with include:
- Issuing money and notes
- Managing currency, monetary and credit exchanging according to the law
- Administering the State’s international reserves
- Advising the government on matters pertaining to the economy, and acting as its banker and financial agent
- Representing the Uruguayan government at international financial institutions
- Acting as the banker for all government institutions
- Regulating and supervising all financial institutions, including Forex brokers in Uruguay
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What rules and regulations govern BCU Forex brokers?
Forex brokers in Uruguay are governed by three sets of regulations. These are the Capital Markets Act No. 18.627 of December 2009 and a subsequent Decree, the Central Bank of Uruguay’s Charter Act No. 16.696 of 1995 and later amendments, and the Consolidated Rules for Capital Markets passed by the Central Bank of Uruguay. The specific aspects of the rulings you will be more concerned with relate to the offering and trading of securities. These are regulated by the BCU via the Consolidated Rules for Capital Markets. The process of regulation is an ongoing process, and there could be amendments raised by the Central Bank’s board of directors, or the Superintendency of Financial Services. There is also a department within the Central Bank which is entrusted with controlling and regulating the financial sector which can suggest changes.
Why are Forex brokers in Uruguay regulated?
There are several reasons why financial markets are regulated. And these reasons apply for almost every country. Regulating capital markets is done to maximize transparency, competitiveness, correct operations, mitigating risk, and protecting investors by providing acceptable levels of information. The main roles of the Banco Central del Uruguay are to ensure stability, solvency and the proper functioning of institutions making up the financial system. The department responsible for supervising and regulating the financial system is the Superintendency of Financial Services. It also has responsibility for disclosing information relating to BCU regulated brokers. In order to fulfill its role it undertakes the following functions:
- Overseeing market participants
- Regulating the financial system
- Helping to fight money laundering and financing of terrorism
- Promoting transparency
- Conducting authorization processes
- Promoting eloquent international relations
- Promoting the confidence of consumers
Tips for avoiding Forex scams
One obvious way to avoid being taken in by a Forex scam is to choose a broker that has been regulated by the relevant regulatory authority in your country. Those of you looking to trade Forex in Uruguay should look for BCU regulated Forex brokers. There are a number of other factors you should always bear in mind to reduce the risk of being taken in by a get rich quick scheme.
Learn as much as you can
Especially in the beginning, you will benefit from equipping yourself with as much knowledge as possible. Before you start looking for a BCU Forex broker, and definitely before you make your first trade. You may find the broker you are considering offers a wealth of educational material. If not, there is plenty available online.
Is the broker offering transparency?
You need to be certain the broker you are considering gives you all the important information up front. Can you find all the relevant fees? Does the broker state all the spreads for currency pairs and are they fixed or variable? Scam brokers often widen spreads when the markets are volatile.
Are there promises of high profits?
Look at the promises with a realistic eye. If they seem to be too good to be true they most likely are.
You would be wise to choose a broker that uses recognized payment security systems and internet. You may find some reference to security protocols such as Verisign or SSL in the broker’s trading information.
Is the broker flexible enough to cater to your changing needs?
The ideal scenario is to find a broker that allows you to start trading in smaller amounts with low leverage. As your trading knowledge and experience develops you’ll be looking for a more sophisticated trading environment. Is there a personal account manager available to help? This will serve you well in the beginning.
Does the broker feel human?
Are there local representatives who you can speak with in your native language? Does the broker have a local office? What is the broker like when you contact them with a question? You want your broker to feel like your friend and be only too happy to answer all your questions. One very prudent question you can ask is how they deal with complaints. You’ll get a good feel for the broker with the answer to this question. When you’re looking for Forex brokers in Uruguay these are some important factors to bear in mind. But of course, regulation should be at the top of your list. There may not be as many brokers regulated by the BCU to choose from, but your interests are going to be better served by choosing a Forex broker regulated in Uruguay.