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EFSA Forex Brokers

Wherever you may be living, whatever country you reside in, there will be a regulatory body responsible for financial services. For those of you who live in Estonia, the regulatory body is the EFSA. Otherwise known as the Estonian Financial Supervision Authority.

What is the EFSA?

Estonian Financial Supervision Authority logoEFSA stands for Estonian Financial Supervision Authority. It was founded in 2001 as an autonomous agency responsible for supervising companies operating in the Estonian insurance, banking, and securities market. The aim of this Authority is to stabilize the Estonian financial sector and protect the interest of clients and investors by way of safeguarding their financial resources. This is a general description of its duties. But let’s see if we can be a little more specific. Tasks of the EFSA include:

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The history of the EFSA

In the 1990s there arose a need for institutional reform of financial regulation. This came about because of the growing integration of the country’s financial sector and the fast-growth in non-banking financial arbitration. The reform was requested by the Bank of Estonia and the Government of the Republic. A new agency was established following the creation of a committee and the drafting of legislation. The initial draft of the reform was rejected but the Estonian Parliament passed the Financial Supervision Authority Act in 2001. The EFSA is also a member of the Committee of European Securities Regulators.

The EFSA also runs a consumer website

The Estonian Financial Supervision Authority is responsible for overseeing state supervision of licensed banks, insurance intermediaries and companies, fund management companies, investment firms, investment and pension funds, e-money and payment institutions, credit intermediaries and creditors, and the securities market. It also takes the education of consumers very seriously and has set up a website where consumers are able to get unbiased information concerning the organization of finances. It includes information about financial markets, financial services and products, comparison tables and calculators. You can find more information here.

What you can do if you have a problem with an EFSA regulated broker

Should there be a problem with a Forex broker in Estonia there is a set procedure you will be able to follow. The first step is to contact the service provider and clarify the nature of the problem by telephone. But in case there arises a need for further clarification it would be preferable to do it in writing. It is very likely the problem can be resolved in this way, but if the matter is not satisfactory concluded it is possible to contact the EFSA. The Estonian Financial Supervision Authority should be the first port of call when you need independent advice. The EFSA, however, is not able to participate in the settlement of civil disputes and does not act as an extrajudicial body because it is not competent in legal assessments. It will, however, be able to advise you on where you can go and who to speak to in order to resolve the dispute. Another avenue you will be able to try if communication with the service provider has failed to reach a satisfactory resolution is to take the matter to the courts. According to the Estonian constitution, there is a three-tiered court system. The first is the county courts and administrative courts. The second is the district or appellate courts and finally, there is the Supreme Court or Court of Cassation.

It is possible to check whether Forex brokers in Estonia are regulated

The EFSA website lists all EFSA Forex brokers, and it is, therefore, possible to check whether a broker you are considering is authorized. Investment firms are usually public limited companies whose primary activity is to provide investment services. This includes EFSA regulated brokers, which will have an activity license issued by the FSA. But let’s first clarify exactly what an investment service is. Investment services are those which:

Once you have found the name of a particular investment firm it is possible to click on the name and get all the relevant details. These include:

Forex brokers in Estonia are also obliged to comply with MiFID

MiFID stands for the Markets in Financial Instruments Directive and is a directive which aims to merge the financial markets in the European Union and increase the level of cross-border investment. The Directive took effect officially in November 2007 and is currently going through a process of improvement. MiFID is EU legislation which regulates firms providing services linked to financial instruments and where the instruments are traded. The aim of the Directive is to harmonize the rules governing financial services firms and their activities, allow for easier cross-border business, increase transparency of the markets, and improve consumer protection. One important feature of MiFID relates to best execution. Firms operating in accordance with MiFID must take all reasonable steps to ensure the best possible result in the execution of client’s orders. This is not just in relation to the execution price, but also speed, cost, likelihood of execution and likelihood of settlement.

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