For Those of You Considering Forex Trading in Bulgaria Here’s a Guide to BFSC Forex Brokers
Forex trading is becoming an increasingly popular form of investment. What was once the investment choice for banks and large organizations is now possible for the average man or woman. There are an increasing number of Bulgarians looking to participate and this is resulting in a number of new Forex brokers in Bulgaria.
Forex trading in Bulgaria and BFSC regulated brokers
Bulgaria hasn’t been a member of the European Union for very long, and only became a full member in 2007, when it joined along with its neighbor, Romania. Forex services in Bulgaria, are regulated by the Bulgarian Financial Supervision Commission. This regulatory body is responsible for awarding licenses to Forex brokers and other financial service providers and ensuring all the relevant regulations are followed. Those of you looking to trade Forex in Bulgaria are also going to be interested in a European Directive known as MiFID. Countries in the European Economic Area are obligated to follow the Markets in Financial Instruments Directive with respect to financial services. This Directive sets out minimum standards of regulation which are required by EU regulators. The idea behind the Directive is that all countries are equal and no one has an unfair advantage. It enables Bulgarian brokers to offer their services in other countries of the European Economic Area.
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Are the regulatory standards the same in Bulgaria as other EU countries?
Bulgaria has come under fire with regards the regulation of Forex brokers in the country. Many have said that brokerage firms choose to be regulated by the BFSC because it has a particularly light approach to regulation. It is said that many of the other European regulatory bodies take a far stricter line when it comes to standards. In certain respects, this is actually true and the regulatory standards are little more than the minimum set out in the Directive. However, we feel it only right to point out that BFSC Forex brokers are required to comply with these minimum standards which ensure traders are provided with protection of a certain level.
Why Bulgaria is a popular choice for Forex brokers
There are a number of reasons why Bulgaria has become a popular location for Forex brokers. The main one is that operating in accordance with MiFID allows BFSC regulated brokers to accept clients from countries throughout Europe. It also has some very competitive tax rules such as the level of income and corporation tax being set at a flat rate of 10%. This is very comparative with Cyprus and Estonia who also offer very attractive tax systems. Forex brokers in Bulgaria are also able to take advantage of the much lower wages required by Bulgarian employees. All these advantages give Bulgarian Forex brokers a competitive edge compared with brokers located in other European countries. Couple this with the light touch approach to regulation and you can understand why the Forex industry is expanding at such a rapid rate.
How the Bulgarian Financial Supervision Commission operates
The Bulgarian FSC is the country’s financial regulator and is in charge of issuing licenses to Forex brokers. It examines the relevant documentation provided by firms applying for licenses, amends the status of licenses in the event of non-compliance, and enforces the regulations which are in place to ensure all regulated entities follow FSC rules and regulations. It is also responsible for setting rules in respect of the following:
- Requirements for amount of capital and company structure
- The origin of funds from which shareholders are paid
- The relationships between consumers and regulated entities
The Commission monitors compliance with legal requirements, the financial status of companies and the reliability of any information provided. The supervisory element of the Commission’s work is carried out through off-site supervision and on-site examination of a licensed providers activity. Its aim is to prevent and end any legal violations to ensure investors interests are protected. Should a regulated broker be found breaking the rules the Commission is able to impose strict measures including the issuance of recommendations, property sanctions and fines.
How to make a complaint regarding a BFSC Forex broker
Should you feel your rights as an investor have been violated there are a number of possible courses of action. The first step is to approach the provider in writing with a formal letter to the director or other representatives of the high management. You should describe your complaint in detail and request a written reply. It is often the case that the provider will offer a solution, but they could also reject your complaint. If you are unhappy with the provider’s decision you can raise the matter with the Financial Supervision Commission and request some assistance. We should stress, however, it is unable to offer solutions on cases outside of its jurisdiction. If the provider is found to be in violation of the regulatory requirements it is able to impose sanctions.
It is easy to check whether a broker is BFSC regulated
For the convenience of consumers, there is a simple search option located on the main website of the Commission. When you find yourself with a list of Forex brokers to choose from you are able to look for more details in the public register. The information includes data on their shareholdings, managing bodies, annual and periodic reports and details of their activities. It is vital for the best protection of your investment to choose a broker who has been licensed and is regulated by the BFSC. While an unregulated broker may seem an attractive choice you should be aware you are leaving yourself wide open to fraud. Regulatory bodies have been established all over the world and most countries have their own rules and regulations. While Bulgaria has gained a reputation for being a little light on the regulations it is nevertheless of the required standard. In order to operate from Bulgaria, Forex companies have to be licensed by the FSC or some other competent authority of another European Member state. Which means you’ve definitely got plenty to choose from.