Unregulated Forex and its Challenges
The forex market is deluged with brokers, some of them are regulated and some are not. Whilst it comes to opting for a suitable broker to suit your needs, it can be a laborious job to select – should you go for Regulated brokers or risk going with an unregulated one? Regulated brokers are those who are registered with the financial regulatory body of their country and who must follow the rules set down by the authority.
Why Forex are Unregulated?
In order to receive the license for forex operators from the concerned authority can cost a lot of money that a company needed to build up that kind of infrastructure for smooth operation. However, there are few merchants who took a different path. They use offshore tax havens countries to incorporate the company without any license or certificate from regulators. Although being a licensed holder, there is no guarantee that your forex broker will compensate more, in the end, it all depends on the player and how they are investing in the trades. Now the actual issue here for an unregulated merchant is to find a secure and reliable payment gateway. There are a couple of banks/PSPs who can happily accept their business and offshore gateways provide secure and reliable payment gateways for regulated/unregulated forex merchants at very competitive rates.
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Challenges Faced by unregulated forex merchant.
1. Brokerage Growth: Unregulated forex merchant revenue will be less than the regulated merchant. Unregulated merchants face a bit of slow growth however the final revenue will be based on several factors.
2. Client Trust: This would be the biggest challenge for unregulated merchants to acquire client trust. Normally a client would look for a more suitable forex provider who helps them to earn money.
3. Counterparty Risks: a scenario where the Forex market is largely unregulated. There is no centralized exchange guaranteeing the risk-free execution of the trade. When any trader enters into trading, they also need to be aware of the risks that they will be facing.
4. Operational Risks: Forex trading operations are usually difficult to manage operationally. It is because the market works all the time whereas humans don’t. The traders also have a resort to algorithms to help protect the value of the investments when they are away.
5. Transaction Costs: Regulated forex services get a low-cost payment gateway however, unregulated forex service providers received a bit higher than the usual cost to get a payment gateway for their website. due to that overall cost would increase up to 5 to 6% for a player.
We at offshore gateways can help those merchants to find out the best solution as per their business needs. We as ISO have a pool of High-risk friendly acquiring partners onboarded with us. With offshore Gateways, you will be having multiple approvals to choose from. Our dedicated Business manager will be helping you in your decision and find you the best payment gateway for forex. Do get in touch with us to know more about the same.