The online retail forex and binary options industry’s reaction to the often too high costs associated with compliance to the procedures set out by the official governmental regulatory authorities in each jurisdiction was the formation, in 2013, of the Financial Commission. It was incorporated in Hong Kong and some of its first broker-members were known firms such as FXOpen and Alpari, who saw much sense in setting up a structure that would provide an alternative regulatory body for the industry, at lower cost and with particular emphasis on the timely settlement of client complaints.
Since its inception as an innovative type of self-regulating organization, with the unique feature of being formed from the bottom up, the Financial Commission has attracted as members numerous unregulated brokers, who saw an opportunity of being able to offer their clients some sort of protection and a reliable channel through which to submit their complaints, as the Financial Commission arbitrates each complaint that is submitted through its Resolution Committee.
The recently published results of the Resolution Committee for the first half of 2014 reveal that a total of 34 complaints were received, for various amounts, the vast majority of which were forex-related, with only 5 originating from clients of binary options brokers. Building on the successful experience acquired so far and having diagnosed the obvious regulatory gap that exists when it comes to the trading of cryptocurrencies, the Financial Commission has very recently announced its decision to set up a dedicated Crypto division that will be dealing exclusive with issues of accounting transparency in cryptocurrency trading and the resolution of disputes arising between customers and the increasing number of brokers who have included the likes of bitcoin, altcoin, litecoin and others in the list of products they offer for trading.
This move by the Financial Commission comes as a response to increasing demand for financial as well as compliance oversight in the world of cryptocurrencies, that is a joined desire of brokers and traders alike. It is anticipated that the Financial Commission will thus soon create a set of rules specifically targeted for evaluating the execution process of bitcoins and other cryptocurrencies in order to provide customer oversight. As the Commission explains in a public statement, part of this process will include providing “fair dealing, detailed reporting, and unique trade identifiers to help investigate the trade journey in cases where a specific trade is in question will be required.”
Because it is a private initiative instead of a government-backed regulatory entity, the Financial Commission has being able to show its rapid reflexes, as well as the will and flexibility required in order to tackle the issue of regulating the trading of cryptocurrencies. It is hoped that the traditional government-backed regulatory authorities will soon follow suit in this direction, as cryptocurrencies seem to be here to stay and the regulation of this segment of the industry is a dire need.
